A Tomato Fight With Mexico Is Set to Boost US Prices Nearly 10%

SamanthaSci/Tech2025-07-099240

(Bloomberg) -- Consumers may soon be paying more for fresh tomatoes as a decades-long deal with Mexico expires in less than a week, absent a last-minute deal or extension.

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US tomato importer NatureSweet Ltd. told its customers last week that it would have to raise prices nearly 10% if the agreement ends, Chief Executive Officer Rodolfo Spielmann said in an interview Tuesday.

“There’s no scenario where I can absorb those tariffs,” Spielmann said. “The margins are not high enough.”

That could drive up costs across the country, given NatureSweet’s position as the largest distributor of tomatoes in the US. Its bestsellers, including Cherubs grape tomatoes, can be found at stores including Walmart Inc., Kroger Co. and Albertsons Cos.

“Regardless of the external environment, we remain committed to keeping fresh produce accessible at everyday low prices,” Lauren Willis, a spokeswoman for Walmart, said in a statement.

The US Commerce Department announced in April it was terminating a long-running agreement with the country’s southern neighbor over tomato prices on July 14, which will unleash a 17% levy on the fruits imported from Mexico. With less than a week left before the mid-July deadline, a deal is unlikely to come together, although several groups are pressing for an extension to buy more time for negotiations, according to public documents.

The Commerce Department didn’t respond to a request for comment. Kroger and Albertsons declined to comment.

The end of the agreement would deal a blow to US companies that grow tomatoes in Mexico and import them into the US, where they dominate the market. Around 72% of US fresh tomatoes were imported in 2024, and about 90% of those came from Mexico, according to the US Agriculture Department.

Welcomed Move

Some US tomato growers have cheered the ending of the accord, though many agricultural economists don’t expect them to be able to make up for an expected slowdown in tomatoes coming from Mexico. The US Agriculture Department estimated in June that Mexico’s tomato exports would decrease 5% this year in response to the new levies.

“It’s possible that the price of tomatoes goes up for the short term,” US Agriculture Secretary Brooke Rollins told reporters last week. In the longer term, “ensuring that our international partners are being fair and following the rules and ensuring that they’re meeting their obligations is paramount,” she said.

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Tomato growers in Florida and some other states have urged the administration to end the agreement with Mexico, arguing imports from the US’s southern neighbor are priced unfairly low. The original agreement, signed in 1996 and periodically renegotiated, suspended an investigation into Mexico’s prices and struck a deal: Mexican growers agreed to set a minimum price for their tomatoes and undergo additional inspections.

“It hasn’t worked,” said Robert Guenther, executive vice president of the Florida Tomato Exchange, which represents many growers in Florida and a handful of other states. Over the last 30 years, “what you’ve seen is a consistent reduction in the market share of US tomatoes,” he said.

US growers supplied around 80% of the US market when the agreement was first signed and have since seen that dwindle to roughly 30%, Guenther said.

Growing Sweet Spot

But agricultural economists said Mexico has captured a bigger share of the US market because its temperate climate and network of greenhouses are well situated to growing tomatoes, particularly the cherry, grape and heirloom varieties that have become increasingly popular. Low labor costs also help keep prices down.

“It’s not due to a concerted effort by Mexican growers to take the market share and push Florida out. They’re simply providing better products to the marketplace,” said Matt Mandel, vice president of Arizona’s SunFed Produce, which imports 95% of its products from Mexico.

Mandel said SunFed will also have to adjust prices on its tomatoes if the agreement ends this month.

“It’s going to raise prices, period, full stop,” he said. “We’re working on very, very small margins and there’s absolutely no way we can absorb 17%.”

Guenther said he doesn’t expect a dramatic reduction in imports or a surge in prices. US growers in Florida and elsewhere have room to expand their production, he said.

Lost Jobs

Reducing tomato imports is likely to have additional repercussions by eliminating jobs tied to that pipeline of produce, said Andrew Muhammad, an agricultural policy professor at the University of Tennessee’s Institute of Agriculture.

“You’re going to get some lost economic activity in addition to the lost imports,” he said. “The services associated with importing also pays Americans.”

Importing and marketing fresh tomatoes from Mexico supports roughly 47,000 full and part-time jobs in the US, according to an April analysis from Texas A&M University.

Elected officials from Arizona and Texas, including Texas Governor Greg Abbott, have urged the administration to leave the agreement in place, while lawmakers from Florida have applauded efforts to end it.

(Updates with responses from retailers starting in fifth paragraph)