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Tomato costs could see an uptick if the trade deal between the U.S. Commerce Department and Mexican tomato exporters ends next week as planned.
For instance, major U.S. tomato importer NatureSweet Ltd. confirmed to FOX Business that it may raise prices by nearly 10% if the trade deal is terminated. If the deal ends, there will be a levy of more than 20% on tomato exports starting July 14, according to the U.S. Department of Commerce.
CEO Rodolfo Spielmann said in an interview with Bloomberg News that, given its thin margins, “there’s no scenario” where the company can “absorb those tariffs.”
A worker harvests branches of cherry tomatoes inside a greenhouse at the NatureSweet production facility in Bonita, Arizona. (Watts For The Washington Post via Getty Images) / Getty Images)
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The company is among the largest tomato distributors in North America. Its products are widely available across major U.S. retailers, including Walmart, Kroger, Sam’s Club and Whole Foods.
“While we remain optimistic that the administration will strike the right deal and avoid price increases, as a Texas-based U.S. company in a low-margin business, we will really have no choice but to raise prices by close to 10% in order to be able to continue bringing our healthy vine ripe specialty tomatoes to our consumers,” NatureSweet said in a statement to FOX Business.
A table full of fresh vegetables at a grocery store. (iStock / iStock)
“We will work hard to absorb what we can, but the reality is we can only absorb a portion of the duties if they go into effect without modernizing the agreement to address the current tomato industry,” the company added.
Walmart told FOX Business that “regardless of the external environment” it remains “committed to keeping fresh produce accessible.”
FOX Business reached out to Kroger and Whole Foods for comment.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| WMT | WALMART INC. | 94.86 | -1.95 | -2.01% |
| KR | THE KROGER CO. | 70.71 | +0.45 | +0.64% |
| AMZN | AMAZON.COM INC. | 222.26 | -0.28 | -0.13% |
The 2019 Tomato Suspension Agreement – an updated version of the truce created in 1996 – is a trade deal between the U.S. Department of Commerce and Mexican tomato exporters that essentially allowed Mexican growers to avoid the hefty tariff on fresh tomato imports by agreeing to sell their tomatoes at or above a minimum price and adhering to specific labeling and sales rules.
It was put in place in an effort to protect American farmers from unfair competition while also ensuring a steady supply of the product.
The Department of Commerce announced in April that it was planning to terminate the agreement after officials said it “failed to protect U.S. tomato growers from unfairly priced Mexican imports.”
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An antidumping duty order is set to take effect on July 14, resulting in duties of 20.91% on most imports of tomatoes from Mexico.
Tomato costs could see an uptick if the trade deal between the U.S. Commerce Department and Mexican tomato exporters ends next week as planned. (Artur Widak/NurPhoto via Getty Images) / Getty Images)
The U.S., though, is heavily reliant on Mexican supplies, which can account for as much as 93% of U.S. tomato imports during seasons when domestic production is lower, according to the U.S. Department of Agriculture.
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Depending on how tariffs impact the supply chain, some experts have warned prices could rise as much as 50%, according to Food & Wine.
The Fresh Produce Association of the Americas said in a statement that with the pending termination of the Tomato Suspension Agreement and implementation of duties, “U.S. companies are left to wonder if they can continue to supply consumers with the vine-ripened tomatoes people demand at affordable prices.”
The group is urging the administration to negotiate a new tomato agreement “that supports the innovations of U.S. importers, continues to fill the demands of U.S. consumers, and that helps domestic growers improve their ability to compete, via research, innovation, and improved varieties rather than through duties on their U.S. competitors in Arizona, California, Texas, and elsewhere.”
