With Cinco de Mayo festivities just around the corner, an important trade issue hangs over the celebration. The U.S. government is about to slap a near 21% import tariff on fresh tomatoes from Mexico starting this July 14. The consequences of this decision have the potential to profoundly alter the culinary landscape. Are you ready to discover how Mexico increased its share of the U.S. tomato market from around 30% to nearly 70% over the past two decades?
This proposed duty will hit the 4 billion pounds of tomatoes we import from Mexico each year. This sudden shift, though, has both restaurant owners and diners up in arms. The U.S. fresh market tomato industry is very much reliant on these imports to meet their consumer demand. Adrian Burciaga, who owns a restaurant that uses 300 to 400 pounds of Roma tomatoes from Mexico weekly, expressed his apprehension regarding the upcoming duty.
“This is making it difficult to run my business,” Burciaga stated. He emphasized that the flavors brought by Mexican tomatoes are essential for traditional dishes, saying, “We know the flavors they are going to bring to the salsas and moles. We don’t want to compromise flavors.”
Agricultural economist Tim Richards calculates that wages for workers on Mexican tomato farms average $1.698 an hour. He even goes so far as to predict that if the duty is put in place, U.S. retail prices for tomatoes may increase by about 10.5%. This increase would only serve to deepen the already thin profit margins that characterize the produce industry.
Tomatoes for example, are an extremely labor-intensive crop. Robert Guenther makes it clear that the U.S. industry is in deep peril without immigrant workers, who enter the industry through the H-2A visa program. He explained, for example, that it takes 40% to 50% less to grow tomatoes in Mexico than it does to grow them in the U.S. This extreme difference begs the question of the long-term sustainability of U.S. fresh tomato growers.
In the U.S., Florida and California are the two biggest commercial tomato-growing states. The vast majority of California’s tomatoes go into canned sauces and other processed goods. Lance Jungmeyer pointed out that Florida does not produce the vine-ripened tomatoes that U.S. consumers increasingly prefer. That would create a wide-open market that would be tough to compete in if tariffs are put in place.
The ambiguity on how these changes would play out has created an atmosphere of cautiousness among restaurant operators. Burciaga remarked on the challenges of budgeting for small and medium-sized restaurants: “The uncertainty part concerns us. For a small or medium independent restaurant that weighs everything financially. Because we know ahead of time that in six months everything is going up, we can plan for that change.” He continued, “We don’t know these things ahead of time. Between the two is where you can distinguish between how you plan versus how you respond.
Skip Hulett, one of Hizzoner’s partners-in-cuisine and a fellow restaurateur, was born to the idea that establishments need to evolve or die. “We will look for ways to adapt or streamline our operations, but the truth is, we are always doing that so we run an efficient business already,” he explained. He highlighted the difficulty of absorbing increased costs in a low-margin industry: “Produce is not a large-margin business. We’re still in the process of determining just how much of the significant additional cost we can absorb. Of course, we’re going to have to pass all of these incurred costs to the customer.”
The consequences of this obligation go well beyond short-term rent hikes. Guenther warned that unless there is a level playing field regarding pricing, the domestic fresh tomato industry may face an uncertain future: “Unless we even the playing field in terms of fair pricing, you’re not going to have a domestic industry for fresh tomatoes in the very near future.”
To counter the effects of the trade war, Mexican President Claudia Sheinbaum is moving to prevent an escalation of US-Mexico tensions. More recently, she has proposed duties on U.S. chicken and pork leg imports as retaliation. While negotiations are still underway between the two countries, advocates on all sides can only hope for an agreement that meets everyone’s needs.
