Today, the United States government announced an immediate 17% tariff on all tomatoes imported from Mexico. This withdrawal is one piece of a larger overall withdrawal from a decades-long bilateral trade—the North American Free Trade Agreement (NAFTA)—with Mexico. Officials argue that the prior deal “had failed to protect US tomato growers from unfairly priced Mexican imports,” leading to concerns about the economic impact on domestic farmers.
In the past, American tomato growers have sounded alarm bells about being undercut by their Mexican counterparts. In 1996, industry preemptively acted by filing a petition with the feds. It was their allegation that Mexican growers were selling tomatoes at below normal value, or dumping. Currently, nearly 70% of the tomatoes consumed in the US are imported from Mexico. This new tariff quickly became the center of strong controversy between the two countries.
U.S. Secretary of Commerce, Howard Lutnick, stressed the impact on U.S. farmers. He stated, “For far too long our farmers have been crushed by unfair trade practices that undercut pricing on produce like tomatoes.” This feeling is a reflection of a larger frustration from the agricultural community about the current state of international trade affairs.
The United States and Mexico signed five agreements to suspend retaliation tariffs. In exchange, Mexico agreed to sell tomatoes at least at a minimum price. The US administration decided that these steps fell short. In particular, the new tariffs are likely to increase prices on consumers at supermarkets and restaurants. In the end, it’s consumers who will suffer the consequences in their public-facing consumer transactions.
In response to the antidumping complaint, the Mexican Government has vociferously denied the allegations of dumping. Yet, they claim, their growers would never sell tomatoes at below-market prices. Officials have repeatedly pushed back against the idea that Mexican tomatoes have gained popularity due to their quality. The Mexican economy and agriculture ministry has expressed concern over the new tariffs, declaring it “impossible to substitute Mexican tomatoes” given their significant volume in the US market.
Trust is rapidly eroding and tensions are high. The US is threatening to slap a massive 30% tariff on all goods coming from Mexico starting on August 1. This possible turn of events would be a serious step backward for bilateral trade relations between the two countries. The Mexican government recently announced plans to renegotiate a new deal. Like us, they want to do this quickly before their domestic producers start to feel the full brunt of these tariffs. In particular, they have committed to helping local tomato farmers figure out where to sell their tomatoes.
President Donald Trump has remarked that Mexico has not done enough to prevent North America from becoming a “Narco-Trafficking Playground,” highlighting the complex interplay of trade and security issues affecting bilateral relations.