Tariffs against Mexico and Canada have only been in place for a day — and questions remain on how long they’ll be in place — but the effects are already being felt along the border.
The 25% levies imposed on Mexican importers are creating issues for the intertwined produce-growing industry of South Texas and Mexico, according to Texas International Produce Association President and CEO Dante Galeazzi.
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“Yesterday we saw a ton of delays at the (Laredo) International Bridge for those trucks crossing,” he said in a Wednesday morning interview with the Business Journal. “That’s a huge issue, it was 90 degrees yesterday. So as produce sits in those trucks, it can be stressed over long periods of time. Plus it creates upstream logistical delays.”
With grocery chains and restaurants operating on a just-in-time supply chain for produce, that can cause shortages if product is left sitting in trucks for too long. As a follow-on effect, if a grocer has to pivot to get produce from somewhere else, the original supplier has too much inventory, and will likely have to offload their goods at a discount. Adding a 25% tariff on top of that further strains their margins.
He pointed to avocado growers as an example, saying if a company is shipping $100,000 in avocados per truck, at 50 trucks per week, that company will see an increase of over $5 million in costs just to bring them into the United States.
“Companies are going to struggle, and so we are going to see volumes reduce so that way they can honor certain commitments,” Galeazzi said. “But they’re not going to bring in excess volume. They’re probably going to cut back on their committed volume just in order to work within the boundaries of those tariffs and the cash that they have available to pay them.
Read more of this story at the San Antonio Business Journal website.
Editor’s note: This story was published through a partnership between KSAT and the San Antonio Business Journal.