End of tomato agreement triggers 17.5% tariff

Dive Brief:

A 17.5% tariff on Mexican tomatoes took effect Tuesday after the U.S. Department of Commerce formally terminated the 2013 Suspension Agreement on Fresh Tomatoes from Mexico. The Department gave notice of the decision on Feb. 6.
The agreement raised the minimum acceptable sale price for fresh or chilled tomatoes exported from Mexico to the U.S. not intended for processing from 21.69 cents per pound to 31 cents per pound. The tariffs were automatically triggered by the deal's termination as was the resumption of an investigation into dumping practices by Mexican exporters.
Negotiations between the U.S. and Mexico are ongoing. The tariff will be collected as cash or bond by Customs and Border Protection (CBP) while negotiations continue and may be returned depending on the result of discussions, according to a press release from Commerce. U.S. Commerce Secretary Wilbur Ross said in a statement he remains "optimistic that there will be a negotiated solution." The tariffs will remain in place until a new deal is reached.

Dive Insight:

The two sides of this debate — U.S. importers against the termination and U.S. growers in favor — are still holding their corners, but the governmental players on both sides seem somewhat confident a resolution will come eventually.

"We’re very disappointed but the good news is that negotiations continue, looking for a solution," Mexican Deputy Economy Minister Luz Maria de la Mora told Reuters. "And we hope that in the coming weeks we can in fact reach an agreement."

In the meantime,tomato prices are likely to rise for U.S. consumers. An Arizona State University analysis —promoted by the Fresh Produce Association of America (FPAA), which is a strong opponent of the termination — found tomato prices for American consumers could rise 40-85%.

"The tomato industry is healthy today because of the pioneering U.S. companies that import produce from Mexico," the FPAA argued in a release, adding American appetite for tomatoes and advanced growing practices are products of Mexico. There are several new proposals from Mexican growers on the table before the Commerce Department, according to FPAA.