Trump’s Tariff Plan Could Disrupt US Food Supply, Prices

Agricultural economists and industry executives warned that if president-elect Donald Trump proceeds with plans to impose tariffs on goods from Mexico and Canada, US consumers could face shortages, particularly of fresh food, along with inevitable price increases. 

Earlier this week, Trump announced his intention to sign an executive order on his first day in office, imposing a 25% tariff on all goods entering the United States from Canada and Mexico. This measure, he claimed, is aimed at curbing illegal drugs and migrant flows across the border. This move places significant pressure on agricultural trade between the countries, as Mexico and Canada are the United States’ top suppliers of agricultural products. 

In 2023, US agricultural imports from these two countries were valued at nearly US$86 billion, according to the US Department of Agriculture (USDA). Mexico, the largest agricultural trade partner for the United States, accounts for approximately 20% of agricultural imports. Between January and November 2023, agro-industrial trade between the two countries reached US$17.1 billion, marking a 5.9% annual growth, according to Mexico’s Ministry of Economy.

Economists highlight that tariffs on food imports could create a ripple effect, causing financial and operational disruptions in US supply chains, emphasizing the nation’s dependence on its neighbors for food. Lance Jungmeyer, President, Fresh Produce Association of the Americas, noted the impact would be felt by consumers in grocery stores and restaurants, with shortages becoming evident. “We would see fewer items overall in the fresh produce section. Additionally, restaurants might need to alter their menus, perhaps reducing portions or using fewer fruits and vegetables,” he said.

Around two-thirds of all US vegetable imports and half of its fruit and nut imports come from Mexico, including 90% of avocados, up to 35% of orange juice, and 20% of strawberries, according to USDA reports. Among berries, blueberries also stand out, with Mexico exporting 72,643t in 2021, of which 96.1% went to the United States.

Avocado exports from Mexico to the neighboring country have surged by 48% since 2019. The United States accounts for 80% of Mexico’s total avocado exports. In 2023, Mexico produced 2.9Mt of avocados, with US imports valued at US$2.6 billion. Alfredo Ramírez, Governor, Michoacan, Mexico’s leading avocado-producing state, warned that tariffs could trigger inflationary pressures. “Demand would not decrease; instead, costs and prices would rise, fueling inflation and directly affecting consumers,” he said.

Beer and tequila imports represented nearly a quarter of Mexico’s agricultural product sales to the United States in 2023. In 1H24, Mexico’s share of US beer imports reached a record 83.9%.  The US beer market has shown consistent growth in import volumes over the past decade, with Mexican imports rising steadily since 2014, when Mexico held a 59.4% share of US beer imports. The 24.5% percentage point increase over the past decade means that more than eight out of 10 imported beers consumed in the United States now originate from Mexico.

Trump's plan could also hinder the migration of more than 1 million cattle exported annually from Mexico across the border to become part of the United States beef supply. Currently, cattle exports to the United States have temporarily been paused as a precaution following the detection of a screwworm infestation in an animal that entered the country in the state of Chiapas.   

Bill Bullard, CEO, Ranchers-Cattlemen Action Legal Fund, stated that the tariffs could benefit domestic producers. However, they could also further increase beef prices for US consumers, although Bullard noted that importers and meat processors might absorb some of the additional costs. "We look forward to the tariffs. They will help level the playing field for our domestic producers," he said. Moreover, in the north, tariffs could also disrupt shipments of beef and dairy cattle as well as pigs from Canada, potentially affecting producers in both countries.

USDA projections suggest that if Trump’s tariff plans are implemented, the country could face an agricultural trade deficit of over US$42 billion by 2025. This would be driven in part by growing consumer demand for off-season produce and imported alcoholic beverages from Mexico. Peter Tabor, Attorney and Policy Advisor, Holland & Knight, noted that the tariff threat could serve as leverage in renegotiations of the USMCA trade agreement, slated for review in 2026. However, long-term tariff imposition could damage the Unites States’s reputation as a reliable trading partner, potentially prompting importers to seek alternative sources, he said.