It’s well known that the average auto part crosses the border between the United States and Mexico several times. Same with Canada.
So with 25% tariffs on all goods coming into the U.S. from Canada and Mexico set to begin on Tuesday, new cars are about to get a lot more expensive—anywhere from $3,000 to $5,000, according to estimates.
But what is less well understood is just how integrated the North American food supply chain has become and the critical role that Mexico plays.
In 2023, the U.S. imported $45.4 billion in agricultural products from Mexico. That food supply chain is a vast, complex ecosystem that involves consumers, distributors, farmers, processors, producers and retailers.
But it comes down to one goal—putting food on your table. For example, the guacamole that millions will enjoy next Sunday during the Super Bowl starts in most cases on farms in Mexico with the humble avocado.
Avocados, after all, account for 6% of the $45.4 billion in agricultural imports into the U.S.
If the new tariffs were completely passed along to consumers, the price of a large organic avocado would jump from $2.99 to $3.73, or 25%.
Read RSM’s global economic outlook for 2025 in the latest issue of The Real Economy.
Whether you make guacamole from scratch, as my grandmother Juanita liked to do, or buy pre-made spicy guacamole from Central Market in Austin, Tex., it’s going to cost more.
A seven-ounce package at Central Market, which currently costs $4.98, would jump to $6.22 if the 25% tariff were fully passed along to consumers like me.
Some producers and manufacturers may elect to absorb some of the cost of the tariffs, but at 25%, that cost is too big to completely absorb.
Given that the closest thing the U.S. has to a secular holiday is Super Bowl Sunday, an increase like that may leave a sour taste in what should otherwise prove to be tasty big game.
We are about to get an interesting experiment in Americans’ willingness to tolerate tariffs after the guacamole, cerveza and tequila prices increase in the near term.
The intersection of economics, finance, politics and policy is about to get quite delicious.
Grandma Juanita’s guacamole
- Two ripe avocados
- One-quarter cup red onion
- One diced Roma tomato, remove seeds
- One teaspoon jalapeno diced.
- One tablespoon cilantro
- One tablespoon lime juice
- Pepper and garlic salt to taste.
- Tortilla chips
