Avocados, tequila and other iconic Mexican products are jeopardized by Trump’s tariff threats

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This article was published 28/11/2024 (676 days ago), so information in it may no longer be current.

URUAPAN, Mexico (AP) — Mexicans are worried that threats by Donald Trump to impose 25% tariffs could affect a wide range of iconic Mexican products and threaten entire regional economies.

In western Mexico, no crop supplies an income for so many small growers as avocados. But avocado growers, pickers and packers worry that U.S. consumers, faced with 25% higher prices, may just skip the guacamole.

“I think that when there is an increase in the price for any product, demand declines,” said avocado grower Enrique Espinoza. Orchards like his are the economic lifeblood in the western Mexico state of Michoacan. “It would be a tragedy if they closed down (the border) on us,” he said.

Trump’s Jan. 20 inauguration — when he said he would impose tariffs — couldn’t come at a worse time: It’s around when Mexico starts shipping crates of the green fruit north for Super Bowl Sunday, the annual peak of consumption.

José Luis Arroyo Sandoval, a manager at an avocado packing house in Michoacan, says the economy would be affected.

“Work for us could decrease because it won’t be quite so attractive to export,” Arroyo said, “because avocados would get expensive, and avocados are already expensive.”

It may not just be Mexican producers who are affected; U.S. consumers may also be howling.

Mexican business leader Gina Diez Barroso told a news conference Tuesday that one U.S. agriculture official told her he had never had as many complaints as when the U.S. government halted import inspections on Mexican avocados in 2022.

“Never in his life had he had so much chaos in his office, because they halted Mexican avocados,” Diez Barroso said.

Espinoza agrees that consumers are likely to share the pain.

“The gringos need avocados, it is a good product, and I don’t think they are going to stop consuming it,” he said.

Rather, the reverse effect has him worried; if Mexico retaliates with its own tariffs, as President Claudia Sheinbaum has suggested, Mexicans will face not just a drop in income, but high prices for U.S. products like corn, which is a main supply of feed for animals in Mexico.

“There are more poor people here, so in some ways it is going to hit us,” Espinoza said. “The United States can pay 25% more for Mexican products, very few of us have enough money to pay 25% more for what we import from the United States.”

It’s not just the guacamole; Mexican tequila producers have seen a bonanza in the U.S. market. In 2023, the U.S. imported $4.6 billion worth of tequila and $108 million worth of mezcal from Mexico.

That has raised cautious concern among tequila producers, including farmers who grow agave on some of the driest, marginal soils that couldn’t support many other crops.

“We are analyzing the statements by the authorities and their reactions, and in the coming days we will establish a position,” the National Tequila Industry Chamber said in a statement.

And industry representatives say a drop in the consumption of tequila — America’s third-most popular spirit, behind vodka and pre-mixed cocktails — could affect U.S. bars, restaurants and clubs.

“At the end of the day, tariffs on spirits products from our neighbors to the north and south are going to hurt U.S. consumers and lead to job losses across the U.S. hospitality industry just as these businesses continue their long recovery from the pandemic,” the Distilled Spirits Council of the U.S. said in a statement.

The tariffs would probably plunge Mexico into an immediate recession. Mexican financial group Banco Base estimated in a report that for every 1% that Mexican exports increase in price, their volume falls by 1.33%

Supposing that Americans might absorb half the impact of the tariffs and just pay higher prices for Mexican goods, they still might reduce their consumption by 12%, Banco Base estimated.

“This would be reflected in a 4.4% drop in gross domestic product,” the bank wrote, adding “the decline would not just occur in 2025, but would get more serious the longer the tariffs last.”

And the tariffs could affect some products that aren’t thought of as particularly Mexican at all.

Mexico’s Economy Secretary, Marcelo Ebrard, said Wednesday that 88% percent of all North American pickup trucks come from Mexico, though it was unclear if he meant just parts of the trucks or their final assembly.

Ebrard claimed that 25% tariffs would mean U.S. consumers might have to pay $3,000 more per pickup truck.

“It is shooting yourself in the foot,” Ebrard said.

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