Study: Tomato tariff could hike prices 40 to 85% - WFMJ.com News weather sports for Youngstown-Warren Ohio

Study: Tomato tariff could hike prices 40 to 85%

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WASHINGTON -

Growing tomatoes in your own garden may become more attractive this year. Americans could soon be paying 40 to 85% more for vine-ripened tomatoes, according to a recent consumer economic analysis of duties that went into effect this week on Mexican tomatoes.

Although the U.S. Department of Commerce said negotiations are continuing, the U.S. announced on Tuesday that it has withdrawn from the Tomato Suspension Agreement.

Decision means that duties on Mexican tomatoes could force consumer prices up to 40% in the period from May to December, according to the analysis, conducted by economists at Arizona State University.

During other periods, such as the winter, prices for certain varieties like vine-ripened tomatoes, tomatoes on the vine and Romas could rise more than 85%, according to the analysis, which relies on data from AC Nielsen.

Led by Dr. Timothy J. Richards, Morrison Chair of Agribusiness at ASU, the analysis evaluated the impact the withdrawal from the Suspension Agreement will have on prices consumers pay for four varieties of tomatoes – Tomato-on-Vine, vine ripe, Roma, and Field/Beefsteak – under several market scenarios.

Terminating the suspension agreement, the ASU analyst found, will reduce the supply of tomatoes in the U.S. market, and raise prices paid by American consumers, particularly during the winter tomato season (October through June).

“In general, tariffs levied on imports of fresh produce from Mexico are borne disproportionately by U.S .consumers,” said Dr. Richards. “In this analysis, we show that retail tomato prices in the U.S. may rise by an average of approximately 40% if tariffs remove a substantial proportion of the Mexican supply during the critical winter-tomato supply period.”

If something were to happen to the remaining supply of U.S. tomatoes during this period, Dr. Richards said, the potential impact on retail tomato prices would be even more substantial. “In this regard, imports serve a critical shock-absorber function for U.S. retail markets, given the frequency and severity of supply shocks from weather, disease, or even labor-related events,” he said.

Assuming that the imposition of duties reduces the supply of Mexican tomatoes by 50%, consumers in the May to December time frame could be paying up to 47% more for TO, for instance. The sticker shock on a pound of these tomatoes is dramatic - up from $2.87 a pound at present, to $4.21 after the impact of duties is absorbed, according to the price elasticity analysis.

Prices would skyrocket even more when weather events and crop failures are considered, according to the analysis.

Such weather disruptions occur often during the wintertime, when the sole U.S. supply is in the southeast U.S., primarily Florida, which is seeking the imposition of duties.

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