Tensions are rising for U.S. - China trade. ( File photo )

The clock is counting down with anticipation to the start of U.S. cherry season in May and with dread over possible new tariffs on exports to China.

China is the third largest market for U.S. cherry exports, behind South Korea and Canada.

Along with cherries, China has identified dozens of U.S. fresh fruit and nut exports among its top targets for trade retaliation for the Trump administration’s tariffs on Chinese steel and aluminum imports on March 23.

While most other U.S. trading partners were spared the steel and aluminum tariffs — Mexico, Canada, Europe, Brazil, Argentina, Australia and South Korea were either given temporary or permanent exemptions — trade tensions with China continued into late March. In concert with the dispute, the U.S. Trade Representative on March 22 published a paper detailing China’s unfair trade practices, especially related to theft of intellectual property from U.S. companies. While U.S. and Chinese officials are in talks to resolve the conflict, there was no sign of a breakthrough by late March.

The targeted items for retaliation were announced on a Chinese government website, which said that its first priority list of targeted products includes a 15% tariff on fresh fruit, dried fruit and nuts.

All together, the value of those exports to China is $977 million.

Apples, pears, oranges, cherries, strawberries, peaches, lemons, mandarins, plums, almonds, cashews, pistachios and walnuts are on the list.

 

Trade impact

China is a huge market for U.S. nuts, buying $100 million worth of U.S. pistachios and $41 million in almonds in 2017.

U.S. exports of cherries to China in 2017 topped $122 million, with significant shipments starting in May. U.S. orange exports to China were $48 million in 2017, while apple exports to China totaled $18 million.

Chinese officials said the U.S. tariffs of 25% and 10% on imported steel and aluminum products from China on the grounds of “national security” represent a safeguard measure.

Because of that, China said the World Trade Organization will allow it to impose tariffs on targeted U.S. products if the U.S. and China fail to reach a trade compensation agreement within 30 days.

A second list of U.S. exports targeted by China for 25% retaliatory tariffs includes pork and processed products, recycled aluminum and other products, according to the Chinese website. The value of those U.S. exports to China approaches $2 billion, China said.

China said it will impose tariffs on the second list of items after considering the harm caused by U.S. steel and aluminum tariffs.

 

Looking ahead

Mexico and Canada have temporary exclusions from the steel and aluminum tariffs until May 1, said Mark Powers, president of the Northwest Horticultural Council.

“Those countries are still of concern, but there is hope and expectation that something will be worked out,” he said. In addition, Powers said South Korea has received a permanent exemption from the tariffs. South Korea is a key market for U.S. cherry exports.

“The administration is in talks with the Chinese to avoid a trade war and hopefully that will occur,” Powers said. With the Washington cherry season starting June, a 15% tariff by China would dim export prospects.

Meanwhile, Powers said there is pressure on the North American Free Trade Agreement talks to conclude by May 1 in order to finish the deal before Mexican and U.S. elections, and to have the pact ratified by the U.S. Congress by mid-year, Powers said.

“If they pass the May 1 deadline, timelines under the trade promotion authority make it unlikely that the agreement could be ratified by this Congress,” he said.

Preserving U.S. fruit exports to China is important for all growers, said Desmond O’Rourke, economist and president of Belrose Inc., Pullman, Wash.

“It may hurt other apple producers in the U.S. more than it hurts the state of Washington, because if Washington faces (higher tariffs) in China, it will slow their sales and they will have more fruit available for other exports markets or the domestic market,” he said. “The prayer for Eastern (growers) is that Washington keeps exporting.”

Keeping trade open for cherries from California and the Northwest may be even more critical than for apples, he said.

“Sweet cherry folks may be the hardest hit if the market is restricted, because China is much more important to sweet cherries than it is to the apple guys,” O’Rourke said. “With apples you can store them and try to find new markets, but with sweet cherries, it is too late to find other markets.”

 

 
Comments
Submitted by Larry on Sat, 03/31/2018 - 03:51

A additional tariff on cherries and other us produce is not going to stop the Chinese consumer from buying them.
How many times has the U S consumer done without their favorite fruit of vegetable because their price is 25% higher than usual. How many times have you refused to buy avocados because they were 25% more than usual or go to another store because they were 25% more exspensive at your favorite store than another.
Besides, President Trump is making better deals for the United States than those before him made. There will not be a trade war but better deals thanks to Presdent Trump.
Get out of the barnyard and stop looking up screaming THE SKY IS FALLING! THE SKY IS FALLING!

Submitted by JJ on Mon, 04/02/2018 - 09:14

Unfair trade and less than amicable business practices on behalf of China have had a negative impact on the US economy for many many years. Previous administrations lacked the courage to address those issues. In business, all of us have to address issues that negatively impact our operations, and profitability. Correcting those issues often come with a certain level of risk and it is almost impossible to make positive change without some minor disturbances in certain sectors. It is no different for the current administration. China is an extremely important trade partner, however, regardless of your importance or volume or value, successful businesses operate by rules dictated by capitalism and if a faction within your business operates seemingly immune to those rules, you are bound to fail. About time this gets addressed. The result will be beneficial to the US and China alike.

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