Stability. That's what Dwayne Coffin of Vanco Produce Ltd. in Prince Edward Island, Canada, is hoping for now following last week's April 2nd tariff announcement from the U.S. administration. That event tariffed numerous countries of varying size around the world but largely seemed to spare Mexico and Canada from further retaliatory tariffs directly impacting produce. "We were shocked. We automatically assumed there would be tariffs. We got lucky in the last round of tariffs. At least now there's a little bit of stability for the short term," says Coffin.
This follows months of threatened tariffs on goods coming into the U.S. from Canada and Mexico for as high as 25 percent. (From Canada, steel, aluminum, auto manufacturing, potash, and energy products remain tariffed.)
Some Canadian companies in non-produce industries noted that even the threat of tariffs was enough to affect business. "We hadn't lost any amount of business from it but it depended on what you were selling. Almost every customer had a different reaction," Coffin says. "There was a repacker that would handle a commodity item that said–look, if there's any price increase, they would look elsewhere and find other suppliers." Counter that with retail customers buying higher value items such as organic and creamer potatoes who were willing to pay the tariff.
© Vanco ProduceThe timing of the potential tariffs weighed heavily on Coffin and other PEI potato growers. Photo: Vanco Produce Ltd.
Easter and potatoes
The timing of the potential tariffs also weighed heavily on Coffin and other PEI potato growers. "With potatoes, we typically move a lot of volume around major holidays, and Easter is around the corner. A lot of those buying decisions and pricing contracts would have been done weeks ago. That would have been challenging to work through," he says.
That said, even with the amount of attention being paid to the topic of tariffs, he does not think that inaccurate information was out there. "A lot of people think that just because we're being charged a tariff that we automatically and legally can charge the buyer. That's not true. The only way we'd be able to ship into the U.S. is if the importer of record–which is the Canadian exporter–has to pay that tariff once that truck arrives at the border. Then you hope you can recoup some of those costs from your buyers," he says, adding that the lack of reciprocal tariffs will now allow the storage crop to clean up without the worry of additional cost to move that product to market.
In the meantime, demand has increased slightly on PEI potatoes from Canada. "The trouble is with Canadian business. Those established suppliers have a certain market share. There's only so many buyers in the Canadian marketplace, and our population is much lower," Coffin says.
© A&B ProduceGoldberg says the tariffs impact his company directly given close to 90 percent of what it sells are imports--including chayote from Costa Rica. Photo: A&B Tropical Produce
Importers affected
Meanwhile, in the U.S., Alan Goldberg of A&B Tropical Produce says the tariffs impact his company directly. "Close to 90 percent of what we sell are imports, and there are eight or nine countries that we import from that are said to have tariffs set," he says.
He's also particularly concerned about how the tariffs will now affect pricing. With some of its items running between $30-$50 FOB/box, an additional 10 percent tariff could add another $4-$5/box. "That is what gets passed directly onto the consumer," Goldberg says.
After all, the items it largely imports are tropical ones. "As far as exploring ways to bring in product from other places or grow it in the U.S., it won't happen. These products simply don't grow in the U.S.," he says.
© dVidaVidal says even with the tariffs, she doesn't anticipate supply disruptions on its products, such as mango. Photo: dVida
Challenging season already
At dVida, Annabell Vidal says it's working already on implementing the new method of payment (Automated Clearing House or ACH) to accommodate the tariffs, which take as much as 15 days onward to set up.
She also anticipates potential shifts in sourcing regions. "Some commodities will see an increase in the volume into the U.S. market due to other countries having a higher tariff," says Vidal, adding that generally, she doesn't see any supply disruptions in product as the tariffs are being implemented. "For example, ginger. Ecuador and Brazil, and Peru ship ginger and their main competitor is China, which has a higher tariff. We expect that ginger shippers and distributors in these countries will probably see an increase in demand because of this."
For more information:
Dwayne Coffin
Vanco Produce Ltd.
www.vancofarms.com
Alan Goldberg
A&B Tropical Produce
www.abtropical.com
Annabell Vidal
dVida
www.dvidaco.com