People involved in the local import-export industry are bracing for potential impacts after Mexico imposed tariffs last week on an estimated $3 billion worth of U.S. exports such as apples, pork products and cheese.
Enrique Escalante, operations manager at customs broker Freig Carrillo, said he had not yet seen any repercussions from the increased duties, but he expected to see changes within a matter of days.
“I imagine that, right now, they are pushing forward with all the orders they had in place,” he said of Ambos Nogales import-exporters. “But exports (of apples) are going to fall, just like those of steel for the maquiladora industry. It’s going to hit them very hard.”
Mexico announced the tariffs, which include a 20-percent levy on U.S. apples, in response to new import duties President Donald Trump imposed on steel and aluminum from Mexico, Canada and the European Union. Mexico also imposed its own tariffs on imports of U.S. steel.
Jose Martin Delgado Castillo, director of the Mexican Agricultural Secretariat’s health inspection office in Nogales, Sonora, referred questions about the potential impact of the tariffs to agency headquarters in Mexico City, which did not respond by press time. However, in 2015, Delgado told the NI that apples were the biggest U.S. agricultural export in terms of weight that passes through Nogales. He cited data showing that in June 2014, nearly 28 million pounds of apples with a worth of $13.8 million passed through Nogales on their way to Mexico, resulting in more than half the value of all apple exports from the U.S. to Mexico that month.
That demand is likely to decrease once the effect of the new tariffs reaches the public, said Terry Shannon, Jr. of Nogales, Ariz.-based Shannon Brokerage.
“The Mexican consumer cannot afford to purchase products coming from the U.S. because of the increased duty rates,” Shannon said. “Whether a car, an apple, a banana, the consumer is the one who pays the increase, and how is that good for any economy?”
The ripple effects in Ambos Nogales would mean a decline in business for people involved in U.S. agricultural import-exports, and potential job losses, according to Escalante.
“We still don’t know the exact repercussions,” he said. “But obviously, if you have a group of X amount of people, then you are going to have to think about laying off or something like that.”
As a U.S. broker, Shannon said, his business is mainly impacted by changes affecting Mexican imports, and he’s already seen the result of the new U.S. tariffs on steel imports from Mexico.
“The increase of duties on steel impacted clients of mine who bring steel from Mexico into the U.S. Now, they’re looking towards other venues to bring steel,” he said.
Shannon and Escalante both stressed their concern over the escalating imposition of tariffs between the United States and Mexico, calling it a “trade war.”
“We don’t need a trade war, we need to trade more,” Shannon said.
Santa Cruz County’s produce-import sector, which is estimated to directly and indirectly employ about 4,000 people in the county – approximately 22 percent of the local workforce – has so far not been directly impacted by the trade fight.
Scott Vandervoet, chairman of the Nogales-based Fresh Produce Association of the Americas, said the produce industry hasn’t had to face new tariffs in many years, but the possibility remains a concern given the current uncertainty.
“We haven’t really been too much in the spotlight in respect to some of the produce items that cross here, but it is a concern because we don’t know what could happen this week, tomorrow or later this afternoon,” Vandervoet said.
If the Trump administration were to ratchet up the dispute by imposing import duties on Mexican produce, he said, “I think a lot of businesses would have to analyze their strategies and get creative.”