Will Trump Pay for the Wall with the Food Industry?
What many leaders in the Food and Beverage Industry have feared is finally coming true. It seems that the proposals made by President Donald Trump during his candidacy are beginning to be put into action, starting with a 20% tariff placed on imported goods. White House Press Secretary Sean Spicer indicated that such a tax could be used to pay for the border wall that Trump has promised to build. But the administration quickly backtracked, saying that the tariff is just one of several options being considered for funding the construction.
Here are some of the items that will cost you more if and when imports are hit with a hefty tax increase:
Fruits & Vegetables
America imports more strawberries, avocados, tomatoes, onions, chili peppers, and raspberries from Mexico than it does from any other country. Roughly 60% of all avocados in the U.S. in 2014 were grown in Mexico.
“Consider the impact on American consumers of a 20 percent hike in the cost of foods such as bananas, mangoes and other products that we simply cannot grow in the United States,” Tom Stenzel, President and CEO of the United Fresh Produce Association, said in a statement. “We urge President Donald Trump to consider the unique nature of food and not place a new ‘food tax’ on American consumers.”
If Trump’s broader immigration policies become reality, even food grown within the U.S. could be more expensive. Roughly half of the people hired by U.S. farms for crop production are undocumented immigrants, and the vast majority of them are from Mexico. If Trump’s policies succeed in ridding the country of undocumented workers, wages paid by farmers would have to increase nearly threefold, as noted by the Wall Street Journal, in order to attract American citizens for the jobs. And if the costs of farming increase, then the prices of the crops they’re growing will naturally increase as well.
Medical
In 2015, the U.S. imported $12 billion of optical and medical equipment from Mexico. Because consumers aren’t buying these products themselves, there’s less of an incentive for producers to hold the line on prices. Those higher prices, although initially paid by the healthcare industry in the U.S., eventually get passed along to us in the form of pricier health insurance.
Alcohol
“Products that have a pretty low elasticity with reference to prices — in other words, where consumers will buy anyway — will probably bear the full brunt of a 20 percent increase,” Monica de Bolle, fellow at the Peterson Institute for International Economics said. Booze certainly falls into that category. “Alcoholic beverages tend to be very price inelastic,” she said. “These would likely go up by the same amount as the tariff.”
Nearly two-thirds of the beer imported into the U.S. comes from Mexico. Roughly 80% of the tequila exported from Mexico winds up in the U.S. They would all see price increases, alongside Mezcal, Mexican wines, and other alcohol produced south of the border.
Automobiles
An import tax would presumably apply to any vehicle completed in Mexico and sent to the U.S. for sale. And it would affect a wide variety of cars from brands like Volkswagen, Dodge, Honda, and Nissan. Altogether, Americans purchased $74 billion worth of cars assembled in Mexico in 2015.
Your Editor Remembers: Former Mexico President Fox asking Trump to grow up
