Arizona Senators Martha McSally and Kyrsten Sinema joined Representatives Tom O’Halleran, Greg Stanton, Debbie Lesko, Andy Biggs, David Schweikert, Ruben Gallego, and Raul Grijalva in urging U.S. Trade Representative Robert Lighthizer to protect “free, fair, and reciprocal trade” with Mexico.

The letter comes amid discussions among Trump Administration officials over whether to implement a new “seasonal trade remedy” to protect growers in the Southeast U.S., which the delegation argues will hurt Arizona importers and shoppers. 

By  increasing barriers to the importation of Mexico fresh tomatoes in the form of tariffs or duties, the policy could potentially raise prices for domestic consumers.

Complicating matters is Florida and Georgia’s importance to the president’s reelection. 

Disputes linger despite USMCA implementation

Following the ratification of the U.S-Mexico-Canada Agreement (USMCA), a landmark trade agreement that replaced the North American Free Trade Agreement (NAFTA), the three North American powers are still debating the implementation of new rules.

Mexican firms, for instance, have been by American petroleum companies of participating in unfair trade practices that “[throw] up roadblocks to American companies seeking permits for new or rebranded gas stations, energy storage facilities, and liquefied natural gas terminals,” said Gary Clyde Hufbauer, a nonresident fellow at the Peterson Institute for International Economics.

Hufbauer said that “faithful implementation of the United States-Mexico-Canada Agreement is… important” for all member nations.

In the past weeks, President Trump was also accused of stymying the process of implementation when he a 10% increase in aluminum tariffs on Canada after they had been lifted more than a year earlier.

In response, Canada levied $2.7 billion in tariffs on American goods.

Despite the disputes, business leaders and economists remain optimistic that the USMCA will stimulate economic expansion.

Agriculture

The commercial relationship between Arizona and Mexico is significantly bolstered by the flow of imported Mexican produce to the state. 

Since the turn of the century, Arizona has seen an expanded agricultural importation relationship with Mexico, the University of Arizona’s Eller College of Management.

The dispute arising from the importation of Mexican agricultural products, specifically tomatoes and avocados, arose in 2019 when Trump Administration officials regarding “increasing organized crime activity in Michoacán — the main avocado producing state in Mexico.” 

They also had separate worries surrounding competition between the U.S. agricultural sector and the Mexican agricultural sector.

30% of all Mexico-grown tomato imports, the Nogales, Ariz. commercial port of entry is key to the Southwestern economy and Arizona commerce. This places Arizona at the center of the current conflict.

A 2018 by UArizona found that U.S. and Canadian importation of fresh tomatoes from Mexico is responsible for more than 30,000 U.S. jobs. 

Economic impacts

In 2019, when the U.S. considered levying a 17.5% tariff on Mexican tomatoes, economists from Arizona State University that “consumers could pay 40% to 85% more for vine-ripe and other fresh tomatoes.”

If the U.S. administration establishes protectionist trade remedies, trade advocates  worry that Mexico will retaliate in kind againstAmerican imports. 

In January, Mexican Deputy Trade Minister Luz Maria de la Mora , “If the U.S. government seeks any action of this kind against Mexican agricultural exports, the government of Mexico will apply similar measures to U.S. products.”

As occurred last week between the U.S. and Canada, there is a possibility of a new trade dispute erupting — this time along the Southern border.

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American consumers and industries could face price hikes on fresh produce and aluminum products as trade conflicts with Arizona’s top two trading partners heat up. 

Just weeks after the new “tariff-free” United States-Mexico-Canada Agreement (USMCA) went into effect July 1, President Donald Trump announced he was reimposing a punishing 10 percent tariff on Canadian aluminum. Canada retaliated in kind the following day.

Meanwhile, a domestic trade dispute over fresh produce from Mexico is threatening to stir up a new round of tariff battles as well.  

Both measures could disrupt relations with Arizona’s top two trading partners, Mexico and Canada, during a time when many Americans are faced with financial hardships due to COVID-19 shutdowns, opponents said. 

“Tariffs are taxes, plain and simple,” said Glenn Hamer, president and CEO of the Arizona Chamber of Commerce and Industry. “As trade partners with Canada and Mexico, we see every day how Arizona benefits from these relationships.

“Efforts should be focused on expanding market access for American manufacturers and growing economic opportunities with our closest partners to lead to a greater variety of goods and price competition for U.S. consumers.”

