Apples and cherries are counted among agricultural commodities hurt the most by retaliatory tariffs by China, Mexico and other countries, a new report from the Congressional Research Service says.
Called “Profiles and Effects of Retaliatory Tariffs on U.S. Agricultural Exports,” the report notes that many countries have imposed tariffs on U.S. agricultural products to retaliate against actions the Trump administration took in spring 2018 to protect U.S. steel and aluminum producers and in response to Chinese intellectual property rights policies.
U.S. apple exports to Mexico and China are now subject to additional tariffs of 20% and 40% respectively, the report said.
Before, apples to Mexico faced no tariffs. Counting China’s previous tariff of 10%, China’s current tariff rate is 50%, according to the report.
The two countries accounted for about 30% of the $969 million total U.S. apple exports in 2017, according to the report.
India is another important market for U.S. apple exporters, with 10% of total exports. While it has delayed a retaliatory tariff on U.S. apples several times, the Indian government has said that it will apply a 30% tariff on U.S. apples starting Jan. 31 — on top of the current 50% tariff on U.S. apples.
For cherries, the report said China’s 40% retaliatory tariff — creating a current rate of 50% — took a toll on U.S. cherry exports in 2018 and could spark importers to look for supplies from other countries.
The U.S. should lift tariffs on Mexican steel and aluminum because the U.S.-Mexico-Canada Agreement has been successfully negotiated, said Jim Bair, president and CEO of the U.S. Apple Association. That action would likely open the door for Mexico to remove its retaliatory tariffs, he said.
Bair said the apple association has talked with Trump administration officials, encouraging them to remove U.S. Section 232 tariffs on steel and aluminum.
“So long as the Section 232 tariffs remain in place as a market reality, so long as there are those retaliatory tariffs are in place as a result of the steel, aluminum tariffs, then the USMCA cannot be successful,” he said. “The Trump administration says they view those as two separate issues, but the reality on the ground is that they’re inseparable.”
Bair said China had been a bright spot for U.S. apple exporters before retaliatory tariffs took effect.
“We’ve only had access to that market since May of 2015, and between May of 2015 to May of 2018, they went from zero imports to 2.5 million cartons,” Bair said. “They were buying top-quality varieties and paying premium prices for it, so we’re anxious to see that gets settled,” he said.