US tariffs could take Mexican agricultural products off the market: USMCA former negotiator

Consumers and importing and exporting companies in the US, Mexico, and Canada would be quickly affected should the tariff threats that loom over the region include agricultural products, sources say.

"If (the US) implements a 10-15% tariff on Mexican agricultural products, it could quickly take them off the (US) market, meaning that their prices could increase to the point where they are not sellable anymore," Kenneth Smith, former Mexico's chief negotiator in the talks that resulted in the approval of the USMCA said in an interview with S&P Global Energy.

Data from the USDA shows that the US buys approximately 92% of Mexican agricultural exports, primarily vegetables, fruit, and spirits like tequila and mezcal in 2023. It also buys close to 60.3% of Canadian agricultural exports, which in 2023 consisted mostly of meat, grains and feeds, oilseeds, and oilseeds products. Rapeseed oil was the most imported Canadian product that year.

"Close to 90% of the avocadoes, berries, tomatoes and other products that the US imports come from Mexico. (With potential tariffs), prices would go up, and the US would not have a way to replace supply with national production, especially during winter. The damage to the consumers' pocket would be quickly felt," said Smith.

Donald Trump's administration announced on Feb. 1 the implementation of a 25% additional tariff on imports from Canada and Mexico until both countries addressed the "extraordinary threat posed by illegal aliens and drugs, including deadly fentanyl, (which) constitutes a national emergency under the International Emergency Economic Powers Act," the White House said on a release.

The tariffs were postponed for a month shortly after, following Mexico's and Canada's commitments to secure their borders with the US and the agreement of both countries to work together with the US to stop fentanyl traffic.

"If the US imposes tariffs, Mexico and Canada are likely to retaliate and they could try to select products to cause 'economic pain' to the US," Smith said. "Essential grains like wheat, corn, soy or rice are less likely (to be affected by retaliations), but maybe other pork meat products like Boston butts, ham, and certain primal cuts that are also produced domestically in Mexico could be affected," he added.

Feb. 1 was not the first time the US imposed tariffs on Mexican and Canadian imports. In June 2018, during the first Trump administration, the US announced 25% tariffs on steel and 10% on aluminum from both countries. Mexico and Canada retaliated with 10% and 25% tariffs on several US goods, such as pork meat, cheese, apples, potatoes, blueberries, and American bourbon.

Historical data shows that Canada and Mexico were the first and third largest suppliers of agricultural products to the US from 2017 to 2021, respectively.

According to the Mexican Ministry of Agriculture, avocados, tomatoes, berries, pepper, beef, and strawberries are among the products most exported to the US.