Amid Cinco de Mayo celebrations, a tax on Mexican tomatoes looms
National Legal News
Guacamole has been spared from tariffs for now. But salsa may not be so lucky.
While President Donald Trump put threatened tariffs on Mexican avocados on pause, the U.S. government plans to put a nearly 21% duty on fresh Mexican tomatoes starting July 14. A duty — like a tariff — is a tax on imports, and this one would impact the 4 billion pounds of tomatoes the U.S. imports from Mexico each year.
Proponents say the import tax will help rebuild the shrinking U.S. tomato industry and ensure the produce eaten in the U.S. is also grown there. Mexico currently supplies around 70% of U.S. tomato market, up from 30% two decades ago, according to the Florida Tomato Exchange.
“Unless we even the playing field in terms of fair pricing, you’re not going to have a domestic industry for fresh tomatoes in the very near future,” Robert Guenther, the trade group’s executive vice president, said. Florida and California are the top U.S. producers of tomatoes, but most of California’s crop is turned into sauces and other products.
Opponents say the duty will make fresh tomatoes more expensive for U.S. buyers. NatureSweet, a San Antonio-based company that grows tomatoes in Mexico as well as the U.S., said it will be paying millions of dollars each month in duties if the decision isn’t reversed.
“We will look for ways to adapt or streamline our operations, but the truth is, we are always doing that so we run an efficient business already,” said Skip Hulett, NatureSweet’s chief legal officer. “Produce is not a large-margin business. We’re determining what portion of the cost we could absorb, but these added costs will most certainly need to be passed on to the consumer.”
Tim Richards, a professor at the Morrison School of Agribusiness at Arizona State University, expects U.S. retail prices for tomatoes to rise by around 10.5% if the duty goes through. Mexico’s government said last month it was convinced it could negotiate over the issue. But if the tomato tax takes effect, Mexican President Claudia Sheinbaum has hinted her country may impose duties on chicken and pork legs imported from the U.S.
The tug-of-war over tomatoes has a long history. In 1996, shortly after the North American Free Trade Agreement went into effect, the U.S. Department of Commerce investigated allegations that Mexico was exporting tomatoes to the U.S. at artificially low prices, a practice known as dumping.
The U.S. government agreed to suspend the investigation if Mexico met certain rules, including selling its tomatoes at a minimum price. Since then, the agreement has been subject to periodic reviews, but the two sides always reached an agreement that avoided duties.
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