Groceries, particularly fresh produce with a short shelf life, could be among the first products to see a price increase as a result of the Trump administration’s tariffs on Canada and Mexico that took effect Tuesday, retailers and economists warned.
A supermarket in Chicago, Illinois on August 09, 2023. (Photo by Scott Olson/Getty Images)
The Trump administration imposed a 25% tariff on products imported from Mexico and Canada Tuesday, plus an additional 10% tariff on Chinese imports, on top of the 10% tariff on Chinese products levied earlier this year.
A range of U.S. grocery products are sourced from all three countries, but fresh fruits and vegetables in particular are under threat of immediate price increases as they have a short shelf life and a significant share are imported from the U.S.’s two neighbors: Mexico and Canada supplied 51% and 2%, respectively, of fresh fruit imports, and 69% and 20%, respectively, of fresh vegetable imports in 2022, according to the USDA.
Fresh strawberries, raspberries, avocados and tomatoes are among the top agricultural exports from Mexico to the U.S., according to the USDA, while meat and other animal products, grains and feeds and oilseeds are among the top agricultural imports to the U.S. from Canada.
In 2023, the U.S. imported $45 billion in agricultural products from Mexico, including $9.8 billion in fresh fruits and $8.5 billion in fresh vegetables: $1.3 billion of fresh and frozen strawberries, $2.7 billion of tomatoes and $1.5 billion in fresh peppers.
The U.S. imported $2.7 billion of avocados from Mexico in 2023 and was the top market for Mexican avocado exports, while beer and tequila made up 13% and 10%, respectively, of U.S. agricultural imports from Mexico in 2023.
Meanwhile, Canada exported around $40 billion in agricultural products to the United States in 2023, including $9.8 billion worth of grains and feeds, $4.8 billion of rapeseed oil, $4.7 billion of biscuits and wafers, $4.2 billion of red meat (mostly beef and veal), $2 billion of cocoa and $1.9 billion of frozen vegetables, according to USDA data.
Target CEO Brian Cornell said Tuesday customers will likely see an increase in prices on fruits and vegetables within a matter of days, noting “during this winter season we depend on Mexico for a significant amount of supply” and that fresh produce has “a really short supply chain.”
Peterson Institute for International Economics senior economist Gary Hufbauer told Foreign Policy recently there would be almost an immediate increase in grocery prices from the tariffs on Mexico and Canada, while Michigan State University supply chain management professor Jason Miller told The New York Times, “it’s going to be difficult to go down an aisle of a grocery store and not see some sort of inflationary effect.”
Grocery prices rose 0.5% in January, representing a 1.9% increase from January 2024, according to the Bureau of Labor Statistics’ Consumer Price Index. The increase was largely attributed to the 15.2% surge in egg prices in January due to a bird flu epidemic.
Oil, natural gas and electricity imported from Canada are subject to a 10% tariff, rather than the 25% rate imposed on other imports, which could also lead to “price impacts rather quickly,” in some U.S. regions, GasBuddy’s head of petroleum analysis Patrick De Haan wrote in a recent blog post. The Northeast could see price increases of about 30 cents per gallon by mid-March, since “a significant portion” of the region’s fuel comes from a refinery in Saint John, New Brunswick, Canada.
The 25% tariffs on Mexican and Canadian imports, plus the additional 10% tariff on Chinese imports, took effect just after midnight Tuesday, after Trump initially delayed the levies for 30 days amid some signs of willingness from the countries to meet Trump’s demands for stricter border controls. “What they have to do is build their car plants, frankly, and other things in the United States, in which case they have no tariffs,” Trump said Monday, confirming the tariffs would take effect as planned despite suggestions from some White House officials over the weekend that Trump might reduce the tariff levels. Trump hasn’t said explicitly what the three countries can do to alleviate the tariffs, but has pressed Canada and Mexico for stricter border controls and cited an influx of fentanyl from all three countries when discussing the taxes. All three countries are planning retaliatory measures: China said it would impose 15% tariffs on chicken, wheat, corn and cotton and 10% tariffs on other agricultural imports in retaliation. Canada levied a 25% tax on $30 billion worth of goods, and Mexican President Claudia Sheinbaum said she would announce new tariffs on U.S. imports Sunday. While Trump has said it’s a “myth” that prices for U.S. consumers will increase from the tariffs, Commerce Secretary Howard Lutnick and Treasury Secretary Scott Bessent acknowledged in interviews Tuesday there could be some short-term impacts for consumers, but insisted prices would level out over time.
Trump’s Tariffs Could Raise Prices Of Fruits And Vegetables Within Days, Target CEO Warns (Forbes)
Trump’s 25% Tariffs On Canada And Mexico Start Today—Here’s How They Could Impact Prices (Forbes)
China, Canada And Mexico Are Retaliating As Trump’s Tariffs Go Into Effect—Here’s How (Forbes)