The 25% import tax on Mexican products announced by Trump has hit the Mexican industry like a bomb. That's also true for Dutchman Jorick Voorzee, who has been active in the Mexican pecan trade for years. "This is a complete disaster and creates huge instability in the market," he says.
"We produce 50% in Mexico and the other half in the United States. Normally, North America is more or less self-sufficient when it comes to pecans, but since they also have export customers to serve, they will still need to import. But if a local U.S. grower is getting $10 per kilo, I'm certainly not going to get $12.50," says Jorick.
"In the past, the United States was practically the only export market, but I began visiting numerous trade fairs, and now we also ship our pecans to Europe, the Middle East, and Asia. But America was by far the biggest market, and a continent like Europe takes, at most, 10% of what America does. Our advantage is that we started diversifying our exports years ago. Now, we'll have to focus even more on other markets."
"But no one benefits from this—it's just a crooked game being played. You can still store pecans reasonably well, but for a product like avocados, where people rely heavily on Mexico, the impact is even greater. With this, America is really shooting itself in the foot. Mexicans now have to pay 25% in duties, while a country like Brazil doesn't. So you get very skewed trade relationships."
"You're going to see the same thing happen with meat. Mexico is the primary supplier of all calves exported to the U.S., but with the retaliatory tariffs that are inevitably coming, they'll now tax grain feed at 25%. So first you raise the cow, then it goes back to the U.S. It's all completely absurd. And it brings anything but stability to what is supposed to be a free trade market."
"Meanwhile, the exchange rate has gone from $1.03 to $1.08 since Friday—so tell me, who's the winner here? When America sneezes, Mexico catches a cold. For Mexico, the biggest outlet disappears overnight. The pecan market was actually a very stable market, and now it's being wiped out in one blow due to all this turmoil. For all we know, the tariffs could be lifted again just as suddenly, but then you may have already paid that 25% on a few containers."
"We obviously saw this situation coming, so I haven't bought too much product from the Mexican growers in recent weeks. But they still have to do something with their harvest. And you can wait for the tariffs to be lifted again—but who knows when that will be? Nobody knows what Trump will tweet tomorrow, but you certainly can't build a business on that!"
For more information:
Jorick Voorzee
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Tel: +31 6 518 24 014
jorick@mextf.com
www.mextf.com