The United States and Mexico have a complex tomato trade relationship. Supplies from our southern market are vital to meet U.S. demand. However, since the 1990s, Mexico tomato imports have climbed some +400%, an increase that U.S. growers says amounts to “dumping.” Now, the U.S. is pulling out of a decades old trade agreement and slapped a 21% tariff on fresh tomato imports from Mexico. While it could be a victory for U.S. tomato growers, the move also threatens supply shortages and price hikes for U.S. consumers.
Historically, tariffs on imports of Mexican tomatoes were in place to protect U.S. tomato producers but the North American Free Trade Agreement (NAFTA) signed in 1992 gradually eliminated tariffs on Mexican tomatoes. In 1996, the US tomato industry filed a petition to the United States Department of Commerce (USDC) to initiate an antidumping investigation into Mexican tomato imports.
Negotiations led to the Tomato Suspension Agreement (TSA) signed in 1996 that suspended the antidumping investigation but set a floor price for tomatoes imported from Mexico. The agreement’s intent was to ensure there was no undercutting or suppressing of fresh market tomato prices in the United States. The agreement has been renegotiated multiple times over the years, most recently in 2019, under President Trump’s first administration.
In 2023, the U.S. tomato industry petitioned the Commerce Department once again. The Florida Tomato Exchange contends that Mexican tomato companies have continued to dump product into the U.S. market, undercutting U.S. growers and circumventing enforcement mechanisms. The Exchange points to the fact that Mexico now supplies around 70% of the U.S. market, up from just 20% in 1996. Meanwhile, U.S. suppliers’ share of the market has plunged from around 80% to just 30% today.
“The tomato suspension agreement failed American farmers,” said Robert Guenther, executive vice president of the Florida Tomato Exchange. Guenther said the Exchange and other industry members have long argued that the agreement was not enforceable and allowed for widespread evasion.
In April, the Commerce Department announced that it would withdraw from the 2019 TSA. Starting in July, the U.S. will additionally begin imposing a 21% antidumping duty on fresh tomatoes. Notably, the duties apply only to fresh tomatoes, not “processing” tomatoes, which are used for making tomato paste, canned or stewed tomatoes and tomato sauce.
An economic study released by Arizona State University says ending the TSA would raise consumer prices by as much as 50% on a variety of fresh tomatoes, including cherry, grape, greenhouse, roma, and vine-ripe. Guenther and the Florida Tomato Exchange disagree, equating such claims to scare tactics.
The Arizona State study also found that the loss of Mexican tomato imports would decrease economic activity in Arizona by almost $3.4 billion, while Texas would lose $4.53 billion.
Many tomato industry insiders think the agreement will ultimately be renewed. Texas International Produce Association President and CEO Dante Galeazzi said that this is similar to what has happened every five years when the Commerce Department conducts a “sunset review” of the agreement, where parties can agree to withdraw, negotiate or maintain the current agreement.
“If you look at what happened in 2018 into 2019, the Department of Commerce initiated the intention to withdraw,” he said. “We had tariffs for a small time frame, and then everybody came to the table and a new deal was hammered out, and hence, the 2019 tomato suspension agreement. (Sources: The Packer, Reuters, Texas Border Business)