Chipotle says Mexico tariffs could cost the company $15 million

President Trump’s proposed tariffs against Mexico could cost Chipotle Mexican Grill Inc. $15 million in additional costs this year, including from avocado imports, Bloomberg News reported Monday.

“If the tariffs become permanent, we would look to offset these costs through other margin improvement efforts already underway,” Chipotle CFO Jack Hartung said in a statement to Bloomberg. “We could also consider passing on these costs through a modest price increase, such as about a nickel on a burrito, which would cover the increased cost without impacting our strong value proposition.”

The restaurant chain sources their avocados from Mexico, according to Bloomberg.

{mosads}The Trump administration’s proposed 5 percent tariff on goods from Mexico is scheduled to take effect June 10 and increase to 25 percent, “unless and until Mexico substantially stops the illegal inflow of aliens coming through its territory,” according to a statement from the White House Thursday. 

Some Mexican avocado prices already increased this year, but Hartung told Bloomberg News the restaurant will not switch to pre-mashed or processed avocados, which would be cheaper.

“We believe that using whole, fresh ingredients and making guacamole by hand in our restaurants each day leads to better tasting guacamole that our customers deserve and expect from Chipotle,” Hartung told CNBC.

Aside from guacamole, Chipotle is also facing rising costs as minimum wage increases take effect across the country.

Chipotle shares increased 53 percent this year through Friday’s market closing, but they fell nearly 2 percent in early trading Monday, according to Bloomberg. In 2018, Chipotle’s net income rose to $176.6 million, according to CNBC.