Chipotle Says Tariffs Could Increase Costs by $15M

If the tariffs become permanent Chipotle would have to offset them through cost-cutting or price increases.


Restaurant chain Chiptole Mexican Grill says the Trump administration's threatened tariffs on Mexican products could add $15 million to its costs in 2019. Chipotle Chief Financial Officer Jack Hartung said Monday the tariffs would reduce profit margins for the fast food company, which sells burritos and tacos and claims to use 450,000 avocados per day. 

Under the Trump administration's plan, tariffs would start at five percent on June 10 and rise to 25 percent in October. President Donald Trump says he will impose the tariffs as a way to force the Mexican government to block mostly Central American migrants from crossing into the U.S. Hartung says if the tariffs become permanent Chipotle would offset them through cost-cutting efforts or modest price increases, such as a nickel per burrito. 

Chipotle uses avocados and other produce grown in Mexico. The chain operates 2,500 restaurants in the U.S., Canada and Europe.

Mexico has launched a counter-offensive against the threat of U.S. tariffs, saying the steps it has taken on immigration have kept hundreds of thousands of migrants from reaching the United States. Mexico said Monday it will go only so far to avert the duties and absolutely ruled out a "third safe country" agreement that would require asylum seekers to apply for refuge in Mexico first. 

Mexico's ambassador to the United States, Martha Barcena, says, "There is a clear limit to what we can negotiate, and the limit is Mexican dignity." Mexican officials have traveled to meet their U.S. counterparts in Washington. In a news conference, Mexican Foreign Relations Secretary Marcelo Ebrard said that any third-country agreement would be unacceptable for Mexico. 

Mexico says that imposing a five percent tariff on its goods would be very costly for the economies of both Mexico and the United States and warns that it could cause an additional quarter-million Central American nationals to migrate north this year.