CONSUMER ALERT: Tomato prices expected to nearly double, study says
The U.S. Department of Commerce previously announced its plans to end its tomato trade agreement with Mexico last May. But, according to a new analysis, this move could lead to a price increase and reduced supply of tomatoes.
The trade agreement from 1996 created a price floor for imported Mexican tomatoes, and the U.S. could reintroduce tariffs on Mexican tomatoes if the agreement is ended. The withdrawal from this agreement could lead to an approximately 40% price increase on tomatoes, according to an analysis released last week by Arizona State University economists.
According to the Border Trade Alliance, Timothy Richards, Arizona State's Morrison chair of agribusiness, said the prices of certain varieties of tomatoes could potentially rise to up to 80%, especially during the winter or a crop failure.
“Ultimately, U.S. consumers pay for the lion’s share of the tariff impact because the demand for tomatoes in the U.S. is relatively inelastic, meaning that consumers do not change how much they purchase in response to higher prices,” Richards said
However, tomatoes would not be the only food affected. Luis Ribera, an agricultural economist at Texas A&M University, told Austin, Texas, radio station KUT that other products could also be affected by tariffs because they are frequently purchased with tomatoes.
“Look at pizza,” Ribera told KUT. “You’ve got tomatoes, pizza sauce, cheese and wheat products. So there’s going to be some ripple effect on other products.”
After tomato growers and U.S. lawmakers accused Mexico of unfair trade practices. Secretary of Commerce Wilbur Ross said in February that the U.S. withdrew from the agreement to protect farmers and ensure free trade, according to CNBC.
“We have heard the concerns of the American tomato producing industry and are taking action today to ensure they are protected from unfair trading practices,” Ross said in a written statement. “The Trump Administration will continue to use every tool in our toolbox to ensure trade is free, fair, and reciprocal.”