However, the same study reports that total demand for most U.S. fruit and nuts will increase over the next year.
Increasing Chinese demand will partially offset the effects of the tariffs. Fueled mostly by China and India, the Asian Pacific middle class will expand from 2 billion people in 2020 to 3.5 billion by 2030, according to Rabobank fruit analysts David Magana and Roland Fumasi, who wrote the study.
The study said estimated sales of U.S. fruits and nuts to China for the year ending July 2019 will range from just over 5% down for almonds to 25%-30% lower for grapes and cherries.
Because China is a big producer of mandarins, grapes, walnuts and peaches, those U.S. imports are particularly vulnerable, Fumasi said.
Cherries are a luxury item and saw sales drop this year, Fumasi said, when Chinese online retailer Alibaba pulled back on its marketing of U.S. cherries because of the trade uncertainty.
Growing world demand
Despite the Chinese tariffs — currently between 50% to 60% for most U.S. fresh fruit and nuts — the authors said the potential change in total demand for U.S. fruits and tree nuts (domestic and export) is still positive for most commodities. That is especially true for almonds, walnuts, mandarins and lemons, the authors said.
The study also accounted for increased tariffs by India on U.S. apples, almonds and walnuts.
The report estimated the range of potential changes in demand for U.S. fruits and nuts for the year ending July 2019, and found that only peaches, pears and raisins are expected to face lower demand.
All other commodities — almonds, walnuts, pistachios, oranges, mandarins, lemons, grapes, apples and cherries — will find increased demand.
“The overall demand change was still positive for nine of the twelve crops,” Fumasi said on Sept.6. “I don’t know if it was surprising as it was refreshing.”
Estimated lower year-over-year demand for raisins, peaches and pears relates as much to sagging domestic demand and global export trends as it does lower sales to China, Fumasi said.
The authors recommended several possible strategies to help fruit and nut marketers deal with trade uncertainty with China and other markets:
- Strengthen relationships in the domestic market;
- Diversify export sales and divert to low tariff/no tariff markets;
- Share tariff costs with importers;
- Emphasize reliability as a supplier; and
- Focus on innovation and product quality.
With no end to trade tensions with China in view — and the possibility of additional tariffs by both the U.S. and China — the report said the trade outlook could become dimmer.
“If trade wars intensify on different fronts, such as Canada, Mexico or Europe, the outlook for international demand could worsen considerably,” the report said.