Uncertainty Over Tariffs

by Erin Mittelstaedt

Like any small business owner, I try to keep an eye on federal and state policies that might impact the company I run. There has been a lot to watch in the food industry lately as President Donald Trump settles into office and releases new executive orders.

Right now, my team and I are watching two orders closely: the 25% tariffs on many goods imported from Mexico and Canada. While they’re on hold at the moment, they may still be executed in the future.
Our primary concern is for farmers and consumers. For farmers, these executive orders could have several different impacts.

1. Increased Costs for Farm Input. Farmers are buyers as well, and tariffs on goods from Mexico and Canada may raise their fixed costs. Potash, for example, is a key component in fertilizers that some farmers use. According to the American Farm Bureau Federation, 80% of it is sourced from Canada. A tariff on Canadian goods will most likely increase the price farmers pay.

2. Decreased Demand for Exports. Some farmers who export their products are concerned about the impact of the tariffs (and any retaliatory tariffs that may come from both countries) on that business. I spoke with a Canadian recently who mentioned that his family doesn’t want to buy U.S. products. He said, “My wife says she’d rather get citrus from Spain than the U.S.” If the tariffs proceed, there may be lower demand for exports, which could negatively impact farms.

3. Increased Demand for Local Produce. It’s possible that these tariffs could help some small farmers, particularly farmers who compete on price with produce grown in Mexico, like avocados. This could be a silver lining for some local growers if it can outweigh the impacts mentioned above.

For consumers, tariffs on Mexican and Canadian goods would probably lead to higher food prices. Mexico supplies a large chunk of fresh produce consumed in the U.S., particularly when local U.S. harvests slow down. Canadian imports account for a smaller percentage of what we eat, but they still matter, especially when it comes to vegetables.

According to the U.S. Department of Agriculture (USDA), in 2023, “Mexico and Canada supplied 51% and 2%, respectively, of U.S. fresh fruit imports, and 69% and 20%, respectively, of U.S. fresh vegetable imports in terms of value.”

In this industry, we know that the margin on fresh produce can be low. If tariffs raise prices, many outlets will have no choice but to pass those increases on to their customers, who will pass them on to U.S. consumers.

If tariffs raise prices, many outlets will have no choice but to pass those increases on to their customers, who will pass them on to U.S. consumers.

The impact on the food world may also go beyond fresh products to snacks and other food items that are either made in Mexico or Canada or made with ingredients from those countries. It takes suppliers time to remake their supply chains and find substitutes, so even if they move away from imported goods over time, in the short term, they’ll be faced with the challenge of making up their loss of margin. I think many will be forced to raise prices.

Overall, a lot of things in the food world are uncertain right now. Between these executive orders on tariffs, other orders on immigration, and the farm bill pending review, a lot of change could come to the industry in the coming year. No matter what comes, though, I know that my team at The FruitGuys will continue to do what we love: connect people through good food, feed those in need, and support small farms.

Erin Mittelstaedt joined The FruitGuys in 2007 as an operations manager at the newly opened Philadelphia facility. She became chief operating officer in 2015, acting chief financial officer in 2021 and chief executive in 2023. Prior to joining The FruitGuys, she worked as a manager at Trader Joe’s in Berwyn, PA. She has a degree in music from the University of Pennsylvania. She lives with her wife and their two young children in San Francisco, CA.