Trump’s Tomato Trade-War Deal Averted a Dreaded 2020 Scenario
The U.S.-Mexico agreement dodged a surge in undocumented migrants ahead of the presidential election.
Donald Trump has started trade wars across the globe, but his administration tiptoed away from a fight with Mexico over tomatoes. Aspects of the deal it sealed last month have been criticized by U.S. growers. Yet it averts what for Trump could have been a politically uncomfortable scenario of having migrant farmworkers pouring across the border ahead of the 2020 election.
A deal struck on Aug. 20 that is likely to become final in September after a month of public comment is set to scrap a 17.6% provisional tariff imposed in May on Mexican tomato exports to the U.S., which totaled more than $2 billion last year. The move will effectively end a U.S. Commerce Department anti-dumping probe that could have raised the levy to 25% and made it permanent. Mexico is the world’s top exporter of the fruit.
For the self-proclaimed Tariff Man, the accord with Mexico was a tactical retreat as the trade war with China intensifies. The stakes may have proven too high for a president trying to insulate voters from the economic conflict’s effects and who has bet his reelection on curbing migration.
The compromise—to scrap tariffs in exchange for stronger border inspections—was seen as insufficient for some American growers. “I’m not happy with it, and I’ll say it right out loud,” says Paul “Mr. Tomato” DiMare of Coral Gables, Fla., who is chief executive officer of DiMare Inc., one the biggest U.S. growers and distributors. DiMare, 78, says U.S. growers would have won an anti-dumping case, despite Mexico’s denials of wrongdoing, and that the agreement fails to address key grievances.
Tomato diplomacy is so fraught that core elements have long been addressed outside of the North American Free Trade Agreement—and its successor pending in Congress, the United States-Mexico-Canada Agreement—lest it stand in the way of the broader deal. A fragile armistice had been in effect since 1996, when the U.S. put off any anti-dumping case in exchange for commitments by Mexican growers that included selling above a reference price. In May, Trump ditched the deal, levying the provisional tariffs and triggering lengthy bilateral negotiations.
The new accord withdraws the tariff on Mexican tomatoes. It also sets new reference prices, including a requirement that organic tomatoes sell for 40% more than non-organics, and expands inspections of Mexican shipments.
“The agreement brings stability to the market,” Salvador García, 49, said in an interview in August. His family got into the tomato business more than 75 years ago and grows them in greenhouses on 300 sun-soaked hectares of land near the town of Camalú, two hours south of the Pacific port city of Ensenada. García also grows asparagus and strawberries. As the president of the agricultural council of Baja California, he took part in 10 straight days of negotiations at the U.S. Department of Commerce in Washington, which dragged right up to a deadline of midnight, Aug. 20, to suspend the anti-dumping probe and avoid permanent tariffs.
“It was a very difficult negotiation, and it isn’t going to be easy to meet the terms, because this accord will require us to improve our quality,” García said.
The administration’s push to cut a deal on tomatoes dovetails with its drive to curtail immigration. The number of undocumented Mexicans in the U.S. has declined over the past decade, in part because workers have been returning to Mexico to take advantage of greater opportunities at home. The caravans that have irked Trump have overwhelmingly been composed of migrants from Honduras, El Salvador, and Guatemala fleeing insecurity and poverty. A tomato war could have sent Mexicans across the border again, much as the decline of the country’s corn industry after the implementation of Nafta, along with an economic crisis triggered by a steep devaluation of the peso, powered a wave of migration in the 1990s.
“I need to go wherever the work is,” said Lorenzo Juárez, 28, as he separated 12-foot vines at Heirloom Farms in northwest Mexico’s Maneadero Valley in July. Juárez returned to Mexico six years ago after a two-year stint picking strawberries in California as an undocumented migrant. The father of three said the consequence of higher tomato tariffs were obvious. “That might mean returning to the north.”
The labor-intensive industry in Mexico supports around 1.5 million direct and indirect jobs, including pickers, truckers, customs brokers, restaurant owners, and others. Like many of the workers in the tomato greenhouses in Mexico’s north, Juárez is from Oaxaca, one of Mexico’s poorest states. His parents and family there lived off subsistence farming. In Baja California, he saved up $1,000 over eight months to buy a car. Now he’s socking away money to purchase a plot of land.
The same economic factors that lead Mexicans to migrate north within the country in search of job opportunities can draw them across the U.S. border. Juárez says that at the height of the strawberry season in California, he earned 10 times his current salary. He returned voluntarily to Mexico because he missed his family and worried about the possibility of deportation.
“If we didn’t have sales to the U.S., then people would need to migrate to the U.S. to look for other options, because they don’t have them here,” said García, whose operation logs sales of around $30 million a year.
Tomato growers in Florida, a key swing state in U.S. presidential elections, and the state’s congressional delegation have been the most vocal advocates of the anti-dumping investigation. Although California produces more tomatoes overall, Florida leads the market for fresh tomatoes—as opposed to canned—and producers face fierce competition from Mexico during the North American winter, when other states are mostly out of the market.
Two decades ago, Florida alone used to produce more tomatoes than Mexico now ships to the U.S. Mexican imports dwarf Florida’s output and represent more than half of the U.S. tomato market overall.
The number of Florida-based producers has declined dramatically in recent decades, and critics attribute that to unfair competition. Representative Ted Yoho, a Republican from the tomato-rich state, argues that the administration should have dealt more harshly with Mexico. “I would have definitely taken the more aggressive approach,” he says. “We don’t need their tomatoes.”
There’s much nostalgia for Florida’s produce-growing past. Pioneering farmers started settling in the state nearly a century ago, including the DiMare brothers, sons of Sicilian immigrants who ran a push-cart produce business in Boston. The brothers—including Anthony, Paul’s father—expanded into Florida and California and started growing tomatoes in the 1940s. Paul DiMare turned DiMare Inc. into America’s biggest tomato producer for a time and has donated millions to the University of Miami, where a recital hall lobby bears his name.
Despite that history, Lance Jungmeyer, president of the Fresh Produce Association of the Americas, a Nogales, Arizona-based association that represents tomato importers, says production in Florida no longer makes economic sense. “You don’t grow tomatoes there,” says Jungmeyer. “You grow condos.”
Still, the new accord allows the U.S. to claim a partial victory. “The Mexican industry conceded on core provisions such as border inspections,” said a statement from the Florida Tomato Exchange, whose member companies produce 90% of the state’s tomatoes.
Most varieties will now be subject to quality inspections at the U.S. border. The U.S. producers claimed that such inspections were critical to keep low-grade produce out of the market.
The American growers didn’t get quotas they would have liked, according to Paul’s son Tony, who represented the company at the talks in Washington. They also failed to get a mechanism to enforce price floors farther down the supply chain.
For the Trump administration, the provisions may be enough to avert a fresh migration crisis. But it wasn’t clear if the new deal would be enough to keep Florida growers in business. When asked about that, Yoho demurs. “If you’ll give me about a year and a half, two years,” he says, “I can answer that question.”