Packer Insight - Richard Owen on retaliation by China
Richard Owen and Ashley Nickle discuss the fallout of new tariffs imposed on Chinese goods. ( The Packer )

President Donald Trump has announced plans to put in place 25% tariffs on $50 billion worth of Chinese goods, and apples and cherries are among the items that will be affected by retaliatory tariffs from China.

In a statement released June 15, Trump cited a trade imbalance and China’s theft of intellectual property and technology as the reasons for the tariffs. China has vowed to respond in kind.

Richard Owen, vice president of global business development for the Produce Market Association, said the move by the U.S. is not a complete surprise.

It was floated as possibility in April, and during that same time frame China put together a list of products it would target in response if more tariffs came down.

Owen was still looking through the tariff lines to see which fresh produce items are included, but he expected the usual suspects would be there.

“Apples were already facing a tariff increase back in April, and this would add onto the tariffs for, I believe, cherries, apples and a few other products,” Owen said.

It is unknown whether the back-and-forth on tariffs will continue for some time or whether the exchange is a shorter-term tactic to create leverage in negotiations.

Producers may not have the luxury of waiting for clarity.

“If you are, for example, a cherry producer in the Pacific Northwest, you’re picking cherries now to sell into the Chinese marketplace,” Owen said. “Fortunately cherries are a fairly high-value product, and so some products like that can absorb a little bit more (in terms of) tariffs, but what’s going to happen is you will see some smaller volumes, but you also see some of those markets turn to other places to source the products.”

With a new apple crop set to harvest in a few months, some of those growers might have to re-evaluate the markets they supply and consider whether they will need to diversify more.

“This is basically a give-and-take on these trade tariffs, and who knows if there’s going to be another round after this,” Owen said.

Trump indicated in his statement June 15 that retaliation by the Chinese to the tariffs would be met with additional tariffs.

Owen cautioned against that approach.

“I certainly recognize that there are some things to address in terms of trade between the U.S. and China, I know intellectual property and protection of intellectual property, for a number of industries including agriculture, is something that people have wanted to focus on, but that can be addressed in a multitude of different ways without taking a heavy hand and imposing tariffs that impact a much broader sector of the economy than just the one that you want to make a difference on,” Owen said.

He noted there is some concern about the trade dispute sullying the reputation of U.S. suppliers to the market — one producers have been working hard to access.

“They wouldn’t want to lose these markets,” Owen said, “and they also want to make sure that they’re seen as a reliable and dependable supplier and that those markets — China in particular — don’t look toward other places to (supply) the market.”

 
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