U.S.-Mexico Tomato Trade War Faces Crucial Deadline on Monday

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A key deadline is set to lapse Monday that could lead to permanent U.S. tariffs on Mexican tomato imports, with costs potentially hitting American consumers when the weather turns cold later this year.

As of last week, the two sides had failed to reach an agreement to end an anti-dumping investigation over Mexican tomato imports and lift a 17.6% provisional tariff, which went into effect in May. The outcome of the investigation may now make the tariffs permanent, potentially hitting the Mexican agriculture industry as well as American supermarkets and restaurants.

But some U.S. produce farmers, backed by Florida Republican lawmakers Senator Marco Rubio and Rep. Ted Yoho, have said they favor letting the investigation and the tariffs go forward. They say Mexico, the world’s largest tomato exporter, has been unfairly undercutting American farmers on price, hurting agriculture in Florida, among other places. Mexico denies that its farmers are dumping.

“I don’t think a suspension agreement is going to cure the problem,” Rep. Yoho said in a telephone interview Friday. He said the U.S. should protect local agriculture jobs, even if it means consumers pay a bit more for their produce.

Uneasy Detente

Mexican growers ship more than $2 billion in tomatoes to the U.S. annually, rivaling avocados as the nation’s biggest farm export, and the industry directly supports more than 1 million jobs.

Since 1996, the tomato industry has operated under an uneasy detente. At the time, an agreement was reached to end an anti-dumping probe, provided Mexican producers adhered to certain conditions, including a minimum price. That deal has been renewed several times over the past two decades, but the Trump administration broke precedent and left the deal earlier this year.

Mexico’s Undersecretary of Foreign Relations Jesus Seade said earlier this month that the sides were close to a new deal, but were stuck on a U.S. demand that 100% of Mexican tomatoes be reviewed at the border. Seade said that condition was logistically impossible.

The provisional tariffs would become permanent if the U.S. Commerce Department determines by Sept. 19 that Mexico engaged in dumping and, subsequently, the International Trade Commission determines that the behavior caused injury to American producers.

If the U.S. producers lose their case, the Mexican industry will be able to get back tariff money deposited in the interim.

The sides need to reach a new accord by Monday to allow for 30 days of public comment before the Commerce Department concludes its investigation.

Price Spike

A study released earlier this year by Arizona State University economists -- and commissioned by a trade association representing importers of Mexican tomatoes -- showed how the prices of most varieties of tomatoes would spike if Mexican imports fell by half. But the magnitude of the increase will depend on many variables, including growing-season conditions. Supply is generally much tighter in the North American winter months, when many producers drop out of the market.

The analysis said that a collapse of Mexican trade coupled with, for example, a January cold snap or a bout of disease in Florida, could make prices of many varieties double.

To contact the reporters on this story: Jonathan Levin in Miami at jlevin20@bloomberg.net;Eric Martin in Mexico City at emartin21@bloomberg.net

To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, Flynn McRoberts, Robert Jameson

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