Tomato prices are likely to increase as a result of the Trump administration decision this week to terminate a tomato import agreement with Mexico, causing tariffs to swing into effect, according to the Fresh Produce Association of the Americas.
Newsweek contacted the Department of Commerce for comment on Saturday via email outside of regular office hours.
Why It Matters
Since his inauguration as president in January, Donald Trump has imposed sweeping tariffs targeting imports to the United States from most other counties, though some of these have since been rolled back.
If tomato prices do increase in response to administration policy, it could spark consumer anger comparable to that already seen in response to the surging cost of eggs.
What To Know
This week, the Trump administration announced it is beginning the process of ending a tomato import agreement signed with Mexico in 2019, itself an altered version of a deal that has been in place for decades.
The agreement is now due to end in July, at which point a minimum price agreed for Mexican tomato imports will disappear but the products will face a 20.9 percent tariff, according to the Commerce Department. Exports warn this is likely to result in U.S. tomato prices increasing, as the climate and lower costs mean they are able to be grown year-round across large parts of Mexico.
Speaking to fruit and vegetable industry publication The Packer, Lance Jungmeyer, president of Fresh Produce Association of the Americas, said it is U.S. customers who will likely pay for any increase in the tomato price.
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He said: “This price has to be passed on. It can’t be charged back to the grower or anything. A lot of companies that have year-round contracts are going to be renegotiating those in order to make sure they can fill those contracts.
“As a result, retailers are going to have to raise prices. Restaurants are going to have to raise prices or adjust menu output, for example, by putting fewer tomatoes on a salad or fewer slices on a sandwich.”
Jungmeyer added the price increase is likely to happen in two stages during which customers will “start wondering why tomatoes are costing more than they used to.”
He said: “At first, we would see it go to an open market, and who knows how the market behaves over time. As duties accumulate, people don’t have enough money to plant next year’s crops. So, by year two, we see quite a bit less volume, and normally when there’s a decrease in volume, there’s an increase in pricing.”
The Trump administration has already come under fire over the rising price of eggs, the cost of a dozen of which hit $6.227 last month following avian flu outbreaks. In response the government has been trying to increase egg imports from abroad.
What People Are Saying
Speaking to The Wall Street Journal, the Commerce Department said: “The current agreement has failed to protect U.S. tomato growers from unfairly priced Mexican imports. This action will allow U.S. tomato growers to compete fairly in the marketplace.”
In a statement, Britton Mullen, president of the Border Trade Alliance which encourages commerce between Mexico and the U.S., strongly condemned the government’s plan to withdraw from the tomato agreement.
She said: “The tomato suspension agreement has provided a reliable structure for trade in fresh tomatoes between the U.S. and Mexico that the trade community has strongly supported.
“More than 400 businesses have written to the Department of Commerce urging maintenance of the tomato suspension agreement because there are too many jobs and there is too much economic activity connected to the tomato trade to sacrifice them for certain regional agricultural interests’ attempts to tilt the rules of trade in their favor. Withdrawing from the tomato suspension agreement will not only put upward pressure on prices, but it is also inconsistent with [U.S.-Mexico-Canada Agreement] during a time of tremendous upheaval in the North American trade marketplace.”
What Happens Next
If no fresh agreement is reached the tariffs on Mexican tomatoes will come into effect in July. If industry bodies are right, and this raises prices, it could cause consumer anger though it is likely to benefit American tomato growers in places like Florida.
