The Trump administration has withdrawn from the Tomato Suspension Agreement, announcing a 17 percent tariff on fresh tomatoes from Mexico.
The decision scrapping a three-decade-old agreement to spare tomatoes from anti-dumping duties came as the clock ticked down for Mexico to reach an across-the-board trade deal with the US by August 1 or face a general tariff of 30 percent on its goods.
In announcing its withdrawal from the Tomato Suspension Agreement, the Commerce Department said that it had been “flooded with comments” from US tomato growers who wanted better protection from Mexican goods.
US Secretary of Commerce, Howard Lutnick said in a statement that Mexico remains one of the US’ greatest allies, but for far too long, US farmers have been “crushed by unfair trade practices that undercut pricing on produce like tomatoes.”
“That ends today. This rule change is in line with President Trump’s trade policies and approach with Mexico.”
Howard Lutnick
The Commerce Department had in April announced its intention to exit the agreement in 90 days, saying that it had “failed to protect US tomato growers from unfairly priced Mexican imports.”
The Tomato Suspension Agreement, which was first signed in 1996, put a hold on duties stemming from a US trade court decision that found Mexican exporters were selling their produce at artificially low prices.
Under the agreement, the US agreed to suspend the tariffs provided that Mexican producers did not sell their produce below agreed-upon “reference prices.” The two sides renewed the deal on four occasions, most recently in 2019.
According to the Florida Tomato Exchange, Mexico currently supplies around 70% of the US tomato market, up from 30% two decades ago.
Proponents said that the import tax will help rebuild the shrinking US tomato industry and ensure that produce eaten in the US is also grown there.
Robert Guenther, the Florida Tomato Exchange’s Executive Vice President, stated that the duty was “an enormous victory for American tomato farmers and American agriculture.”
However, opponents said that the import tax will make tomatoes more expensive for US consumers.
Mexican greenhouses specialize in vine-ripened tomatoes, while Florida tomatoes are typically grown in fields and picked green.
Democratic politicians also criticised the tariff, warning of higher prices and job losses. Arizona Governor Katie Hobbs, a Democrat, said in a statement, “Donald Trump’s reckless trade war is raising prices, threatening our economic growth and killing jobs.”
“With his latest senseless decision to leave the Tomato Suspension Agreement, he is threatening to kill over 50,000 jobs between Arizona and Texas and forcing Arizonans to pay more at the grocery store, all to benefit Florida farmers. Arizona businesses and families will pay the price for this tax hike that is the latest step in the administration’s reckless trade war.”
Katie Hobbs
Mexico’s Economy and Agriculture Ministries Condemn Move
In a joint statement, Mexico’s economy and agriculture ministries condemned the move as “unjust” and “against the interests not only of Mexican producers but also of the US industry.”
The ministries said that gains made by Mexican fresh tomatoes in the US market are due to the quality of the product and “not to any unfair practices.”
They added that the tariffs would “only hurt American consumers’ wallets, as it will be impossible to replace Mexican tomatoes.”
Tim Richards, a Professor at the Morrison School of Agribusiness at Arizona State University, said that US retail prices for tomatoes will likely rise around 8.5% with a 17% duty.
Jacob Jensen, a Trade Policy Analyst at the American Action Forum, a right-leaning policy institute, opined that areas with a higher reliance on Mexican tomatoes could see price increases close to 10%, since it will be more difficult to replace that supply, while other parts of the US could see price increases closer to 6%.
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