Yesterday afternoon, President Trump confirmed his decision to implement a 25 percent tariff on goods imported from Mexico and Canada, as well as an additional 10 percent tariff on Chinese goods. The three countries are the US' largest agricultural trading partners. The tariffs went into effect at midnight EST today and will most likely increase prices for U.S. consumers since importers are expected to pass along a share of the cost of those higher taxes. According to Trump, the tariffs need to force the two neighboring countries to halt illegal immigration and stop fentanyl and other drugs from flowing into the country. At the same time, he also indicated he wants to eliminate U.S. trade imbalances and support domestic farmers.
Mexico is largest source of produce
The impact on produce is expected to be significant. Mexico is the largest single source of U.S. horticultural products. In 2023, the country supplied 63 percent of U.S. vegetable imports and 47 percent of U.S. fruit and nut imports, according to the USDA. Between 2000 and 2023, the U.S. was the destination for 91 percent of Mexico's total annual horticultural exports on average. About 90 percent of all avocados consumed in the U.S. originate Mexico, but the southern neighbor is a supplier of many more produce items. Up to 75 percent of asparagus, broccoli, and cucumbers grown in Mexico are exported to the U.S., according to UC Davis. In addition, about half of the tomatoes, watermelons, lettuce, and strawberries from Mexico make their way over. Other key produce items imported from Mexico include bananas, blueberries, bell peppers, mangos, and squash.
While Mexican President Claudia Sheinbaum announced the country has a plan on how to respond, details haven't been unveiled. The country would wait to see whether Trump followed through before responding.
Canada retaliates
In Canada on the other hand, Prime Minister Justin Trudeau said in a statement that retaliatory tariffs on CAD 30 billion of imports from the United States would take effect at 12:01 am EST today. The duties will remain in place until the U.S. eliminates its tariffs against Canada. The counter measures do not apply to goods already in transit. The CAD 30 billion is the first tranche of retaliation and doesn't include fruits and vegetables, but Florida orange juice is included. If Trump's tariffs remain in place, Canada will place tariffs on another CAD 125 billion of U.S. goods in 21 days. The second tranche of retaliatory tariffs would include fruits and vegetables.
Canada mainly exports greenhouse grown vegetables to the U.S., including tomatoes, cucumbers, and bell peppers. For many years, this export market has been very stable and 99.5 percent of all greenhouse grown products Canada exports, make their way over to the U.S.
China imposes tariffs and non-tariff measures
China is also formulating countermeasures in response to a cumulative 20 percent tariff. The country will impose additional tariffs on some products imported from the United States, effective March 10, according to the Customs Tariff Commission of the State Council. An additional 15-percent tariff will be applied to imported chicken, wheat, corn and cotton from the United States. In addition, China decided to add 10 U.S. firms, including TCOM, Limited Partnership, to the country's unreliable entity list and take corresponding measures against them. From today on, these companies are prohibited from engaging in import and export activities related to China, and they will also be banned from making new investments within the country.
In the coming days, FreshPlaza will keep you up to date with comments from produce industry members.