For the last 23 years, the United States and Mexico have benefited from the Tomato Suspension Agreement, which was installed to keep tomato supply high and prices low. That agreement, which has helped boost the country’s economy by $5 billion, was just terminated by the U.S. Department of Commerce at the behest of lawmakers out of Florida.
With the trade deal’s end on May 7th comes a spiking 17.5 percent tariff on tomatoes, a tax that the American consumer will have to take on.
More than half of all tomatoes sold in the United States come from Mexico and represents the largest agricultural export to the United States. The Commerce Department said in their own statement that it withdrew its agreement with Mexico at the “request of representatives of the domestic tomato industry.” This is where Sen. Marco Rubio (R-FL) and his constituents from the Sunshine State come into play as their land grows the most tomatoes inside the United States followed by California and Ohio.
Border Trade Alliance President Ms. Britton Clarke expressed her disappointment about the withdrawal from the 1996 Tomato Suspension Agreement and the imposition of tariffs on fresh tomato imports from Mexico.
“We regret that the Department of Commerce has withdrawn the U.S. from the agreement that has governed U.S.-Mexico tomato trade for decades,” Clarke said. “It’s a move that hits shoppers in the wallet. As a result of this decision and the establishment of tariffs on fresh tomato imports from Mexico, U.S. consumers will face higher prices on popular tomato varieties. We believe that productive conversations between the Department of Commerce and Mexico tomato growers could have continued without a total withdrawal from the agreement. We take the Department at its word that negotiations over a possible revised agreement will continue. They must continue with urgency, or we risk inflicting lasting damage on the U.S. economy.”
The Florida Tomato Exchange (FTE), a group that lobbies for state growers, has criticized Mexican tomato producers, claiming that they have been unfairly flooding the market and artificially inflating prices over the years. The group had been lobbying the federal government for an investigation into this alleged unfair practice of trade and called for the deal’s ending.
“The Department of Commerce remains committed to ensuring that American domestic industries are protected from unfair trading practices,” Secretary Wilbur Ross said in a statement.
However, Ross gave notice that a new contract is still an option and stated he is optimistic about a solution.
If the United States and Mexico do not reach a new agreement soon, shoppers looking for some ruby red tomatoes in their local grocery store can expect to see price hikes, especially during the colder seasons when the market demand for tomatoes will have to be met with imports from Mexico.
One additional issue is that Mexican growers may move to other crops in light of recent developments, such as cucumbers, watermelons or avocados. That could drive prices up by as much as 40 percent during regular tomato demand times and as much as 85 percent during the colder months.