A South Philly produce distributor is girding for pain from Trump’s tariffs on Mexico

When the news sank in Tuesday that President Donald Trump’s tariffs on imports from Mexico and Canada had taken effect, there wasn’t much John Vena could do.

The third-generation Philadelphia wholesale produce distributor gets Haas avocados, greenhouse bell peppers, and hundreds of specialty crops, including cucumbers and squash, from Mexico — all of which were suddenly subject to a 25% levy.

So that morning Vena signed up for a webinar on tariffs, checked his email, and read a couple of news articles about the new global trade war taking shape.

“To be honest, as a wholesaler in Philadelphia, I’m kind of powerless,” Vena, 72, of Haddon Heights, said Tuesday. “We just have to go along with what’s happening, and day by day we’ll figure it out.”

The trade war unleashed by Trump — slapping 25% tariffs on most imports from putative allies Canada and Mexico, while also increasing levies on China to 20% — has deepened uncertainty across the economy. The latest whiplash came Thursday, when Trump said he would pause tariffs for a month on goods from Canada and Mexico that are covered by an existing trade agreement.

Trump has also targeted specific commodities such as steel and aluminum with tariffs, set to go into effect this month, and vowed to punch back against other countries’ levies with reciprocal tariffs starting in April.

“It’s really quite an expansive and profound approach, and one that we really have literally never seen in recent history,” said Jonathan Doh, professor of international business at Villanova University.

» READ MORE: Why Trump’s tariffs could have ‘bigger impacts’ this time around

Trump’s pause Thursday came after retailers such as Target and Best Buy said they would likely have to raise prices. A day earlier, the president gave automakers a one-month reprieve from North American tariffs after industry executives and analysts warned car prices could climb by thousands of dollars.

Vena’s 90-employee South Philadelphia produce business is a small player in a global drama that has rattled financial markets, prompted vows of retaliation, and, at least for now, upended even the North American trade deal Trump himself negotiated during his first term.

Still, Vena has a close-up view into how the conflict could affect U.S. consumers at a place they shop every week and where Trump repeatedly promised on the campaign trail to bring down prices: the grocery store.

“It’s very difficult for somebody in my business to see how tariffs on fresh produce or any food products will serve the current administration in their goal to lower prices at the grocery store,” Vena said. “I don’t see how those ideas work together.”

Trump, in his speech to Congress on Tuesday, gave multiple reasons for imposing tariffs on Canada and Mexico, citing the flow of the synthetic opioid fentanyl into the U.S. and saying America effectively subsidizes those countries to the tune of “hundreds of billions of dollars” — an apparent reference to trade deficits.

Canadian Prime Minister Justin Trudeau said this week that less than 1% of the fentanyl confiscated at the U.S. border comes from his country. Trump has long complained that the U.S. imports more goods and services than it exports. U.S. policy has traditionally favored consumption over savings, fueling the trade deficit, Doh said.

Trump said his trade agenda would make America richer and encourage companies to invest in the U.S. so they can avoid his tariffs, citing Honda’s reported decision to make its next Civic in Indiana instead of Mexico.

That may work in certain industries. But fresh-fruit executives say nearly all of the U.S. lacks the necessary climate to grow some produce, such as bananas and tropical fruits.

“There are some products for which there is no or minimal U.S.-based production due to the lack of appropriate growing conditions,” Bret Erickson, a board member of the International Fresh Produce Association, said in written testimony to the U.S. Senate Committee on Agriculture, Nutrition, and Forestry last month.

About 30% of fresh fruit available in the U.S. comes from Mexico, according to a 2023 U.S. Department of Agriculture analysis, as does 26% of fresh vegetables. Canada is a smaller player, especially in fruit, but still provides about 8% of fresh vegetables in the U.S. in terms of dollar value.

The International Fresh Produce Association — a trade group that represents growers, shippers, wholesalers, distributors, and others — said this week the tariffs will “drive up costs for both the fresh produce industry and consumers.”

Vena said free trade with Mexico has been a boon to the family business — John Vena Inc. — which began in 1919 when his grandfather, who had emigrated from Italy, pushed a cart on Dock Street in Society Hill, site of the city’s wholesale produce market until the mid-20th century.

The company started out selling mostly local produce but gained a foothold in specialty products in the 1980s — by which point John Vena III, the current proprietor, had joined the family business — importing greenhouse-grown bell peppers from Holland and tomatoes from Israel.

Trade with Mexico “allowed for an investment in [greenhouse] facilities and farms in Mexico that didn’t exist before that,” Vena said, citing favorable climate conditions and cheaper labor. “So it made a big difference in the supply that was available and allowed us to use our expertise to increase our volume on those items,” he said.

Today the company — now based at the 686,000-square-foot wholesale produce market on Essington Avenue near the airport — gets multiple loads of greenhouse bell peppers and Haas avocados a week. Vena invested in a repacking facility and ripening room for avocados, plantains, and other products.

His customers include retailers ranging from street corner vendors to Acme supermarkets, plus food-service businesses and other wholesalers.

This time of year, imports account for about 70% of Vena’s produce, with Mexico supplying the bulk of that. By late spring, imports and domestic sources will each account for 50% of his produce, he said.

Contrary to Trump’s claims that foreign countries will pay the tariffs, Vena learned Tuesday that he will have to foot the bill for the bell peppers handled by his importer.

“According to their customs broker, because we’re the final destination for the peppers, we will probably be getting an invoice for tariffs,” Vena said.

He wasn’t able to prepare ahead of time, he said, because the Trump administration has signaled “different directions at different times.”

Vena and other avocado distributors may be able to source more of their produce from exporters like Colombia and Peru, which do not face tariffs. In the U.S., California is a big market, but fruit trees take years to develop — and avocados require a lot of water — so the state could not make up the difference anytime soon, Vena said.

“There’s no immediate replacement for anything, even something as basic as tomatoes or field-grown cucumbers,” he said. “There are very few places where you can pick those things now. And this is a big country that requires a lot of fresh produce to feed itself.”

So can’t Vena just eat the tariffs and pass the cost onto his customers? He chuckled at the suggestion.

“If we were in the hardware business and we could calculate the value of what we had on hand, and add tariffs to it and figure out, you know, where our margins are — that might work out,” he said. But produce, he said, is “a totally supply-and-demand business, so I can’t sell anything here higher than the market.”

Tariffs will add to his fixed costs alongside freight and other expenses — meaning he will have to pay the levy regardless of whether he is able to sell his products.

“We’re not really sure what’s going to happen, but the answer for us is not simply, ‘Oh, well, we’ll just raise prices,’ because our prices are only what the customers can pay for the products,” Vena said. “If the market doesn’t bear it, we’re going to be in trouble.”

For most products, consumers are “somewhat responsive” to price changes, said Doh, the Villanova professor.

“That means that the importer is going to eat some of this, the wholesaler is going to eat some of this, and the consumer is going to eat some of this,” Doh said. “So we’re all going to share in the pain, if you will, of how this 25% gets distributed. And if the price goes up too much at the final marketplace, consumers stop buying or buy a substitute product.”

Vena is hoping the produce trade group of which he is a member will successfully lobby the Trump administration to exempt fresh fruit and vegetables from tariffs — though the industry may not have as much clout as the automakers.

In the meantime, he expects to reduce the amount of produce he brings in from Mexico “until we have a sense of where the market’s going to settle,” he said, “and then determine if we can cover this added expense.”

Vena says other market participants will likely do the same thing. That alone would reduce the supply of produce in the U.S.

“If you have a shrinking supply, regardless of demand,” he said, “eventually you’re going to see higher prices.”