Mexico and Canada are prime suppliers of US agricultural imports
28 November 2024
4 minute learn
US costs might rise subsequent 12 months for avocados, strawberries and different recent produce, and customers might face shortages, if President-elect Donald Trump follows by means of on plans to slap tariffs on items from Mexico and Canada, Reuters reported, citing agricultural economists and business executives.
Mexico and Canada are by far the highest two suppliers of farm merchandise to america, with imports of agricultural items valued at almost $86 billion final 12 months, based on US Division of Agriculture and US Customs knowledge.
Duties on their meals shipments might trigger jarring monetary and operational ripple results on US provides and spotlight how reliant the nation has turn into on its neighbours for feeding its inhabitants, economists stated.
Trump stated Monday he would signal an government order on his first day in workplace in January that might impose a 25% tariff on all merchandise coming into america from Canada and Mexico to curb the stream of unlawful medicine and migrants into the US.
US customers would really feel impacts at grocery shops and eating places, with gadgets being out of inventory, Lance Jungmeyer, president of the Recent Produce Affiliation of the Americas, stated on Tuesday.
“We might see fewer gadgets typically within the produce part,” Jungmeyer stated. “Eating places must reconfigure their menus, possibly placing in much less vegetables and fruit or reducing parts.”
About two-thirds of all US vegetable imports and half of fruit and nut imports come from Mexico, based on the USDA: almost 90% of its avocados, as a lot as 35% of its orange juice, and 20% of its strawberries.
Avocado exports to america have soared 48% since 2019, based on US commerce knowledge, as customers have more and more put them in salads and on sandwiches. The US market accounts for about 80% of Mexico’s whole avocado exports, knowledge by the USDA reveals, a commerce value $3 billion final 12 months.
“It might generate an inflationary spiral,” stated Alfredo Ramírez, governor of Michoacan, Mexico’s fundamental avocado producing state.
“Demand wouldn’t fall,” he stated. “What would enhance are prices and costs. This is able to carry us a rise in inflation and direct repercussions for customers.”
Margarita provides may very well be hit, too. Imports of beer and tequila collectively make up almost 1 / 4 of Mexican imports of agricultural items into the US final 12 months. US imports of Mexican tequila and mezcal – each used for making cocktails, equivalent to margaritas – totalled $4.66 billion in 2023, up 160% since 2019, based on knowledge from the Distilled Spirits Council of america.
“Tariffs on spirits merchandise from our neighbours to the north and south are going to harm US customers and result in job losses throughout the US hospitality business simply as these companies proceed their lengthy restoration from the pandemic,” the group stated.
The tariffs might additionally push costs greater for fertilizer imported from Canada at a time when farmers are paying almost 50% extra for fertilizer than in 2020, stated Sam Kieffer, vp of public coverage for the American Farm Bureau Federation, a farmer commerce group.
“Now shouldn’t be the time to ship shock waves by means of the agricultural financial system,” Kieffer stated.
Pigs, cattle migration
Trump’s plan might additionally sluggish the migration of greater than 1 million cows exported by Mexico throughout the border every year, to turn into a part of the US beef provide.
US producers have slashed their cattle herds in recent times, pushing up beef costs. They might profit if tariffs result in fewer cattle and beef imports, stated Invoice Bullard, chief government officer of the Ranchers Cattlemen Motion Authorized Fund United Stockgrowers of America.
Tariffs might additionally additional enhance meat costs for US customers, although Bullard stated importers and meat processors could possibly take up some further prices.
“We stay up for tariffs,” he stated. “It is going to assist to stage the enjoying subject for our home producers.”
To the north, tariffs additionally might disrupt shipments of beef and dairy cattle and hogs between the US and Canada, and doubtlessly have an effect on producers in each international locations.
Manitoba alone sends about 3 million piglets every year to producers in Iowa, Minnesota, South Dakota and Nebraska, the place feed corn may be sourced extra cheaply, based on the Canada Pork Council and Manitoba Pork Council
Midwestern farmers then increase and fatten up the animals of their feeder barns, earlier than sending them to slaughter – and the pork flows each to patrons within the US and Canada after processing.
Trump commerce wars 2.0
The most recent USDA projections present that the US in 2025 will doubtless run a deficit in agricultural commerce of greater than $42 billion, pushed partly by client curiosity in low season produce and imported alcohol from Mexico.
The specter of tariffs may very well be a approach of achieving leverage over Mexico and Canada within the lead-up to renegotiation of the USMCA commerce deal, set to be reviewed in 2026, stated Peter Tabor, an lawyer and senior coverage advisor at Holland & Knight and a former USDA commerce official.
However implementation of steep tariffs over time might imply the US could also be seen as an unreliable buying and selling accomplice and that importers of US items would look elsewhere to fill the void, Tabor stated.
