As 25% tariffs on imports from Mexico and Canada are set to take effect on Tuesday, Hispanic-owned businesses and companies that depend on cross-border trade are already passing higher prices onto consumers and preparing to sharply reduce imports.
The prospect of a North American trade war has already thrown the global economy into turmoil, with consumer confidence tumbling, inflation worsening and the auto sector and other domestic manufacturers bracing for a downturn.
Trump dismissed concerns that tariffs are largely paid for by consumers through higher prices, saying: “It’s a myth.”
It is possible for a stronger U.S. dollar to offset some of the costs, but most economic modeling shows tariffs will effectively amount to billions of dollars in tax hikes nationwide. Along the border, the reality is that prices were already rising in anticipation of Trump's announcement, and much more disruption now looms.
Chamberlain Distributing represents nine different Mexican farming companies that ship about 5 million boxes of produce every year through Nogales, Arizona, to retail, wholesale and foodservice customers across the U.S. Its owner, Jaime Chamberlain, said he would raise customer prices for all the products he imports, starting Tuesday.
And if the importers of record lack the resources to pay these higher prices, Chamberlain said he won't be able to support the farmers for more than a week or two. They'll have to sell at a loss, or not at all. Not everything will sell in Mexico, he said. The tomatoes, bell peppers, cucumbers, beans, squash and other perishable vegetables will be left in the fields and in his two warehouses across the border.
He predicts similar dilemmas industry-wide: Supplies of produce coming into the U.S will decrease, and prices will increase.
Since January, retailers have been bracing for the impact on their bottom lines. Restaurants have already stockpiled non-perishable goods in anticipation of prices going up, said Raul Luis, who owns the Birrieria Chalio Mexican Restaurant with locations in Los Angeles and Fort Worth, Texas.
But Luis can't do that with the meat and fruit he sources from suppliers in Canada and Mexico. And with event catering, he can’t provide customers with a set price because he does not know things will look like in a few months.
His restaurants already use menus without prices so that he can immediately reflect changing costs without printing new ones. He's also considering reducing his menu options to avoid higher-priced ingredients. Closing either location is out of the question, he said.