(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.
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 best-sellers, including Cherubs grape tomatoes, can be found at stores including Walmart Inc., Kroger Co. and Albertsons Cos.
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, Walmart, Kroger and Albertsons didn't immediately respond to a request for 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.
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.