While the Department of Commerce announced plans Monday to withdraw from the 2019 Suspension Agreement on Fresh Tomatoes from Mexico, it’s not the end of the agreement, Texas International Produce Association President and CEO Dante Galeazzi points out.
Monday’s announcement starts a 90-day review of the agreement in which the Commerce Department will assess the value of keeping or leaving the agreement, Galeazzi said. The Commerce Department will interview the signatories of the suspension agreement to better understand the impacts of a withdrawal.
“If things can not be resolved by July 14, a dumping duty will be placed on tomatoes coming in from Mexico — this covers most all varieties for the fresh market — and that duty rate is going to vary for several companies. For most of the industry, it’ll be just slightly less than 21%,” he said.
Galeazzi said tomatoes coming from Mexico are a critical part of the vertical integration of fresh produce supply chains in North America, and such a move would disrupt an established supply chain that has been in place for more than three decades.
“Mexican tomatoes are responsible for roughly 30,000 jobs and several billion dollars of economic impact,” he said. “When you take a third of that away, that’s tough. How do you how do you survive when a third of your income or third of your supply is suddenly unable to access this intended market?
“What that also does is it makes these vertically integrated companies that are no longer going to have access to Mexican supply at the rates that they did — they’re not going to be able to satisfy the demands of the American market in the way in which they have over the last several decades,” he added.
Galeazzi said this will lead to a reduction in supply of tomatoes in the U.S. and a rapid escalation of tomato prices. He said a similar situation happened in 2024 when Mexican tomatoes were in short supply due to several hurricanes hitting the growing regions, which caused a rapid increase in tomato prices.
“For a long time, those tomatoes [post-hurricane] were trading in the 20s, and that’s impactful to the American consumer, who then has to pay higher prices to access their tomatoes,” he said.
Galeazzi said TIPA has advocated for the benefits of the suspension agreement, which he intends to continue to do during this 90-day period.
“American growers are benefiting from the agreement in the way that they have a surety of price, because when you establish a floor price for your foreign competitors, it means that the U.S. industry can already earmark what they know the lowest possible prices that foreign competitors can enter the market at,” he said. “That gives them an earmark that they can work with all year long, when establishing contracts that also gives them a competitive advantage, because if the market softens in an oversupply scenario, the U.S. entities have the ability to be more aggressive in their pricing, whereas Mexican suppliers cannot do that.”
Galeazzi said it’s important the industry advocates for the benefit of the value proposition in maintaining the agreement — in that importers that are U.S.-based employ U.S. citizens, work with U.S. banks, warehouse manufacturers, transportation providers, packaging providers, insurance providers and more.
“This ecosystem is dependent on the Mexican tomatoes being part of that vertically integrated supply chain,” he said. “When you withdraw the tomato suspension agreement, and you begin introducing a 21% duty on Mexican tomatoes, it’s going to limit the number of companies that can come in. That ecosystem is going to suffer and fall apart.”
Galeazzi said with a 21% duty rate on imported tomatoes, he doubts many fresh produce companies will be able to pay those duties for a lengthy period. He used the example of a produce company importing $65,000 of tomatoes with a tariff of about $13,650 per load, paid between 10-30 days after the load crosses. But, the amount owed would skyrocket with duty fees.
“Let’s say you’re a sizable tomato company and you’re bringing in 75 loads a week. Your bill for duties for one week is now $1.02 million. Multiply that by four-and-a-half weeks, you now have a monthly bill of $4.6 million on your duties,” he said. “I would suspect that there are not but a handful of companies that could tolerate being able to pay those duties over the long run.”
And Galeazzi said a U.S. consumer will eat roughly 19 pounds of fresh tomatoes a year because they’re affordable, but as seen with inflation, consumers often see fresh produce as a luxury and not a requirement.
“The perception is that fresh produce is expensive, and they don’t want to see it go to waste,” he said. “Once Americans move away from [produce], it is very, very difficult to get them back toward produce. That, in my opinion, is perhaps one of the single largest travesties that our industry is going to face.
“We saw a huge uptick in fresh produce consumption following COVID, and we lost a lot of that momentum in 2024. It took us a lot of time and a lot of messaging to make those increases we did,” he continued. “So, for us to continue to experience these challenges and now to have yet another challenge introduced that is likely to lead to less fresh produce consumption really does impact not just tomatoes, but I think it impacts all of the fresh produce consumption, and that ultimately, my opinion, will impact American health.”
What can fresh produce industry members do? Speak up, Galeazzi said.
“If you eat fresh tomatoes and you enjoy a variety of fresh tomatoes and you enjoy the prices you pay on your fresh tomatoes, what you need to do is you need to contact your elected officials,” he said. “Say, ‘Hey, I saw that the suspension agreement is being withdrawn from. That’s a mistake. You need to keep that suspension agreement in place because you need to continue to provide a sure, consistent and year-round supply of tomatoes.’”
Galeazzi said the messaging doesn’t have to be long or complicated, but it’s important to have representation outside of the typical states involved in suspension agreement conversations.
“Oftentimes, on this tomato issue, it’s really only Texas, Arizona and Florida that are having this conversation. We really need to make sure that more states, more elected officials are not only aware, but that they are speaking up,” he said. “By sending that message to your senators and your congressional reps and your elected officials, that tells them they need to be involved on this issue.”
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