US consumers ‘will pay more’ after tariffs come into effect

Consumers in the US will have to pay more for products including avocados, after the country imposed a 25 per cent import tariff on imports from Mexico and Canada, and a 20 per cent duty on those from China.

That’s according to Luis Ribera, director of the Center for North American Studies at Texas A&M University, and an expert in agricultural economics.
“Given that over 90 per cent of the fresh avocados imported by the US comes from Mexico, this tariff will increase the cost of Mexican avocados,” he told Fruitnet.

“Prices reacts much faster than any volume traded, because prices are the signal to different supply chains to start adjusting to the changes.”

As for how much they could rise, he said this was uncertain as the price is dictated by the market, not by the cost of production.

“In this case a tariff just adds to the cost of production,” he explained. “Some could be absorbed by the producers and along the supply chain, but also some by the consumer.”

The tariff on Mexico also makes other suppliers such as Peru, Colombia and Chile more competitive on price, he continued.

“[So] there might be a shift is volume as well as in price. Also, there is no real substitute for avocados, so I’d expect the price is fairly inelastic and so consumption might not change much,” he said.

“Consumers just might have to pay higher prices. I’d expect that organic avocados, which have a higher price, would experience a larger drop in demand and consumption.”