The certainty of stable trade relations between the U.S. and Mexico seemed to be evaporating in early June.
U.S. importers of Mexican tomatoes have dealt with the reality of a 17.56% duty on Mexican tomatoes since the May 7 lapse of the suspension agreement between the Commerce Department and Mexican tomato growers.
Drawing criticism from his own party, President Trump set a June 10 deadline on whether to apply a 5% tariff on all imports from Mexico.
Trump initially threatened the first of a series of escalating tariffs on Mexican goods if the country doesn’t do more to stop undocumented migrants crossing to the U.S.
“If Mexico does not take decisive measures, it will come at a significant price,” Trump said in a May 30 statement from the White House.
Mexican officials spoke with Trump administration officials June 5 but failed to reach a breakthrough. Talks were expected to continue.
If no resolution is reached between the U.S. and Mexico on border control issues, Trump says the tariffs will be hiked to 10% on July 1, 15% on Aug. 1, 20% on Sept. 1 and 25% by Oct. 1.
The potential tariffs were drawing television network news crews to Nogales, Ariz., where tons of vegetables cross into the U.S. daily, said Jaime Chamberlain, president of Chamberlain Distributing Inc. in Nogales.
Chamberlain was interviewed by CNN June 5.
“It’s pretty crazy down here,” he said.
Crossings of Mexican produce into Nogales in early June included heavy shipments of watermelons and grapes.
“We’re right in the middle of everything, so a 5% tariff increase is fairly imminent and we should take the threat seriously,” he said. “If it’s 5%, it could go up to 10% or 15% — who knows what’s going to happen?”
Chamberlain said he strongly opposes Trump’s tactics.
“Mexico is our No. 1 trading partner and there is $650 billion worth of trade going back and forth,” he said.
If the tariff does take effect, Mexico will likely respond with retaliation against U.S. imports, Chamberlain said.
“Do we really think that Mexico’s going to just stay quiet and not put mirror tariffs on 5% (of U.S. exports)?,” he asked. “There’s most likely going to be retaliation.”
And for tomatoes, adding a %5 tariff to an existing duty of 17.56% would make imports that much more difficult, he said.
While the company will still distribute Mexican tomatoes, Chamberlain said the 17.56% duty has convinced his and other firms not to be a direct importer of Mexican tomatoes to avoid the responsibility of paying the high duty.
Trump’s threats for a new tariff were criticized by the Fresh Produce Association of the Americas, which represents importers and distributors of Mexican produce.
If the 25% tariff level is reached in October, Americans will be paying an extra $3 billion for avocados, tomatoes, mangoes and other fruits and vegetables, the group said in a news release.
“This is a tax on healthy diets, plain and simple,” FPAA president Lance Jungmeyer said in the release.
“With the obesity epidemic, this is completely unacceptable and counterproductive in dealing with the migrant issue at hand.”
The Produce Marketing Association said the issue could derail approval of the U.S.-Mexico-Canada Agreement.
“We urge the U.S. administration and the Mexican government to take immediate action to approve USMCA and remove all tariffs to preserve predictability and transparency in the marketplace,” PMA said in a statement.