Here's how a major Mexican tomato exporter is affected by Trump's 17% tariff

San Francisco Chronicle​

6 days ago

AJUCHITLAN, Mexico (AP) — The Trump administration's decision to impose a 17% duty on fresh tomatoes imported from Mexico has created a dilemma for the country providing more tomatoes to U.S. consumers than any other.
The import tax that began July 14 is just the latest protectionist move by an administration that has threatened dozens of countries with tariffs, including its critical trading partner Mexico. It comes as the Mexican government tries to also negotiate its way out of a 30% general tariff scheduled to take effect Aug. 1.
While the impacts of the tomato tariff are still in their infancy, a major grower and exporter in central Mexico shows how a tariff targeting a single product can destabilize the sector.
Surviving in times of uncertainty
Green tomato plants stretch upward row after row in sprawling high-tech greenhouses covering nearly six acres in the central state of Queretaro, among the top 10 tomato producing states in Mexico.
Climate controlled and pest free, Veggie Prime's greenhouses in Ajuchitlan send some 100 tons of fresh tomatoes every week to Mastronardi Produce. The Canadian company is the leading distributor of fresh tomatoes in the U.S. with clients that include Costco and Walmart.
Moisés Atri, Veggie Prime's export director, says they've been exporting tomatoes to the U.S. for 13 years and their substantial investment and the cost to produce their tomatoes won't allow them to make any immediate changes. They're also contractually obligated to sell everything they produce to Mastronardi until 2026.
'None of us (producers) can afford it," Atri said. "We have to approach our client to adjust the prices because we're nowhere near making that kind of profit.'
In the tariff's first week, Veggie Prime ate the entire charge. In the second, its share of the new cost lowered when its client agreed to increase the price of their tomatoes by 10%. The 56-year-old Atri hopes that Mastronardi will eventually pass all of the tariff's cost onto its retail clients.
Mexican tomato exports brought in $3 billion last year
Experts say the tariff could cause a 5% to 10% drop in tomato exports, which last year amounted to more than $3 billion for Mexico.
The Mexican Association of Tomato Producers says the industry generates some 500,000 jobs.
Juan Carlos Anaya, director general of the consulting firm Grupo Consultor de Mercados Agrícolas, said a drop in tomato exports, which last year amounted to more than 2 billion tons, could lead to the loss of some 200,000 jobs
Experts: U.S. will have difficulty replacing fresh Mexican tomatoes
When the Trump administration announced the tariff, the Commerce Department justified it as a measure to protect U.S. producers from artificially cheap Mexican imports.
California and Florida growers that produce about 11 million tons would stand to benefit most, though most of that production is for processed tomatoes. Experts believe the U.S. would find it difficult to replace Mexico's fresh tomato imports.
Atri and other producers are waiting for a scheduled review of the measure in two months, when the U.S. heads into fall and fresh tomato production there begins to decline.
In reaction to the tariff, the Mexican government has floated the idea of looking for other, more stable, international markets.
Mexican Agriculture Secretary Julio Berdegué said Thursday that the government is looking at possibilities like Japan, but producers quickly cast doubt on that idea, noting the tomatoes would have to be sent by plane, raising the cost even more.
Atri said the company is starting to experiment with peppers, to see if they would provide an option at scale.
President Claudia Sheinbaum said recently her administration would survey tomato growers to figure out what support they need, especially small producers who are already feeling the effects of a drop of more than 10% in the price of tomatoes domestically over fears there will be a glut in Mexico.