US tomato prices expected to go up following new tariffs

Florida growers have long worried about heavily subsided tomato crops imported from Mexico being sold in the United States at substantially lower prices. This practice, known as dumping, puts local producers at a disadvantage due to their inability to compete with imported tomato prices.

In March 2013, the U.S. Department of Commerce (USDOC) and producers/exporters of fresh tomatoes grown in Mexico signed an agreement to suspend antidumping investigations on the basis that Mexican growers agree to export their produce at or above the stipulated reference price.

Despite these agreements, U.S. lawmakers and produce growers say that the deal has failed, as tomato sales in the U.S. continue to drop considerably. The Florida Tomato Exchange states that the market share of Mexican tomato companies rose from 32% to 54% between 1996 and 2017, while the market share of U.S. producers dropped from 65% to 40% during the same period.

Maintaining market competition
In a bid to maintain market competition and protect domestic growers from unfair trading practices, the USDOC formally terminated the 2013 Suspension Agreement on Fresh Tomatoes from Mexico. As a result, the committee will resume anti-dumping investigations while imposing new tariffs on the import of Mexican-grown tomatoes.

Following the termination of the Suspension Agreement, a 17.5% tariff on all imported Mexican tomatoes took effect on May 7, 2019. The tariff is expected to raise the minimum acceptable sale price of chilled or fresh tomatoes imported to the U.S. from 21.69 cents per pound to 31 cents per pound. This decision has, understandably, garnered polarizing reactions from stakeholders, with U.S. growers in favor of and U.S. importers against the termination.

Source: thomasnet.com


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