The US war on Mexican tomatoes has begun and consumers will pay

The termination of the US-Mexico Tomato Suspension Agreement could hit home.
The termination of the US-Mexico Tomato Suspension Agreement could hit home.
Image: Reuters/Daniel Becerril
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After 22 years, the US Department of Commerce just terminated the Tomato Suspension Agreement, which governs fresh tomatoes from Mexico. With the trade deal’s end on May 7 comes a 17.5% tariff on the fresh fruit, a tax that will likely be passed on to American consumers.

More than half of tomatoes sold in the states come from Mexico. The popular fruit is the nation’s largest agricultural export to the US. Some American farmers argue that Mexican tomatoes have been so successful in the US partly because their neighbors violate the countries’ trade agreement.

The Department of Commerce said in a statement on the deal’s termination that it withdrew its agreement with Mexico at the request of “representatives of the domestic tomato industry.” It did not specify who those representatives were, but the pressure is most likely coming from Florida. The state grows the most tomatoes in the US, followed by California and Ohio, and local cultivators and politicians have been vocal about their displeasure with Mexican tomato farmers.

The Florida Tomato Exchange (FTE), which lobbies for state growers, has issued criticism of Mexican counterparts, complaining that they are flooding the US market, dumping fruit and artificially deflating prices for the commodity, which undermines American farmers. “[I]t is not an exaggeration to say that the Florida industry is in an existential crisis,” FTE wrote in its annual report last year, blaming Mexican tomato growers for the Floridian predicament.

The group lobbied the federal government for an investigation into alleged unfair trade practices and called for the Mexican deal’s termination. In February, Florida’s Republican senator Marco Rubio and Republican congressman Ted Yoho sent a bipartisan letter, signed by representatives from Florida and other tomato-producing states, to federal commerce secretary Wilbur Ross urging him to end the agreement.

This week, Ross gave them what they wanted. “The Department of Commerce remains committed to ensuring that American domestic industries are protected from unfair trading practices,” he said in the agency statement on the deal’s end. But he signaled that a new contract could still come, adding, “We remain optimistic that there will be a negotiated solution.” US authorities will continue to investigate the alleged violations of the deal’s terms while representatives on both sides keep bargaining to renew the Tomato Suspension Agreement.

If the US and Mexico don’t reach an agreement soon, shoppers will probably not feel the squeeze during the summer, when US states produce a lot of tomatoes. But expect to see price hikes during the colder seasons even if there is a new deal. In winter, the market demand for tomatoes, which doesn’t abate, will have to be met with imports from Mexico.

However, Mexican growers may move to other crops in light of recent developments, according to predictions in an agribusiness study out of Arizona State University on the economic effects of canceling the agreement. That could drive prices up by as much as 40%. The cost of tomatoes could climb to nearly double if a natural disaster also impacts American growers at the same time, the report predicts. These findings prompted some to warn that fresh tomato prices for US shoppers will soon “skyrocket,” although much would still have to go wrong before the most dire predictions come true.