Donald Trump may be backing down from his “Mexico will definitely pay for it” stance on his border wall, but things are still a little murky as to where they will actually find room in the budget. One of the proposed solutions is a 20% tariff on all Mexican imports, which, if imposed, would squeeze the money from the American people. Sometimes it is tricky to see exactly how policy changes will affect you personally, so let’s put this in terms that you might understand: if Trump and his cabinet go the tariff route, your guac will be even more expensive.
According to analysts, Chipotle could be one of the first to feel the brunt of the additional cost of importing. Chipotle gets as many as 70 million pounds of avocados from Mexico yearly, and Instinet analyst Mark Kalinowski told Business Insider that this tariff could have huge ramifications for the chain.
“Our belief is that the company generally obtains about 70-90% of its avocados from Mexico, all of its limes, the majority of its jalapenos, less than half of its tomatoes, and small amounts of other items (e.g., cilantro). In other words, should a 20% tariff be enacted for goods imported from Mexico, Chipotle likely would bear the biggest brunt of this potential impact on food costs compared to the other companies we cover.”
Chipotle has been facing an uphill battle for the past year with sharp revenue declines following the bacterial outbreaks, so this could be a potentially devastating blow. Chipotle spokesman Chris Arnold did his best to quell any panic, but you should start expecting to pay out the nose for guacamole the next time you want to give your burrito a little something extra.
“There are a host of variables that can impact upon food costs (weather, supply and demand, and public policy decisions, among others). If any events impact our food costs in material ways, we’ll make that information available in a timely fashion, but we’re not going to speculate about what any of these events might mean.”
Now, there are certainly more important things to worry about with the border wall, but this is just one real world example of how it will likely affect your day to day. With an undertaking this yuuuuuge, the ripples will definitely be felt by all.
(Via Business Insider)