The avocado industry of Mexico continues to trade with some uncertainty fearing that American consumers will ultimately pay higher prices if any new tariffs are applied on imports. This comes after a new 25% import tariff that was going to be imposed by U.S. President Trump on Mexico was delayed for 30 days after a deal was made with Mexico's President Claudia Sheinbaum. Natalia Merienne, founder of the brand Avocado Queen who are producers and importers of fruit and vegetables into the U.S. from Mexico, says, "The 25 percent tariff represents a significant burden for the industry. The reality is that produce margins in the US are far from 25 percent, meaning this increase would inevitably have to be transferred to the end consumer."
Natalia Merienne, founder of the brand Avocado Queen.
She says ultimately American consumers will end up paying higher prices as a result. "This would result in higher prices for avocados in the US market, potentially making them less accessible to consumers. Moreover, this issue is not exclusive to avocados as it applies to all fruits and vegetables imported from Mexico, which make up a significant portion of US supply," states Merienne.
Her company is based in the U.S. city of San Diego. They import several weekly loads of avocados and other fruits and vegetables. Avocado Queen works with Mexican growers and distributes their fresh avocados to all regions of the United States, including the West Coast, Midwest, Northeast, and Southeast.
Natalia selecting avocados with a grower in Mexico.
Despite the 30-day pause, there is still a real fear of the tariffs being expanded affecting the entire Mexican fruit industry. Just like the auto and other industries, the U.S. market relies heavily on Mexican fresh produce imports. "This measure will undoubtedly affect all agricultural imports, as they would face the same challenges. A 25% tariff is unsustainable for any segment in the produce industry, forcing higher costs onto consumers and disrupting established supply chains. It is also important to consider that the US does not produce enough of the imported items to meet domestic demand. As a result, purchasing from Mexico would remain inevitable for many of these products, further complicating the situation," explains Merienne.
The uncertainty around the impending news of the coming tariffs has already started to affect the industry on both sides of the border says Merienne. Given the long planning horizon in the fresh produce sector, Merienne warns of the longer-term effect of the punitive tariffs. "At the moment, production in Mexico remains stable, but exports are already being strained by the uncertainty surrounding these tariffs. Additionally, as we all know in the produce industry, planting projections are planned well in advance based on expected demand. This creates the risk of a surplus in the Mexican markets if US demand decreases, which could further disrupt market stability."
She also fears that higher-priced products will dampen consumer buying patterns and decrease demand for certain produce that will most likely be more expensive on shelves. "If the tariff is applied, it is inevitable that avocados and other fruits and vegetables imported from Mexico will become more expensive for American consumers. This could result in reduced demand, especially for items that are staples in many households but still considered discretionary purchases."
Merienne says the response from the Mexican Government is to have urgent dialogue before measures are implemented in reply. The Mexican Government agreed to increase border security and curb drug trafficking. However, despite a 30-day pause, many are still holding their breath to see if the U.S. will still go ahead with the tariffs or not.
"The Mexican government is actively engaging in dialogue to address this issue. They understand the critical importance of the agricultural industry, not only for Mexico's economy but also for maintaining strong trade relations with the US. However, concrete solutions or agreements have yet to be announced. We are closely monitoring the situation and hope for a resolution that minimizes the impact on both sides of the border," concludes Merienne.
For more information:
Natalia Merienne
The Avocado Queen
[email protected]
www.avocadoqueen.us