President Donald Trump recently announced a 10% tariff on goods coming from more than 50 countries, adding that the U.S. will impose higher reciprocal tariffs for countries that have a larger trade deficit.
While this will affect the fresh produce industry, imported produce that falls under the U.S.-Canada-Mexico Agreement would continue tariff-free, including fresh fruits and vegetables. Texas International Produce Association President and CEO Dante Galeazzi says as long as the fresh produce is grown in Mexico or Canada, it will not be subject to these tariffs.
“The important thing to know, and this is what I was trying to clarify to my members, is that the executive order for the International Emergency Economic Powers Act of 1977 against fentanyl migration is still in place,” he says. “So at any point this 0% could change, but as of right now, it doesn’t look like it. It looks like we’re going to go down this path of the 0%.”
For the rest of the world, there is a bigger impact on imported fruits and vegetables to the U.S., Galeazzi says.
“What we saw for the rest of the countries ... essentially, we saw a baseline of 10% tariff fee introduced on all countries with about a dozen or so other countries, which are going to have a higher tariff rate than that 10%,” he says.
Galeazzi says while there’s a fair amount of uncertainty surrounding the future of tariffs, he encourages fresh produce businesses to monitor how the U.S. speaks about its partnerships with Mexico and Canada, as that’s an indicator of what’s down the road and the USMCA renegotiations that will start late this summer.
“We need to be, as an industry, part of those conversations, because those conversations are going to dictate the terms of business between our three countries,” he says. “We don’t want to be left trying to make changes after those ideas have already been signed into law. We need to be part of those conversations to make sure that we are working with all the countries, all the entities and all the authorities who are going to govern fresh produce movement across North America.”
Though produce businesses in Canada and Mexico might have a tariff reprieve, that could change at any moment, and the produce industry should be prepared, Galeazzi says.
“Take the time to write the [standard operating procedure] for how you would do valuations, how you intended to handle tariffs. Make sure that it’s well done,” he says. “Make sure that folks have access to it, and then stash that away somewhere so that way you can tap on it in a moment’s notice and activate it if you do need it.”
