US-Mexico Trade Tension: Avocado prices could soar if US tariffs take effect

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03:25

In Mexico, concern among farmers around US President Donald Trump's threats to impose tariffs on all Mexican exports entering the US. Many are anxiously eyeing negotiations and hoping for a positive outcome. CGTN's Franc Contreras reports from Mexico City.

When it comes to food - the United States and Mexico are co-dependent. According to the U.S. Department of Agriculture, Mexico is the United States' largest agriculture trading partner. Avocados often top the list of agricultural items that make their way to U.S. kitchens. Mexico's best avocados come from the western state of Michoacan.

ARMANDO LOPEZ, GENERAL DIRECTOR ASSOC. OF MICHOACAN AVOCADO PRODUCERS & PACKERS "It takes about nine months for avocados to go from flowers to fruits. Michoacan is an exceptional place for their production because we are the only country with four flowering seasons each year. That's why our slogan is 'Always in Season'."

But prices for this beloved food would rise for U.S. consumers if President Donald Trump slaps import tariffs on all Mexican products. Trump says those tariffs would start at five percent and rise five percent each month up to 25 percent until Mexico curbs the flow of undocumented immigrants across the southern border.

Food trade numbers show what's at stake. In 2018, the U.S. bought 78 percent of all Mexican agricultural exports. Most of that consisted of beer, vegetables and fruits - including millions of tons of avocados.

Free trade agreements have opened doors for massive agricultural trade. They go back to 1986, when Mexico signed the General Agreement on Tariffs and Trade, and since the mid 1990s under the North American Free Trade Agreement.

FRANC CONTRERAS MEXICO CITY "Those trade agreements along with year-round sunshine and fertile lands have transformed Mexico into a hemispheric leader when it comes to export of fruits and vegetables."

U.S.-Mexico agricultural trade is largely complementary. For example, the United States exports grains that are used to feed Mexican cattle. Then Mexican-produced beef is sent to U.S. consumers. Manuel Molano is an expert in global markets and competition. He says Trump's tariff increases would be felt by both U.S. consumers and Mexican producers.

MANUEL MOLANO, DIRECTOR MEXICAN INSTITUTE FOR COMPETITIVENESS "Because what will happen when you place tariffs like Trump wants to of the first five percent, then 10 percent and 15 percent all the way up to 25 percent is that these products will not enter the United States at affordable prices. It will be American consumers who end up paying more."

Meantime, Mexican agricultural producers are bracing for a possible trade war with the United States. They know higher tariffs could make their food products less attractive to U.S. consumers, and that could lead to a fall in demand and exports. FC, CGTN, Mexico City.