Hold the Tomatoes: Negotiations Pending

Terminating the 2019 Agreement and enforcing U.S. trade laws will finally give U.S. tomato growers the legal relief they won when the Commerce Department and the U.S. International Trade Commission ruled in their favor against the Mexican tomato industry. Commerce found dumping each time it investigated—in its 1996 preliminary determination, in its 2019 final determination, and the 2024 remand determination. This is not a negotiation. Commerce has made its decision. Thank you to those who’ve supported this effort every step of the way to return fair trade practices to U.S. production. -- Florida Tomato Exchange

The tomato industry is expected to experience major disruptions unless the United States and Mexico can strike a new trade deal. Beyond a simple neighborly spat, negotiations between the two nations center on, as the Florida Tomato Exchange puts it, fair trade versus free trade.  Though it is hardly the first time tomato exports from Mexico have been questioned, trade between countries has been relatively free and allowed goods to flow north and south with minimal government intervention in the form of tariffs to level the playing field. Over time, the dynamic has contributed to industry expansion in Mexico but worked to suppress U.S. advancement.  

While consumers are crossing their fingers for market stability and reasonably priced tomato products at the supermarket, Mexico and the United States are dueling over exactly how to define free and/or fair trade.  Considering the fact that almost all of Mexico’s tomato exports end up in the United States and upwards of 80% of tomatoes consumed here come from Mexico, the next three months of talks stand to have a dramatic ripple effect in both countries.

Fair Trade Versus Free Trade

Field tomato growers in Florida and California have led the charge for fair trade agreements. Both states compete with Mexico during prime growing seasons.  Mexico’s climate is already well suited to tomatoes. Government subsidies supporting the industry’s greenhouse expansion created a boom for the country where tomatoes can be grown year round for cheaper than in the U.S.  Continual harvests now also pit the summer crops relied upon by northern states against Mexico’s yields.  

Without duties to act as an equalizer, the free market has favored cheaper Mexican tomatoes. American growers argue free trade is muddied by Mexico’s subsidies, which they say amount to dumping, cheaper labor costs and fewer regulations. Can we penalize a country well suited to growing produce who is also maximizing efficient production in greenhouses and has a slightly different perspective on fair labor conditions for the hundreds of thousands of people tied to the tomato industry?  Until now, we haven’t; as far as tomatoes go.

Yet, Florida’s tomato industry is half of what it was in 1994 and imports from Mexico have grown by 400% since that time. For thousands of Americans who have abandoned domestic production in the last decade because they could no longer remain competitive, tariffs might have created the space they needed to carry on. It still could have been more expensive to grow tomatoes here than in Mexico, but at least U.S. retailers might have bought as much from American growers as they did from our southern neighbors. 

Mexico currently claims nearly 65% of U.S. market share and, despite repeated anti-dumping investigations ending with new agreements, they continue to claim ground. If you hold the belief that each region of the world specializes in a commodity and should focus on producing that commodity for the rest of the world, then perhaps it would be most efficient to let Mexico grow all of our tomatoes. While this train of thought is reasonable and even sound, we also understand it can be shaken by things like pandemics, dry canals and wars. Food security considers efficiency and also demands that individual nations maintain a certain level of self sufficiency. Does free trade jeopardize food security and make us wholly dependent on Mexico for vegetables, Brazil for fruits and Norway for fish?

Can the U.S. Produce Enough Tomatoes to Offset Mexico’s Exports?

According to current tomato inventories, consumer demand for tomatoes and tomato products was down in 2024 and that has created a larger inventory of both. Perhaps there was a perceived shortage even before action was taken to terminate agreements between the U.S. and Mexico and consumer spending behavior shifted in anticipation. 

Mexico’s agricultural minister believes the two countries can strike a new agreement and if not, American’s will have to pay 21% more for tomato products as we have few options for other suppliers who offer both quantity and quality. If the U.S. buys from other countries they will still have to absorb the higher shipping costs of transporting goods farther distances.  If the United States opts to expand domestic production prices could still increase in the short term while supplies are tight. And, because there are tariffs on steel and aluminum coming from Mexico, even the greenhouse sector of tomato growing could see operational cost increases.

Consumers are wary of further disruptions to food supplies that could increase prices at the supermarket. Free or fair, American shoppers are hoping any new trade agreements bring predictability to their grocery budgets while American growers hope that come July, domestic operations will have greater access to the tomato industry.