Trump tariffs may increase grocery, liquor payments – from beef and pork to avocados and tequila

By Leah Douglas and Ed White

WASHINGTON/REGINA, Saskatchewan (Reuters) -U.S. costs might rise subsequent 12 months for avocados, strawberries and different contemporary produce, and customers may face shortages, if President-elect Donald Trump follows by means of on plans to slap tariffs on items from Mexico and Canada, agricultural economists and trade executives stated.

Mexico and Canada are by far the highest two suppliers of farm merchandise to the USA, with imports of agricultural items valued at practically $86 billion final 12 months, in response to U.S. Division of Agriculture and U.S. Customs knowledge.

Duties on their meals shipments may trigger jarring monetary and operational ripple results on U.S. provides and spotlight how reliant the nation has turn into on its neighbors for feeding its inhabitants, economists stated.

Trump stated Monday he would signal an govt order on his first day in workplace in January that will impose a 25% tariff on all merchandise coming into the USA from Canada and Mexico to curb the movement of unlawful medication and migrants into the U.S.

U.S. customers would really feel impacts at grocery shops and eating places, with objects being out of inventory, Lance Jungmeyer, president of the Recent Produce Affiliation of the Americas, stated on Tuesday.

“We’d see fewer objects on the whole within the produce part,” Jungmeyer stated. “Eating places must reconfigure their menus, possibly placing in much less fruit and veggies or lowering parts.”

About two-thirds of all U.S. vegetable imports and half of fruit and nut imports come from Mexico, in response to the USDA: practically 90% of its avocados, as a lot as 35% of its orange juice, and 20% of its strawberries.

Avocado exports to the USA have soared 48% since 2019, in response to U.S. commerce knowledge, as customers have more and more put them in salads and on sandwiches. The U.S. 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 will generate an inflationary spiral,” stated Alfredo Ramírez, governor of Michoacan, Mexico’s major avocado producing state.

“Demand wouldn’t fall,” he stated. “What would improve are prices and costs. This could carry us a rise in inflation and direct repercussions for customers.”

Margarita provides could possibly be hit, too. Imports of beer and tequila collectively make up practically 1 / 4 of Mexican imports of agricultural items into the U.S. final 12 months. U.S. imports of Mexican tequila and mezcal – each used for making cocktails, comparable to margaritas – totaled $4.66 billion in 2023, up 160% since 2019, in response to knowledge from the Distilled Spirits Council of the USA.

“Tariffs on spirits merchandise from our neighbors to the north and south are going to harm U.S. customers and result in job losses throughout the U.S. hospitality trade simply as these companies proceed their lengthy restoration from the pandemic,” the group stated.

The tariffs may additionally push costs increased for fertilizer imported from Canada at a time when farmers are paying practically 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 economic system,” Kieffer stated.

PIGS, CATTLE MIGRATION

Trump’s plan may additionally gradual the migration of greater than 1 million cows exported by Mexico throughout the border every year, to turn into a part of the U.S. beef provide.

U.S. producers have slashed their cattle herds in recent times, pushing up beef costs. They may profit if tariffs result in fewer cattle and beef imports, stated Invoice Bullard, chief govt officer of the Ranchers Cattlemen Motion (WA:ACT) Authorized Fund United Stockgrowers of America.

Tariffs may additionally additional improve meat costs for U.S. customers, although Bullard stated importers and meat processors might be able to take up some additional prices.

“We sit up for tariffs,” he stated. “It’ll assist to degree the taking part in area for our home producers.”

To the north, tariffs additionally may disrupt shipments of beef and dairy cattle and hogs between the U.S. and Canada, and probably 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 will be sourced extra cheaply, in response to 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 consumers within the U.S. and Canada after processing.

TRUMP TRADE WARS 2.0

The newest USDA projections present that the U.S. in 2025 will doubtless run a deficit in agricultural commerce of greater than $42 billion, pushed partially by client curiosity in low season produce and imported alcohol from Mexico.

The specter of tariffs could possibly be a means 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 may imply the U.S. could also be seen as an unreliable buying and selling accomplice and that importers of U.S. items would look elsewhere to fill the void, Tabor stated.