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US faces potential tomato shortage, price hikes from tariffs
Dive Brief:
Dive Insight:
With more than 50% of tomatoes sold in the U.S. coming from Mexico, U.S. food manufacturers like Heinz, Del Monte Foods and Campbell Soup may soon be feeling the pinch. In addition to the 17.5% tariff, President Trump announced late Thursday that the U.S. would impose an additional 5% tariff on all Mexican products unless the Mexican government stops migrants from crossing the border. That tariff would go to 10% on July 1 and then increase 5% each month for the next three months.
If all the tariffs stay in place, manufacturers will likely have to weigh whether to absorb the cost or pass it on to the consumer. Many are likely already rethinking their supply plan to minimize the fallout. What may help keep costs lower temporarily is that tomato season is ramping up in the U.S., but if the impasse continues through the winter, prices may jump 40% to 80%, according to the Arizona Republic.
There is a wider economic impact as well. According to a University of Arizona study from 2018, imported fresh Mexican tomatoes contribute 33,000 jobs, $4.8 billion in sales and $2.9 billion in gross domestic product to the U.S. economy in direct, indirect and induced multiplier effects.
Nevertheless, U.S. tomato growers might be fine with the current tariff since fewer Mexican imports may challenge their business. The Florida Tomato Exchange, a growers' trade group, has been increasingly feeling the pain since its U.S.-grown products once comprised most of the fresh tomatoes available in winter and spring months.
As NPR noted, Florida tomato producers have been losing out to Mexico during the past 20 years. One reason may be that Florida tomatoes are often picked green and artificially ripened with ethylene gas, while Mexican ones are sometimes vine-ripened or sold on the vine, potentially leading to better flavor.
For consumers, it may be difficult to find reasonably priced fresh tomatoes or substitutes for them. The big winners could be frozen or canned tomato products, which are available pretty much anytime and may be able to stand in for the fresh product — at least until the tariff situation is resolved and/or the U.S. crop comes in this summer and fall.
Dive Brief:
- U.S. consumers will see fewer Mexican tomatoes and at higher prices in 15 days due to the 17.5% tariff imposed on imports May 7 by the Trump administration, according to Alfredo Diaz, director general of the Mexican Association of Protected Horticulture.
- Costs stemming from the tariff are challenging Mexican tomato producers, he added. Some smaller producers have already trimmed exports to the U.S., while medium and large ones are continuing to send tomatoes to the U.S. at their normal rate.
- Mexico Daily News also reported that country's share of the U.S. tomato market has increased from 32% in 1996 to 56% in 2017.
Dive Insight:
With more than 50% of tomatoes sold in the U.S. coming from Mexico, U.S. food manufacturers like Heinz, Del Monte Foods and Campbell Soup may soon be feeling the pinch. In addition to the 17.5% tariff, President Trump announced late Thursday that the U.S. would impose an additional 5% tariff on all Mexican products unless the Mexican government stops migrants from crossing the border. That tariff would go to 10% on July 1 and then increase 5% each month for the next three months.
If all the tariffs stay in place, manufacturers will likely have to weigh whether to absorb the cost or pass it on to the consumer. Many are likely already rethinking their supply plan to minimize the fallout. What may help keep costs lower temporarily is that tomato season is ramping up in the U.S., but if the impasse continues through the winter, prices may jump 40% to 80%, according to the Arizona Republic.
There is a wider economic impact as well. According to a University of Arizona study from 2018, imported fresh Mexican tomatoes contribute 33,000 jobs, $4.8 billion in sales and $2.9 billion in gross domestic product to the U.S. economy in direct, indirect and induced multiplier effects.
Nevertheless, U.S. tomato growers might be fine with the current tariff since fewer Mexican imports may challenge their business. The Florida Tomato Exchange, a growers' trade group, has been increasingly feeling the pain since its U.S.-grown products once comprised most of the fresh tomatoes available in winter and spring months.
As NPR noted, Florida tomato producers have been losing out to Mexico during the past 20 years. One reason may be that Florida tomatoes are often picked green and artificially ripened with ethylene gas, while Mexican ones are sometimes vine-ripened or sold on the vine, potentially leading to better flavor.
For consumers, it may be difficult to find reasonably priced fresh tomatoes or substitutes for them. The big winners could be frozen or canned tomato products, which are available pretty much anytime and may be able to stand in for the fresh product — at least until the tariff situation is resolved and/or the U.S. crop comes in this summer and fall.
