Most Mexican fruit and vegetable companies had their cold storage facilities full this week. They were waiting to see if the 25% import tariffs, which went into effect earlier this week, would be reversed. And they turned out to be right: U.S. President Trump has suspended the import tariffs on all Mexican goods that comply with the agreements of the USMCA free trade agreement. This includes agricultural products, which are exempt from border tariffs until April 2. Previously, the U.S. had also paused import tariffs on cars and auto parts.
This development provides temporary relief in trade between Mexico and the United States, but uncertainty remains. "People were already hoping for an exemption for agricultural products, a reduction in tariffs, a delay, or a withdrawal of the measures because these actions do not address the issues the U.S. is facing," says Oscar Woltman de Vries of the Mexican consultancy firm Phoenix Consultoría. "They say it's about the drug war, but this won't solve that." In recent weeks, drug cartel members have been extradited to the U.S.—a process that normally takes months or even years—and, according to Trump, the official reason for the delay is the good relationship with the Mexican president.
Bluff poker
He sees these measures primarily as a bluffing game rather than an actual protection of the U.S. market. "If a 25% tariff is imposed on Mexican vegetables to protect American growers, you would expect subsidies for building new greenhouses. But they are also imposing a 25% tariff on steel and technology, meaning there is no logical incentive for local production." The claim that the tariffs would cost households an extra $2,000 per year, as suggested in a recently published report, seems like an illusion to him. "It must be much more than that: we see U.S. inflation rising, and unemployment will increase due to the layoffs that will follow. After the tariffs are implemented, consumer prices will rise within a few months, and eventually, tomatoes and avocados in stores will cost 25% more. In the end, it only leads to higher prices."
With his consultancy firm, Oscar helps foreign companies establish themselves in the Mexican market, set up new construction projects, and optimize horticultural production. He has frequent contact with growers and sees how uncertainty is affecting the Mexican sector—although not all growers are concerned. "Since Trump won, people have been talking about this, but there are still growers who are unprepared or poorly prepared for this situation. They seemed to be playing catch-up, though they now have another month of respite." For growers who approached him in the past few months, he had clear advice: "Send that letter to your customer. From the day your president enforces this, the price goes up by 25%. You have to bluff back at bluffing. The pressure needs to be increased, and giving direct discounts is out of the question. Hit back."
Oscar Woltman de Vries
He explained that about half of Mexico's tomatoes are under contract, while the other half is sold on the open market. "Large tomato growers have up to 80% under contract, whereas smaller growers, with 2 or 3 hectares, mainly rely on the open market, hoping to earn well for a few weeks. The rest fall somewhere in between." For bell peppers, around 60-70% of the supply is under contract pricing. "Contract prices cannot be raised overnight, but trade partners will have to sit down with retailers. Now all three—producers, traders, and retailers—will take a hit, and in the next contracts, if the import tariffs return on April 2, the price will go up by 25%."
However, negotiations are difficult and reveal the divisions within the Mexican sector. As of 2025, the industry is dominated by a few major players with landholdings of up to 200 hectares. Below them is a large group of growers with about 40 to 50 hectares, and a significant number of smaller growers with just a few hectares. There is little to no cooperation among growers—but that is slowly changing. "Last week, I spoke with a grower who, along with colleagues in the region, drafted a letter to make their stance on the price increases clear to their customers. These developments show that if you collaborate—even with different products—and stick to your position, you can exert power over trading companies. There is some movement, but still not enough cooperation or strength."
For this reason, he does not expect the overall export volume to be immediately affected by the measures. "Export volume will drop, but then Mexico will be left with an oversupply, because you can't just shut down a greenhouse. As long as there's no alternative, horticultural exports will return to normal within a few weeks."
Rising labor costs
The Mexican market has grown tremendously over the past ten years, and exports to the U.S. have multiplied. However, in 2023 and 2024, the sector's growth stalled due to poor exchange rates and stagnant prices. Additionally, the sector is dealing with rising labor costs. "Daily wages have increased from 90 pesos to 300 in six years—socially necessary, but labor efficiency has not yet improved. This is a limiting factor, meaning the net labor cost per kilo of tomatoes has risen." Furthermore, Oscar expects wages to continue increasing, reaching 500 to 550 pesos per day in another six years, given the government's policies.
Overall, growers' profit margins have shrunk. "They have since reviewed their costs and efficiency, reorganized, and are now ready for the next growth phase, but at this moment, they are undoubtedly holding back. If you're considering expanding by ten hectares, you think twice in this uncertain market."
Plenty of challenges remain, and these past weeks haven't made things any easier. The Mexican horticultural sector has been lobbying hard to postpone the measures, and in anticipation, several companies stored as much produce as possible in cold storage, hoping for an exemption, reduction, or withdrawal of the tariffs. That has now happened—much to Oscar's surprise. "It's bluff poker, but sometimes you go too far and can't turn back. The Mexican government has remained very composed under the pressure, and President Claudia Sheinbaum has consistently said that Mexico is not to be toyed with and that dialogue must continue. So far, that approach is working very well!"
For more information:
Oscar Woltman de Vries
Phoenix Consultoría
Querétaro, Mexico
📞 +52 442 130 4010
📧 woltmanoscar@gmail.com