Study: Tomato prices could soar under new tariff on Mexican imports

Tomato prices are set to see a major hike starting Tuesday, as the Commerce Department exited an anti-dumping treaty and imposed a 17.5 percent tariff on Mexican tomato imports.

“The Department of Commerce remains committed to ensuring that American domestic industries are protected from unfair trading practices,” Commerce Secretary Wilbur Ross said. “We remain optimistic that there will be a negotiated solution.”

{mosads}The Commerce Department gave the legal 90-day notice that the U.S. would nix the 2013 Suspension Agreement on Fresh Tomatoes from Mexico, originally struck in 1996 to suspend an American investigation into Mexican tomato dumping.

With the withdrawal in effect, Commerce has started collecting “cash deposits or bonds” equivalent to 17.5 percent of the price of tomatoes coming from Mexico into the U.S.

The tariffs could be returned to the farmers in the event a new deal is struck or investigations by Commerce and the International Trade Commission conclude that Mexico is not dumping tomatoes in the U.S. market.

In the meantime, prices on some varieties of tomato could increase anywhere from 41 to 104 percent, according to a study by Arizona State University (ASU). 

“In general, tariffs levied on imports of fresh produce from Mexico are borne disproportionately by U.S. consumers,” said ASU agribusiness professor Timothy J. Richards.

“In this analysis, we show that retail tomato prices in the U.S. may rise by an average of approximately 40% if tariffs remove a substantial proportion of the Mexican supply during the critical winter-tomato supply period,” Richards added.

Lance Jungmeyer, president of the Fresh Produce Association of the Americas, said the move amounted to political protectionism for U.S. farmers that would cost consumers.

“U.S. withdrawal from the Tomato Suspension Agreement will cause a severe price shock for American tomato consumers and make more than 30,000 American workers vulnerable to job and wage losses,” he said.

Last week, Sen. Martha McSally (R-Ariz.) wrote an op-ed voicing opposition to the move.

“Without the Tomato Suspension Agreement, Arizona’s economy, jobs and tomato prices are at risk,” she wrote.

“I strongly oppose the administration’s move to end the Tomato Suspension Agreement and have clearly expressed my opposition to the secretary of Commerce,” she added.

Mexico’s top trade authority on Tuesday panned the Commerce Department’s decision to end the agreement, saying the tariff has gone into effect.

“It will imply an additional annual cost of more than $350 million to Mexican tomato exporters and it’s expected it will be impossible for many small and medium exporters to front this weighty financial burden,” reads an official statement from the Secretariat of the Economy.

Mexican tomato producers have vowed to keep negotiating a deal to continue exports to the United States, according to Reforma newspaper.

“[Ending the agreement] doesn’t take away that we’ll stay at the negotiating table, it doesn’t mean this is over,” said Manuel Cazares, vice president of Mexico’s tomato growers association.

“The last word has not been spoken,” he added.

Updated at 6:01 p.m.