Trade problems continue to linger for U.S. importers and exporters.
U.S. importers of European citrus will soon have to pay an additional 25% tariff after the World Trade Organization sided with the U.S. in its dispute with the European Union over illegal subsidies to Airbus.
Subject to expected World Trade Organization approval on Oct. 14, the $7.5 billion (annually) arbitration award allows the U.S. to apply a 25% tariff on agricultural products from the European Union.
According to the Office of the U.S. Trade Representative, it is by far the largest award in WTO history, almost twice the largest previous award.
Fresh produce items hit by the 25% tariff include oranges, mandarins and lemons. In 2018, the U.S. imported $14 million in Spanish clementines. In 2017, the U.S. imported nearly $7 million in Spanish lemons.
The complete list of new tariffs is available online..
China problem and USMCA
U.S. negotiations with the Chinese on Oct. 10-11 will determine if planned U.S. tariff increases take effect Oct. 15, said Richard Owen, vice president of global membership and engagement at the Produce Marketing Association. He said the U.S. is scheduled to increase tariffs on $250 billion worth of Chinese products from 25% to 30% on Oct. 15.
The date for the tariff hike was originally Oct. 1, but was moved back to the 15th by President Trump in anticipation of the negotiations. While Owen said some observers have “muted optimism” for a partial deal, media reports on Oct. 10 said talks had reached an impasse.
The U.S. imports Chinese garlic and ginger and a limited amount of Chinese apples, Owen said the bulk of the tariffs are borne by electronics, auto parts and other industrial goods.
Owen said that there is some political pressure to make progress on the USMCA in the next six weeks.
Despite the impeachment inquiry in the House, Owen said some politicians want to show they can work in a bipartisan way.
“There could be one or two pieces of bipartisan legislation that they may try to pursue just to show that business does continue, and USMCA could be near the top of the list that could show some progress,” he said.
Mexico has shown a willingness to make good on the labor provisions in the deal, he said, which could lead to greater support of the pact by Democrats.
What will happen with Brexit is another area of focus in international trade, Owen said.
With no agreement yet on a deal to establish a new set of rules for trading with the European Union and the Oct. 31 deadline looming large, Owen said the United Kingdom may either have to either accept no deal and leave at the end of October or get some kind of extension to try to see if they can further negotiate with the European Union on the terms.