Trump's Tariff Threats Could Hurt Iconic Mexican Exports Like Avocados and Tequila in the US

The 25% tariff raise for Mexican exports like avocados and tequila, affecting both US consumers and Mexican farmers.

By Thea Felicity

Nov 29 2024, 09:31 AM EST

MEXICO-US-VIOLENCE-AVOCADO — Employees work at an avocados packing plant in the municipality of Ario de Rosales, Michoacan state, Mexico, on February 21, 2022. While in the US tons of avocados were eaten while people watched the Super Bown, in Mexico, where they were produced, soldiers deactivated explosives planted by drug traffickers who impose their law in the state of Michoacan. ALFREDO ESTRELLA/AFP via Getty Images

Earlier this week, upcoming US President, Donald Trump announced plans to add an additional tariff on not just Chinese exports, but also Mexican products.

While China has yet to respond, there were already raised concerns for iconic Mexican exports, including avocados and tequila.

In a report by AP News, Mexican farmers, particularly in the western state of Michoacán, fear that higher prices for avocados could reduce demand in the US, which is also a key market. This would be devastatingly unhelpful during peak seasons, especially the Super Bowl season when there is a high increase in the consumption of avocados. These exports are what sustain the living of many growers; higher prices would thus deter a lot of demand for the crop.

Tariff and Price Increase

The problem goes far beyond the Mexican producer because a tariff would indeed result in price increases in American consumers' produce that is popular in Mexico and greatly consumed in the United States. Higher costs for guacamole and other avocado-based products could result in fewer purchases for US consumers.

Mexican tequila, which is a staple in the US market, might also be affected, as prices will rise and potentially reduce its popularity in bars and restaurants.

Reuters shared that if Mexico retaliates with its own tariffs, there would be a possible negative ripple effect on both sides of the border. The most probable victims would be higher prices for US products such as corn, which is an important supply for animal feed, affecting the Mexican economy of the poorer population who would find it hard to afford these higher costs. This trade conflict will lead to a reduction in exports, which can significantly affect the GDP of Mexico.

The economic spillover will be severe. According to Mexican experts, a 25% tariff could lead to a 4.4% decline in Mexico's GDP with exports falling and the prices of goods going up. Even with probable price adjustments in the US, the consumption of Mexican products could drop by as much as 12%. This could mean trouble not only for the Mexican farmers but also for the US hospitality industry, which is still in the process of recovering from the pandemic.

As both countries brace for possible trade tensions, the future of these beloved Mexican products ould be felt deeply by both Mexican producers and US consumers.