Companies that depend on cross-border trade were already facing higher prices in anticipation of the 25% tariffs on imports from Mexico and Canada that took effect Tuesday. Now disruption looms, and if consumers won’t accept steep price hikes, they’ll have to downsize operations and lay off workers.
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.”
The reality along the border 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 how 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.
“We have to figure out ways to become more efficient,” Luis said. “We learned from the pandemic that we have to pivot and do things differently and most of our customer base understands that.”