Here is a rundown of what’s happening:

U.S. hearings on produce from Mexico alarm industry

Of concern to importers and exporters is a long festering domestic battle over a rarely-used “trade remedy” to affect seasonal produce coming from Mexico like tomatoes, peppers and strawberries. 

For years, farmers in the Southeast have made a number of claims about Mexico, including that government subsidies to agriculture have harmed American farmers who cannot compete with the low price of produce flooding north over the border.

During heated hearings before U.S. trade officials last week, representatives from states like Florida called for the seasonality rule — known as Section 301 — to be enforced to improve the domestic competitiveness of American farmers.

Representatives of Southeast agriculture testified that Mexican tomatoes and other produce are being sold well below fair market prices — a practice known as dumping — which it’s creating “unfair” challenges for growers to compete.

But opponents dispute those claims and have the research to prove it, said the Fresh Produce Association of the Americas (FPAA), which is headquartered in Nogales, Arizona. 

A recent analysis by the University of Arizona, for example, shows that since 1995, the U.S. has used up to 41 percent of its allowable subsidies while Mexico has averaged just 2 percent, the FPAA said last week. Also, the analysis did not include the $28 billion in aid to U.S. farmers to compensate them for the financial harm caused by trade  disputes with foreign trading partners last year. 

The so-called trade “remedy” would hurt American pocketbooks by instigating costly new tariffs on Mexican imports, the FPAA said. 

“Consumers would pay more for strawberries, blueberries, bell peppers, tomatoes, sweet corn and watermelon if tariffs or quotas are put on these items through a 301 trade action as requested today by the Florida Fruit & Vegetable Association,” the FPAA stated in a that countered the “rhetorical” claims one by one.  

Action could instigate another tariff war with Mexico 

Imposing the action potentially could instigate “numerous and unending tit-for-tat trade wars” with Mexico just weeks after the USMCA went into effect, the FPAA said.

That could imperil $40 billion in U.S. agricultural exports to Mexico and push up the cost of fresh produce from Mexico, said the FPAA, which represents 120 U.S. member companies involved in importing and marketing fresh fruits and vegetables grown in Mexico and distributed across the U.S. and the world. 

Bipartisan front in Arizona opposes attack on “free trade” 

Arizona’s congressional delegation has stepped in to intervene, calling on the White House to reject the proposal. 

“This trade remedy would affect Arizona’s economy, the U.S. agribusiness supply chain, and consumers all across the country who enjoy a diverse selection of tomatoes at low prices,” said a letter sent by nine Arizona congressional members to the U.S. Trade Representative Robert Lighthizer. 

The letter was signed by Arizona U.S. senators Kyrsten Sinema (D) and Martha McSally (R) and representatives Tom O’Halleran (D), Raúl M. Grijalva (D), Andy Biggs (R), David Schweikert (R), Ruben Gallego (D), Debbie Lesko (R) and Greg Stanton (D). 

“Such a provision would run counter to consumer preferences, undermine the spirit and benefits of free trade, risk reciprocal or retaliatory actions from our trade partners, and harm U.S. industries in order to artificially support a small segment of regional growers’ interests,” the letter said.

Canadian and U.S. aluminum hit with new trade taxes

In another blow to many industries that rely on aluminum, President Trump reimposed tariffs on Canadian aluminum this month. Canadian Prime Minister Justin Trudeau responded the next day with retaliatory tariffs on $2.7 billion worth of U.S. aluminium products. 

During a at the Whirlpool Corporation Manufacturing Plant in Clyde, Ohio August 6, the president said that the tariffs were being reimposed to stop Canadian aluminum producers from flooding the U.S. with exports that will “kill all our aluminum jobs.” 

“Canada was taking advantage of us, as usual, and I signed it…because the aluminum business was being decimated by Canada,” Trump stated. “Very unfair to our jobs and our great aluminum workers.”

“To be a strong nation, America must be a manufacturing nation and not be led by a bunch of fools,” the president said. “That means protecting our national industrial base.”

Industry leaders, U.S. Chamber oppose tariffs

But many aluminum manufacturers and industry advocates said the tariffs will only push up costs for producing items like cars, household appliances and beer cans. 

Calling the tariffs “a step in the wrong direction,” Myron Brilliant, the head of international affairs for the U.S. Chamber of Commerce, issued a opposing the new trade duties. They will raise costs for American manufacturers and draw retaliation against U.S. exports.

“Today more than ever, American businesses of all sizes depend on trade as an engine of growth and job creation,” he said.

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