20 percent tax on Mexican goods? Consumers likely would pay more
Subscribe for unlimited digital access.
Try one month for $1!
Subscribe for unlimited digital access. Try one month for $1!
President Donald Trump wants to impose a 20 percent tax on goods imported from Mexico, but if you’re planning on picking up a wool-and-leather handbag imported from Mexico or to have a Mexican beer at your local tavern, you’d pay an even higher premium, Chicago business owners say.
That’s because Mexican importers of everything from handbags to sugar to avocados likely would raise their prices as a defensive measure even before the U.S. tariff was imposed, if indeed it ever takes effect, they say.
“I do think we would lose business on our Mexican-made goods,” says Allison Geitner, manager of Greenheart Shop, a fair-trade gift, clothing and home decor store at 1714 N. Wells St. in Old Town.
So, to try to make up for that, Geitner says, “The price would definitely go up.”
On Friday, the Greenheart Shop had new offerings on display of handcrafted Mexican handbags and duffel bags ranging from $100 to $360. It sets profit margins at 50 percent — standard, according to Geitner, for goods whose creators get paid a living wage.
Another 20 percent price increase would make the Mexican imports “really difficult to sell,” Geitner says.
She doesn’t think the proposed Trump on Mexico would last long because of the impact it would have on American consumers.
Bar-food favorites such as Mexican avocados for guacamole and other dishes would be sure to go up more than the cost of a 20 percent tax increase, says Daniel Ghaowi, operations manager at AMK Kitchen Bar, 1954 W. Armitage Ave. in Bucktown. Ghaowi says he could even see restaurants bump up prices 30 percent because greater demand and costs would get tacked on.
Avocados are selling for $2.90 a pound, on average, he says.
Ghaowi says he would be forced to redo about one-third of his menu if he had to replace Mexican-imported avocados as well as Mexican tomatoes, jalapeno and arbol chile peppers from south of the border and spirits such as tequila and mescal with locally sourced products. He says it would be tough to replace such imported items because local farmers couldn’t produce them in the quantities a restaurant requires.
“It’s not as much a tax on Mexico as it is a tax on the American people,” Ghaowi says of Trump’s Mexico tax.
Such a tariff also would make it harder for mom-and-pop run restaurants such as AMK, which has been open for a year and a half, to compete against chain restaurants that could more easily absorb the extra expense, he says.
Chicago is home to major fruit, produce, sweets and liquor distributors including La Preferida, La Galera Produce, La Bodega Produce and Iñiguez Produce and candy importer Dulcelandia that transport Mexican-imported goods. They could be hurt, too, according to Jaime di Paulo, executive director of the Little Village Chamber of Commerce.
Di Paulo says 80 percent of the chamber’s 800 business members import goods from Mexico.
“It would affect everybody,” he says, noting that Mexico supplied 69 percent of U.S. fresh-vegetable import value and 37 percent of U.S. fresh-fruit import value in 2012, according to U.S. Department of Agriculture data.
U.S. imports of Mexican fresh fruit totaled $2.86 billion in 2012, with the value having risen by an average of about 20 percent a year from 1999 to 2012, the data show. By comparison, the value of U.S. imports of Chilean fruit totaled $1.22 billion in 2012, up an average of 10 percent a year over the same period.
Craig Bolanos, CEO and founder of Inverness retirement adviser Wealth Management Group, says he is advising business owners not to panic because the stock market’s reaction shows Wall Street sees Trump’s proposal as a negotiating tactic rather than a likely reality.
“With the Dow still above 20,000, traders, investors and other stock-market participants believe it’s rhetoric — aka ‘the art of the deal,’” Bolanos says.