Consumer tomato prices might rise in July as battle with Mexico heats up

The U.S. Department of Commerce is scheduled to announce in July whether it will impose tariffs on tomatoes imported from Mexico, which is accused of dumping them at below-market costs in the United States. Photo by kie-kicker/Pixabay

May 23 (UPI) -- Mexico has the market cornered on tomato imports in the United States, and that has the U.S. Department of Commerce considering imposing tariffs to protect domestic tomato growers.

Commerce officials anticipate that could come in July, depending on an examination of evidence that suggests Mexico is dumping tomatoes in the U.S. market.

The change might mean levying a tariff on Mexican tomatoes, which are sold at an average cost 20.91% lower -- and sometimes 30% lower -- than the fair market price, according to federal and tomato industry studies.

The practice seems to have been going on for decades. A 1996 review of tomato prices showed Mexico dumped tomatoes in the U.S. market then for as much as 188% lower than the national market price.

Mexico subsidizes its tomato growers, which enables its growers to undercut prices in the U.S. tomato market.

If the Commerce Department imposes a tariff on Mexican tomatoes, consumers can expect an average price increase of 21% and possibly more for vine-ripened tomatoes and other tomato products imported from Mexico.

With fresh tomatoes on the vine selling for about $2 a pound in retail markets, that means the retail price could rise to $2.20 a pound, hitting consumers in the pocketbook. Manufacturers who use tomatoes in their products also would face higher costs, which they often pass on retailers.

Mexico accounts for more than 90% of all U.S. tomato imports, according to an Aug. 24 economic impact analysis published by Texas A&M researchers.

In 2022, Mexico exported 1.81 million metric tons of tomatoes to the United States with a wholesale market value of $2.48 billion, according to the researchers, and the retail value of those tomatoes was estimated at more than $5.98 billion.

The imported Mexican tomatoes directly and indirectly support an estimated 49,128 full- and part-time jobs, U.S. government figures show.

Many say there's ample proof that Mexico is dumping its tomatoes at below-market rates to the detriment of U.S. growers and farming communities. U.S. Sen. Rick Scott, R-Fla., is one of them.

"Mexico's tomato dumping has hit small family operations particularly hard," Scott said in Dec. 15 letter to U.S. Commerce Secretary Gina Raimondo.

He said Mexican tomato growers are exploiting free market agreements that waive tariffs on their tomatoes, which is harming U.S. growers and those whose livelihoods depend on a robust domestic tomato industry.

"The impacts have been profoundly damaging to rural economies," Scott told Raimondo. "The domestic industry will face further material injury if necessary actions are not taken."

The Florida Tomato Exchange also wants tariffs imposed on Mexican tomatoes.

The exchange represents growers who produce more than 90% of Florida-grown tomatoes, and growers in 13 states are members of the Florida Tomato Exchange.

Exchange members include some of the largest tomato growers in California, Georgia, New Jersey, North Carolina, South Carolina, Tennessee, Virginia and other states.

The Florida Tomato Exchange members account for about half of the nation's fresh-market tomatoes, which makes it a potent lobbying force on behalf of the nation's growers.

Those tomato growers want tariffs placed on tomatoes imported from Mexico.

If federal officials don't intervene, the American Farm Bureau Federation says U.S. tomato growers and many communities will suffer significant harm.

"The Department of Commerce determined that Mexico had continued dumping tomatoes in the U.S. market, and the International Trade Commission made a determination that the domestic industry had been injured," American Farm Bureau President Zippy Duvall said in a Sept. 8 letter to Raimondo.

Duvall said Mexican tomato imports have risen by nearly 400% since 1994 and account for two-thirds of the U.S. tomato market.

"During that time, the U.S. industry's market share has dropped from 80% to around 30% today," Duvall said. "American tomato growers across the country have been forced out of business."

He said the federal government needs to intervene and enforce current trade laws while developing policies that help domestic growers survive.

U.S. Sen. Cory Booker, D-N.J., says the nation's food and economic security are at risk because of Mexico's dominance of the nation's tomato market.

"For our nation's food security and the strength of our economy, we must prioritize the autonomy of domestic farmers and end unfair trade practices that drive small farms out of business and exacerbate consolidation in the foot system," Booker said in a Nov. 14 letter to the Commerce Department.

"Family farmers are the heart and soul of our agricultural landscape, contributing to our economy, food security and the resilience of our food supply chains," Booker added.

Many lawmakers and tomato growers in the United States favor imposing tariffs on Mexican tomatoes. But that sentiment isn't shared in Arizona.

Arizona Senate Pro Tempore Thomas Shope, a Republican, on Feb. 15 read a proclamation in the Senate chamber calling on the Department of Commerce to keep the 2019 suspension agreement in place and leave Mexico's tomato exports to the U.S. alone.

"Arizona and its business community have a long history of bilateral trade and cultural ties with Mexico," Shope said.

"Should the [Commerce Department] proceed with the termination of the agreement, all U.S. companies importing tomatoes would be subject to a 20.91% tariff that must be paid on each shipment of tomatoes."

He said the about 21% rate increase on tomatoes would cause "severe economic harm to Arizona businesses, Arizona jobs and the Arizona economy."

Arizona Gov. Katie Hobbs agreed.

"Arizona companies have led the way in innovation," Hobbs said in a letter to Commerce Department officials.

"Our companies have diversified how they do business to bring U.S. consumers high-quality vine-ripe tomatoes," she said, and those companies "know that to thrive, they have to evolve."

Arizona's congressional delegation also supports maintaining the open market, as does the head of the Fresh Produce Association of the Americas.

Placing a tariff on Mexican tomatoes would cause "severe economic repercussions" and impose "punitive duties that would increase tomato prices for consumers," association President Lance Jungmeyer said in a Sept. 28 news release.

Commerce Department officials, in an email to UPI, said they are weighing the pros and cons of placing a tariff on Mexican tomatoes.

The Commerce Department's International Trade Administration is analyzing the nation's tomatoes market and trade with Mexican tomato producers.

The ITA is scheduled to report its findings to the Commerce Department on July 8, if the deadline isn't extended.

Commerce officials don't have a timeline for making a final decision regarding the potential for imposing a tariff on tomatoes grown in Mexico and exported to the United States.

If a tariff is imposed, that might help domestic tomato growers regain market share from Mexico.