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U.S. Consumers could see cheaper prices as result of Mexican government tariffs

Tariffs imposed by Mexico on grapes, onions, tomatoes and other U.S. agricultural commodities could lead to lower demand and cheaper prices for some U.S. food products, according to a Texas AgriLife Extension Service economist.

“There will be opportunities domestically for consumers; people are always looking for bargains,” said Dr. Parr Rosson, AgriLife Extension economist and director of the Center for North American Studies at Texas A&M University.

The tariffs result from disputes between Mexico and the U.S. since 1994 when the North American Free Trade Agreement went into effect.

The latest controversy stems from the U.S. halting Mexican trucks from going beyond U.S. commercial zones outside border cities. U.S. opponents of the pilot program allowing cross-border trucking between the two countries cite increased traffic congestion, truck and driver safety issues, and concerns about proper insurance and licensing, Rosson said.

With fewer exports to Mexico, that could lead to larger supplies of certain agricultural food products and lower retail prices, Rosson said. Beef and grains were not included in the Mexico tariffs. However, if the current tariff structure is sustained for a long period, U.S. agricultural producers could see lost revenue continue to mount.

Hardest hit would be grape producers in California, while Texas farmers that raise onions, Christmas trees and peanuts would see tariffs as high as 45 percent on certain crops.

“If you get hit with a 20 percent tariff, it’s going to make an impact on how much business you do,” Rosson said.

Texas commodities facing 20 percent tariffs are onions, wines, Christmas trees, strawberries, potatoes, peanuts, fruit and mixed juices. Also included are soups, broths and mineral waters. Items with 15 percent tariffs include oil cakes from soybean and dry dog and cat food (10 percent).

Nationally, according to Rosson, the following commodities affected by the Mexico tariffs (2007 export totals in parenthesis) are:

- Pears, 20 percent ($72 million);

- Grapes, 45 percent ($60 million);

- Dog, cat food 10 percent ($65 million);

- Strawberries, 20 percent ($29 million);

- Mayonaise, 20 percent ($16 million).

With H-E-B and Wal-Mart now having a large presence in Mexico with superstores, U.S. exports have been on the rise, Rosson said.

“Some $16 billion in ag products were exported to Mexico, and that rivals Canada ($16.2 billion),” he said. “Just in the last four years, the Mexican market has surged.”

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