To the profound disappointment of U.S. fruit exporters, the tit-for-tat trade war with China shows no signs of ending soon.
Unhappy with the progress of trade talks with China, President Trump will slap a 10% tariff on $300 billion worth of goods from the country starting Sept. 1.
In a series of tweets Aug. 1, Trump said China had reneged on previous commitments to buy more U.S. farm products.
“We thought we had a deal with China three months ago, but sadly, China decided to re-negotiate the deal prior to signing,” Trump said in a tweet. “More recently, China agreed to buy agricultural product from the U.S. in large quantities, but did not do so.”
In response, China said Aug. 5 it would direct state-owned enterprises not to purchase U.S. farm commodities and issued a currency devaluation, signaling another escalation in a more than year-long trade battle with the U.S.
The dispute had its beginning on May 10 last year, when President Trump increased duties on $200 billion worth of Chinese products from 10% to 25%. China retaliated in July last year with 40% retaliatory tariffs put in place against apples, cherries, pears and other commodities in response to U.S. Section 232 steel and aluminum tariffs and Section 301 tariffs based on technology transfer concerns. That was in addition to an already existing 10% tariff.
Mark Powers, president of the Northwest Horticultural Council, Yakima, Wash. said his interpretation of China’s decision to avoid buying U.S. agricultural commodities is that the directive applies to state-owned enterprises.
In any case, the Northwest is done shipping cherries to China and 2018-19 apple exports to China are also winding down.
“My thinking is that we’ve got a few months for things to settle down and sort out,” he said.
Powers said farmers are optimistic but the trade dispute with China could continue for some time.
“I would be surprised if all of a sudden everything turned out to be resolved,” Powers said. “I think this is long, multi-year process.”
For the 2018-19 season, Washington apple exports to China accounted for 3% of the state’s total exports, said Toni Lynn Adams, communications outreach coordinator for the Washington Apple Commission.
“Even with a 50% tariff and a reduced crop volume (117 million boxes versus 133 million boxes), Washington has exported nearly 900,000 boxes to China season to date,” Adams said in an e-mail.
Along with China’s combined tariff of 50% on U.S. apples, India has imposed a 20% retaliatory tariff on U.S. apples in addition to its previous 50% tariff, bringing that country’s total combined tariff to 70%. Russia continues its ban on U.S. fruit imports, and Indonesia’s trade rules hamper U.S. imports.
“So the good news is we still have our (duty-free access) to our North American neighbors (Mexico and Canada) and priority No. 1 is maintaining that,” Powers said.
Casey Creamer, president of California Citrus Mutual, Exeter, said the Chinese tariffs have hurt the industry.
“It just makes it that much more difficult to move product when you’ve got the tariffs in place,” he said.
While the Trump administration has put money in place to purchase citrus and other commodities to boost farmer and grower income, the recent statement by China to stop all U.S. commodity purchases will hurt growers even more.
“We will be more impacted than what we’ve been estimating before (and) we are going to need to continue talks with the USDA administration on protecting the citrus industry because we’re an unintended consequence of the (trade war),” Creamer said.
“This may still linger for quite some time and one of the biggest fears we have is that these markets are not easy to open up and once they close it’ll be even harder to get back in there,” he said.
USDA trade statistics show U.S. fresh fruit exports to China from July 2018 through June 2019 were $123 million, down by nearly half from $239 million from June 2017 through July 2018. Fresh vegetable exports to China slid from $1.21 million in 2017-18 to $516,000 in 2018-19.