During the festivities of Cinco de Mayo, a potential tax on Mexican tomatoes hangs over the horizon

Tensions over tomatoes are heating up! U.S. tomatoes might get a leg up with a potential import tax, but salsa lovers could be left sucking on an empty chip bag.

President Trump has put the brakes on tariffs on Mexican avocados for the time being. However, a nearly 21% duty on fresh tomatoes from Mexico is set to start on July 14. This tax on imports, like a tariff, could impact the 4 billion pounds of tomatoes imported annually from Mexico.

Backers of the duty claim it's a move to revamp the dwindling U.S. tomato industry and ensure that tomatoes consumed in the U.S. are homegrown. Mexico supplies about 70% of the U.S. tomato market, a figure that's climbed from 30% two decades ago according to the Florida Tomato Exchange [3].

"Unless we even the playing field in terms of fair pricing, you're not going to have a domestic industry for fresh tomatoes in the very near future," said Robert Guenther, the executive vice president of the Florida Tomato Exchange [1]. Florida and California are the main U.S. players when it comes to tomatoes, but most of California's tomatoes are turned into sauces and other products.

Detractors warn that the duty will lead to pricier fresh tomatoes for U.S. buyers. NatureSweet, a San Antonio-based company that grows tomatoes in Mexico as well as the U.S., says it'll be shelling out millions of dollars each month in duties if the decision isn't reversed [1].

"We will look for ways to adapt or streamline our operations, but the truth is, we are always doing that so we run an efficient business already," said Skip Hulett, NatureSweet's chief legal officer [1]. "Produce is not a large-margin business. We're determining what portion of the cost we could absorb, but these added costs will most certainly need to be passed on to the consumer."

Tim Richards, a professor at the Morrison School of Agribusiness at Arizona State University, expects U.S. retail prices for tomatoes to climb around 10.5% if the duty goes through [2].

Mexico's government said last month it was optimistic it could negotiate over the issue. But if the tomato tax comes to pass, Mexican President Claudia Sheinbaum has hinted that her country may slap duties on chicken and pork legs imported from the U.S [1].

The battle over tomatoes' territories has a long history. In 1996, shortly after the North American Free Trade Agreement went into effect, the U.S. Department of Commerce probed allegations that Mexico was exporting tomatoes to the U.S. at artificially low prices [2]. The U.S. government agreed to suspend the investigation if Mexico met certain rules, including selling its tomatoes at a minimum price. Since then, the agreement has been subject to periodic reviews, but the two sides always reached an agreement that avoided duties [2].

However, last month, the Commerce Department announced its withdrawal from the latest agreement, saying it had been “flooded with comments” from U.S. tomato growers who want better protection from Mexican imports [1].

Durbin writes for the Associated Press. AP writer Maria Verza in Mexico City contributed to this report.

Interesting Facts

Tomatoes are a labor-intensive crop, with the U.S. industry usually relying on immigrant workers through the H-2A visa program. Workers in Mexican tomato farms earn about one-tenth of what U.S. workers are paid [3].
The tomato duty, and the threat of Trump implementing the paused 25% tariff on many other products from Mexico, are making it difficult for restaurants like Don Artemio, an upscale Mexican restaurant in Fort Worth, to run their business [1].

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The proposed tariff on fresh tomatoes from Mexico could lead to increased average prices for U.S. consumers, predicts Tim Richards, a professor at the Morrison School of Agribusiness at Arizona State University.
Alexander Guenther, the executive vice president of the Florida Tomato Exchange, argues that the tariff is crucial for revamping the dwindling U.S. tomato industry, ensuring that tomatoes consumed in the U.S. are homegrown.
In the California culture, specifically in Los Angeles, restaurants like Don Artemio are facing difficulties in running their business due to the tomato duty and the possible implementation of paused tariffs on other products from Mexico.
To counter the potential increased costs from tariffs, nature-focused businesses like NatureSweet might need to adapt their operations, as suggested by Skip Hulett, the company's chief legal officer.
The California climate, ideal for tomato cultivation, contributes to the state's role as one of the main U.S. players in the tomato industry, with most of its tomatoes used to create sauces and other products.
The government of Mexico has expressed optimism in negotiating over the tariff issue, but if unresolved, President Sheinbaum may retaliate by imposing tariffs on chicken and pork legs imported from the U.S.