What do tariffs mean for our industry?

Brace yourselves for some uncertainty. The floral industry in the United States is about to experience significant changes under President Donald Trump’s proposed trade and immigration policies. These policies - should they go forward - will impact the cost and availability of imported flowers, as well as the labor force essential to the industry’s operations.

Impact of Proposed Import Tariffs

This week the 25% tariff on all goods coming into the U.S. from Canada and Mexico and a 10% tariff on China were supposed to go into effect. By Tuesday, Canada got pulled back until April 2nd. The on-again, off-again strategy is leaving floral industry experts scratching their heads.

This is only the beginning as President Trump has threatened other countries he will go as high as 100% if they do not comply with his demands. Numerous potted plants and cut flowers are brought in from Canada, while various types of foliage are sourced from Mexico. Many hard goods, such as vases, are produced in China.

The floral industry heavily relies on imports, particularly from nations such as Colombia and Ecuador. These countries are major suppliers of roses, carnations, and other favored flowers to the U.S. market. Imposing tariffs on floral imports, especially from Colombia and Ecuador, will substantially raise costs for wholesalers and retailers, likely causing higher prices for consumers. The U.S. Chamber of Commerce noted that previous trade policies under the Trump administration, including tariffs, had varied effects on different sectors.

Treaties and Trade Agreements: Protections for Flower Imports

Colombia and Ecuador became vital to the floral industry in the early 1990's. In 1991 the Bush Administration with both the Colombian and Ecuadorian governments signed the Andean Trade Promotion and Drug Eradication Act.  This agreement gave coca-producing countries duty-free access to U.S. markets in exchange for clamping down on growing illegal drugs. Many Colombian and Ecuadorian farms started growing flowers instead of coca and began exporting mainly roses to the United States. In the early days cartels continued to smuggle cocaine in flower boxes, but this has largely gone away with the amount of Customs and Border Protection agents looking through product and sophisticated detection processes implemented at the Miami airport.

The ATPDEA reduced the drug crop in these particular countries and helped create legitimate floral businesses for South American farmers. Some experts feel the drug trade would have grown exponentially if not for the shift to floral imports.

Today the U.S. has existing trade agreements with Colombia and Ecuador, under the U.S.-Colombia Trade Promotion Agreement and the U.S.-Ecuador Trade Agreement Protocol. These agreements provide duty-free access for many goods, including flowers, and are intended to support economic growth in both the U.S. and partner countries.

U.S.-Colombia Trade Promotion Agreement 

Colombia supplies about 78% of imported flowers to the U.S., particularly roses and carnations, which are in high demand year-round, especially around holidays. Imposing tariffs on Colombian flowers could violate this agreement, potentially triggering diplomatic and trade disputes. Renegotiating or attempting to modify these terms would be a lengthy process and could disrupt the current supply chain. Without the agreement’s protections, however, prices for imported flowers could increase significantly, impacting florists and consumers alike.

U.S.-Ecuador Trade Agreement Protocol

Ecuadorian flowers, especially roses, are also essential to the U.S. floral industry, and the trade agreement signed in 2020 reduced many tariffs on Ecuadorian imports, including flowers. If the Trump administration were to impose tariffs despite this agreement, it could strain U.S.-Ecuador relations and raise the cost of imports. This would likely impact wholesalers who rely on Ecuadorian flowers to meet consumer demands at competitive prices.

Impact on Domestic Flower Growers

Although some advocates of tariffs argue that they boost domestic production investment, the extent to which this could replace the existing floral industry is unlikely to be achievable in the near future.

Higher tariffs on imported flowers could lead wholesalers and florists to source more domestically, boosting demand for U.S.-grown flowers and expanding market opportunities for domestic growers. However, scaling production is challenging due to labor-intensive processes reliant on seasonal, often immigrant labor, which may be impacted by stricter immigration policies. Labor shortages could limit the ability to meet demand, causing supply shortages or higher prices.

Expanding production requires significant investment in greenhouses, transportation, and cold storage, which may be prohibitive for smaller farms, especially with persistent labor shortages. Extreme weather in the U.S. can also affect crop availability, complicating efforts to meet demand year-round without imports.

Domestic growers might focus on seasonal, regionally adapted flowers, promoting a “local-first” approach that appeals to environmentally conscious consumers, though it may limit variety.

Labor Force Considerations

The floral industry significantly depends on a workforce comprising numerous immigrant workers. President Trump's immigration policies, emphasizing stricter enforcement and potential mass deportations, could reduce the labor supply in agriculture and related sectors. Analysts have observed that previous attempts to restrict immigrant workers have not effectively raised wages for native-born citizens but have instead led to labor shortages.

A reduction in the labor force might impact the domestic cultivation and distribution of flowers, possibly leading to supply shortages and increased operational costs for businesses in the industry.

Potential Impacts on our Industry

Supply Chain Challenges: Importers and domestic growers need to adapt to a less predictable market. Wholesalers may develop more flexible sourcing strategies, balancing between domestic and international suppliers to handle cost fluctuations.

Price Increases: Consumers may face higher prices for floral products as the industry adjusts to tariff changes and potential labor shortages. Significant price increases might occur during major floral events like Mother’s Day.

Innovation and Sustainability Trends: Businesses might innovate with dried flowers, native species, or sustainable farming practices to adapt to these changes. This could also lead to more localized floral arrangements that align with seasonal availability, reducing import dependency and appealing to sustainability-conscious consumers.

Future Outlook

To tackle these possible challenges, the floral industry may need to consider alternative sourcing strategies, enhance domestic flower production, and implement technological innovations to address labor shortages. The degree of impact will depend on the specific aspects and implementation of the proposed policies, along with the industry's ability to adapt to these changes.

As the situation evolves, stakeholders in the floral industry must stay informed and proactive to manage the potential economic and operational changes resulting from the new administration’s policies.

Sources: This blog was adapted from Living Flowers

"As history has repeatedly proven, one trade tariff begets another, then another - until you've got a full-blown trade war. No one ever wins, and consumers always get screwed."

Mark McKinnon