Pecans: opposing views over chaotic tariffs

Chaotic back and forth

Trump’s blanket tariffs on Mexico and Canada initially took effect on 4 March along with a doubling of the tariff for Chinese imports from 10% to 20%. While China swiftly reacted with retaliatory measures coming into effect on 10 March, which comprise additional 10% tariffs against US pecans, Trump backtracked on the tariffs for Mexico and Canada on 5 March after negotiating with Mexico’s President Claudia Sheinbaum and Canadian Prime Minister Justin Trudeau. He suspended the 25% tariff for products covered in the US-Mexico-Canada Agreement, which also applies to pecans. Other non-agricultural products not covered in this agreement will be subject to tariffs in April.

Trump’s back-and-forth policies have left the pecan industry in a state of turmoil and uncertainty. While Mexican-based exporter Pecaninis highlights that the proposed 25% US import tariff on all Mexican products will ultimately hurt both sides in the March report, US market analyst Matthew Baily from Pecan Report is confident that US producers will profit.

Harm has already been done

According to Pecaninis the recent posturing in the US has already done a lot of harm. This is also confirmed by the USDA’s Economic Research Service, which shows that China, Mexico and Canada are the three most important trading partners for the US industry. US exports to China have already taken an 82% hit to USD 10.746 million in 2024/25 as compared with 2023/2024 and have slumped by 75% in Mexico to USD 1.115 million, whereas shipments to Canda are only 1% down at USD 12.297 million.

Yet, the trade dynamics work both ways for pecans as growing and shelling are closely intertwined. If the tariffs come into effect, they will render Mexican pecans 25% more expensive. US suppliers will probably pass these costs on to their customers, which will prompt US consumers to think twice about which nuts to purchase and render alternatives such as almonds or walnuts more attractive. Mexico will certainly lose sales and contracts here. Confidence in the US as a reliable partner has also been shattered as Mexican exporters are already turning to the international market, while still honouring contracts with US partners.

Short-term thinking

From the US perspective Bailey also concedes that the impact of Trump’s tariffs on prices, imports from Mexico and changes in US pecan exports needs to be assessed. Yet, his main argument is that they will support US pecan growers. Not only will the large volumes imported from Mexico amounting to around 69% of the US crop that create a lot of price pressure at the start of the harvest season be diminished, but he is also confident that consumers will switch to US pecans and that domestic production will be able to meet this demand. In addition, he suggests that US exporters may be able to redirect the import volumes from Mexico to other countries.

According to Pecaninis this is, however, short-term thinking. As prices for pecans will climb, the domestic market share and ultimately prices will decline for pecans. In addition, the US crop may not necessarily be able to meet domestic demand. US exports will also mainly target Isreal and South Korea, where protectionist tariffs against Mexican pecans are in place. Apart from this US exporters will experience fiercer competition from Mexico. If the trade war escalates retaliatory measures impacting US pecans may well be implemented in Canda and Europe. US pecan producers will, in other words, gain a monopoly in the domestic market, the largest pecan consuming market in the world, yet will also lose valuable market shares internationally.

Limited supplies vs. uncovered buyers

Apart from this demand was still strong in Europe and Canada in February, whereas in-supplies are very much limited in Mexico and the USA. Halves are trading high as it is difficult to buy them from shellers this year. As many companies still need to book volumes for the third and fourth quarter, the prices for halves are expected to rise, whereas pieces should trade firm in the remaining crop year.

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