Less than two weeks after President Donald Trump won the U.S. election and ahead of his taking office on January 20, 2025, what could this new administration mean for the produce industry? Karl McDermott, chief SaaS officer of DeltaTrak®, a cold chain management and temperature monitoring solutions company, weighs in on what growers and shippers in the U.S.--and beyond–could see starting next year.
One area that may be impacted is tariffs which will begin with a blanket 10 percent on everything coming into the U.S. "Then it's going to ratchet up to 20 percent, 30 percent, 50 percent to cover some trade imbalances but also as a way of getting alignment of what president-elect Trump wants from the economy and his business partners," says McDermott.
That brings to mind the United States–Mexico–Canada Agreement, or USMCA (formerly the North American Free Trade Agreement, or NAFTA), an agreement that has been beneficial in many respects for all three countries involved. USMCA is up for renewal in 2026 and not much can be changed before then. "There could be some punitive tariffs for Mexico and Canada before that but then it would come up against the resolution process inside the agreement which probably would invoke in favor of Mexico and Canada in tariffs," says McDermott.
The state of food security
This plays a factor in food security. After all, the new administration will take office 20 days before the Super Bowl LIX on February 9, an event that is a notably high consumption day of avocados–a product primarily imported from Mexico. "I'm sure we can stock up to get through this Super Bowl but the next one could look dicey. If tariffs start ratcheting up on some of these products, that's going to drive up prices and the overall volume will drop," McDermott says. "There's going to be some shortfalls on product in the marketplace which the U.S. on its own will not be able to source quickly enough to fulfill."
The new administration will take office 20 days before the Super Bowl LIX on February 9, an event that is a notably high consumption day of avocados–a product primarily imported from Mexico.
While certainly there are other countries supplying produce such as avocados, an item that is also grown in the U.S., it's hard to ignore a supply partner that's right next door. "Of $97.3 billion of imports of food products, Mexico accounts for $21 billion so it is the biggest trading partner for food. To put tariffs on it would cause a lot of disruption from the sourcing," says McDermott.
There's also the question of who will pay for those tariffs? "A lot of people have seen post-pandemic issues around inflation and pricing. Food has gone up 50 percent in price so a tariff could end up adding another 10 percent which could be counterproductive. Of the $97 billion of imports, Canada and Mexico account for almost half. Just putting tariffs on those two countries would considerably increase the price of food for American consumers," says McDermott. "We're also not necessarily increasing any quality. It's basically the same product that's going to cost 10 percent more if those costs are passed down to the consumer level."
Tariffs and geopolitics
That said, "There was a significant need to redress the trade flows from China. So the rhetoric may be 10 percent for everyone but there might be a geopolitical filter to target some areas more than others," adds McDermott.
"After Brexit came in, a lot of European workers went back and never came back and now the UK has some serious issues on how they source people," says McDermott.
Immigration is another area the new administration intends to do work in. Given the U.S. produce industry's use of seasonal employment via programs such as the H-2A Temporary Agricultural Workers program, this leaves some questions. "Will that program be continued? Extended? If there are mass deportations, are people still going to want to join those programs?" says McDermott. "Also if you put a blanket block on people coming in, it's going to cause a scarcity of resources and a lot of product will go unpicked and it's going to end up in food waste, which is its own problem."
Look no further than the United Kingdom. Resources are now an issue given Brexit in 2020 saw a similar immigration initiative. "After Brexit came in, a lot of European workers went back and never came back and now the UK has some serious issues on how they source people," says McDermott.
Bigger economic picture
Though, what overall does this new pro-business administration mean for the U.S. food industry? McDermott believes it could impact small to medium size growers and shippers.
"There's a huge deal on the table right now with the merger of Kroger-Albertsons that hasn't been approved yet. We think now there's going to be some extended impetus to really push those deals through to build a more concentrated and larger organization but that doesn't necessarily mean it's going to be better for producers," says McDermott. "We see some of those large U.S. supermarkets and those large food manufacturers getting bigger."
Retail concentration ahead?
With a more concentrated retail landscape that leaves fewer buyers in the marketplace, consumer pricing could shift at a time when inflation is just coming back to manageable levels again. "We can learn from Canada where they have a much less competitive retail sector than in the U.S. Loblaws is heading towards 40 percent concentration," says McDermott. "A lot of Canadian consumers complain about the concentration of very few competitive organizations. That tends to drive up prices for the consumer and squeeze costs for the suppliers. The smaller medium businesses are going to be squeezed out. You're killing off the opportunities of those smaller producers to contribute to the economy which means you need to find alternative suppliers. "
This is already on top of growers and shippers managing high input costs thanks to inflation but also additional food requirements from consumers and retailers: think food traceability regulations Section 204 of the FDA Food Safety Modernization Act (FSMA) which need to be implemented by January 2026 or sustainability in The Climate Corporate Data Accountability Act (Senate Bill 253) in California. "Producer-growers have all these other costs plus if they're getting price squeezed, something has to give somewhere," says McDermott. "It may be that produce quality drops which could be worrying. You can't have lots of compliance and traceability and best quality with prices going down."
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