New 21% Tariff Will Make Fresh Tomatoes More Expensive
Trump hopes you like tomato sauce!
The International Trade Administration (ITA), an agency within the Commerce Department responsible for facilitating trade agreements, announced on April 14 its withdrawal from a 2019 trade treaty with Mexico. Starting July 14, most Mexican tomato imports will face an import duty of nearly 21 percent. President Donald Trump promised to deliver price relief for American families on inauguration day, but this action will ensure that Americans pay more for the fresh tomatoes used in so many staple recipes.
The Commerce Department signed an Agreement Suspending the Antidumping Investigation on Fresh Tomatoes from Mexico and those producers and exporters "accounting for substantially all imports of fresh tomatoes from Mexico" in September 2019. The agreement terminated the investigation begun by the department in April 1996 as to whether fresh tomatoes from Mexico were being sold in the U.S. at "less than fair value." Mexican tomato exporters and the Commerce Department agreed to suspend the investigation in 1996, 2002, 2008, 2013, and, most recently, in 2019 in exchange for Mexican exporters agreeing to sell their tomatoes "at or above the established reference price" to "prevent the suppression or undercutting of price levels of domestic fresh tomatoes."
The Commerce Department said the agreement "failed to protect U.S. tomato growers from unfairly priced Mexican imports." The ITA defines unfair prices as those "below the cost of production or below prices in…home markets." Antidumping duty orders "provide American businesses and workers with a mechanism to seek relief from the harmful effects of [such] unfair pricing." The agency does not acknowledge that this mechanism works by increasing the price of imports, so they are more expensive than domestically produced tomatoes.
Whether or not the government thinks the agreement was "fair," it undeniably failed to eliminate Mexico's majority share of the American fresh tomato market. Four years after the agreement was signed, Mexico accounted for 85 percent ($2.8 billion) of the $3.3 billion worth of tomatoes imported to the United States. American tomatoes produced for the fresh domestic market amounted to only $716 million: a quarter of the value of Mexican imports and a little more than a fifth of total imports.
There is nothing unfair about Mexican farmers selling American consumers tomatoes at prices significantly lower than American producers are able to (or would like to) provide. What's unfair is U.S. tomato growers successfully lobbying the Department of Commerce to increase the price of breakfast, lunch, and dinner for every tomato-eating American.
