The impending termination of the trade agreement between the U.S. Commerce Department and Mexican tomato exporters may increase tomato prices. Reports indicate that if the deal comes to an end as scheduled, it could trigger a duty of over 20% on Mexican tomato exports starting July 14. This would heavily impact the pricing structure of major U.S. importers such as NatureSweet Ltd., a key distributor in North America.
NatureSweet Ltd. acknowledged to FOX Business the potential for nearly a 10% rise in prices due to the inability to absorb the proposed tariffs. CEO Rodolfo Spielmann indicated in Bloomberg News that the company cannot absorb these duties given its slim profit margins. In a statement, the company emphasized that price increases are necessary to continue supplying their vine-ripe specialty tomatoes to consumers, while maintaining hope that an agreement can be reached to prevent these hikes.
The 2019 Tomato Suspension Agreement, a revision of the 1996 truce, allowed Mexican firms to bypass substantial tariffs by adhering to specific pricing and labeling standards. The agreement was crafted to protect U.S. producers from unfair competition while stabilizing supply. The Commerce Department, however, plans to terminate this agreement, claiming it failed to safeguard U.S. growers from underpriced Mexican imports. If terminated, an antidumping duty order will become effective on July 14, imposing a 20.91% duty on most Mexican tomato imports.
Given that Mexican imports can account for up to 93% of U.S. tomato supply during low domestic output periods, the new tariff may disrupt supply chains, potentially causing price increases up to 50%, as per Food & Wine. The Fresh Produce Association of the Americas expressed concerns, noting the uncertainty U.S. firms face regarding their ability to meet market demand at affordable prices. The association calls for a new deal that supports U.S. importers' work while enabling domestic producers to compete through innovation and improved crop varieties rather than increased duties.
Source: Fox Business
