Agricultural economists and industry leaders warn that proposed tariffs by President-elect Donald Trump on imports from Mexico and Canada could significantly increase prices for various groceries, including fresh produce and alcohol, while potentially leading to shortages.
Key Highlights:
Import Reliance: Mexico and Canada are the top suppliers of agricultural products to the U.S., with imports valued at nearly $86 billion last year, according to USDA and Customs data. Tariffs could disrupt this vital supply chain.
Proposed Tariffs: Trump plans to impose a 25% tariff on all products from Canada and Mexico, aimed at curbing illegal immigration and drug trafficking. This could lead to higher prices at grocery stores and restaurants, with fewer items available.
Impact on Produce:
Approximately two-thirds of U.S. vegetable imports and half of fruit and nut imports come from Mexico. This includes nearly 90% of avocados, 35% of orange juice, and 20% of strawberries.
Avocado exports to the U.S. have surged 48% since 2019, with the U.S. accounting for about 80% of Mexico’s total avocado exports, a trade valued at $3 billion last year.
Economic Ramifications:
Alfredo Ramírez, governor of Michoacan, warns that tariffs would lead to an “inflationary spiral,” increasing costs and prices without reducing demand.
The hospitality industry could also suffer, as tariffs on tequila and beer could lead to higher prices for cocktails and affect job recovery post-pandemic.
Fertilizer Costs: Tariffs on Canadian fertilizer imports could exacerbate current cost issues, with farmers already facing nearly 50% higher fertilizer prices than in 2020.
Beef and Dairy Supply: Tariffs might slow the migration of over 1 million cows from Mexico to the U.S., potentially raising beef prices further. Conversely, domestic producers may benefit from reduced competition.
Trade Deficits: USDA projections indicate a potential agricultural trade deficit of over $42 billion by 2025, influenced by consumer demand for off-season produce and imported alcohol.
Negotiation Leverage: The threat of tariffs may serve as leverage in upcoming renegotiations of the USMCA trade deal, set for review in 2026. However, steep tariffs could damage the U.S.’s reputation as a reliable trading partner.