Enduring tariff war in Arizona

“It was 10 days of a tremendous amount of uncertainty. In our business, uncertainty is our enemy. We’re not planning for tomorrow or the day after tomorrow. We are planning for six months, a year, two years down the line,” said Chamberlain, a longtime Republican. “There’s things we have to set up at the farms. There are planting schedules. There are distribution and market schedules that need to be approved.”

That anxiety hasn’t gone away because the tariffs could return in a few weeks or months. While a deal was struck in early June that resulted in Trump calling off the tariffs, the administration and Mexico are supposed to revisit the immigration situation this year, and Trump could decide then to go ahead with the tariffs.

“I’m waiting to see what the Mexican government does in the next 90 days and if it is good enough for the U.S. government. So we are still working under a threat,” Chamberlain said.

Prior to the passage of the North American Free Trade Agreement in 1993, the overall agricultural trade — imports and exports — between the U.S. and Mexico totaled about $2 billion, according to the U.S. Department of Agriculture. Trade has grown exponentially since then, imports from Mexico alone totaling just under $26 billion in 2018, about 20% of all foreign farm products. The U.S. is Mexico’s biggest buyer, purchasing 78% of its exports.

Chamberlain’s company handles one-eighth of those imports, about $3.3 billion. His parents founded the company in 1971 when he was just 4 years old. Today, it has 13 partners in Mexico that supply it with about 125 to 130 million pounds of produce annually on a consignment basis for resale to U.S. restaurant chains such as Taco Bell, grocery chains such as Kroger, and food service companies.

Chamberlain was therefore eagerly awaiting the passage of Trump’s U.S.-Mexico-Canada Agreement on trade, which would update and replace NAFTA. He assumed the deal would ensure that whatever turmoil was happening with the administration on other trade fronts, the situation on Mexico would be resolved. Then, on May 30, the same day that the USMCA deal was introduced to both the Mexican Senate and the U.S. House and one day after it was introduced to the Canadian Parliament, Trump tweeted a threat to impose tariffs on Mexico.

“We saw the news that morning about the positive track that the USMCA was on, both in Mexico and out of Washington. Everything was super positive. How do you think we felt that afternoon? It felt like a cold shower,” Chamberlain said. “The Mexican senate ratified the trade deal on June 19.”

Things didn’t get too bad for Chamberlain during the White House’s standoff with Mexico. Those tariffs never actually went into effect, he pointed out, so he has never had to pay. He knows U.S. farmers who are suffering due to retaliatory tariffs Beijing has put on the products they previously exported to China.

But for Chamberlain, the fact that the tariffs can return if the understanding between the U.S. and Mexico breaks down is a constant worry. Simply switching to domestic producers isn’t an option, he argued, because of the way both the U.S. and Mexican markets have evolved and become intertwined. Mexico grows year-round and is particularly active in the winter, when farms in most U.S. states are less productive due to the cold. The U.S. states that could pick up that slack, such as Florida, can be unreliable due to other factors, such as the hurricane season.

“If you only buy domestic product, you run the risk that a natural disaster or a late freeze can affect those products. So where do you get your products?” Chamberlain said.

He’ll still be importing from Mexico. That means, should tariffs go into effect, he’ll have to pay them out of pocket because he’s the one doing the importing. “Can I pass that along to my customers? Well, I would hope I could,” he said. He believes his goods are of sufficiently high quality that he can still sell it to the same buyers, but he won’t know until then. “People are going to buy from whomever has the best price. Second is quality,” he said.

The threat of tariffs comes on top of another problem that Chamberlain began facing about two months ago, when the Department of Homeland Security moved some customs agents at ports to help the U.S. Border Patrol process immigrants. The upshot is that produce shipments for his company that used to take 30 to 45 minutes to clear customs at Nogales now take up to two hours or more. The trucks are refrigerated, so spoilage hasn’t been an issue yet, but all produce has a short shelf life, so any delay in getting it to market is problematic. It also means his truckers are more likely to have to put in double shifts.

“We’ve been really fortunate here in Nogales that our wait times have increased but they haven’t increased to the point of other ports of entry like El Paso and Laredo, where they have gone from four-hour wait times to 16 hours,” he said.

Chamberlain isn’t eager to find out how much longer his luck can hold out. He wants the trade deals settled and for the administration to move on. He’s already hearing from some of his Mexican suppliers that they’re getting fed up with the situation and looking to find markets outside the U.S.

“It is kind of like if you tell your wife, ‘Hey, you’re gaining weight.’ Then you start telling her, ‘Hey, you’re getting chubby.’ Then you start telling her, ‘Hey, you’re getting fat.’ Eventually, she is just going to leave you,” Chamberlain said. “And then you realize she was the best woman you ever had.”