Trump’s new tariffs spark retaliation worries

President Donald Trump has promised to soon put in place long-term tariffs on steel and aluminum, sparking fears of retaliation against fresh produce exports.

Trump said March 1 the tariffs could be in place by mid-March.

“We’re going to build our steel industry back and we’re going to build our aluminum industry back,” Trump said in remarks at the White House.

Canada, Brazil, South Korea and Mexico are the largest suppliers of steel to the U.S., according to the Department of Commerce. Canada, China and Russia are top aluminum suppliers to the U.S.

Leaders of several countries said they would respond if they are hit with tariffs, including Canadian Foreign Minister Chrystia Freeland.

Canada is the top export market for U.S. fruits and vegetables, taking $1.83 billion of vegetables and $1.59 billion of fruit in 2017.

Mexico purchased $570 million worth of U.S. fresh fruit in 2017 and $135 million of U.S. fresh vegetables.

South Korea was the number-three destination for U.S. fresh fruit, importing $490 million of U.S. fruit in 2017.

Retaliation

Mark Powers, president of the Northwest Horticultural Council, said the tariffs announced by Trump are concerning for all U.S. export interests, but the level of concern for specialty crop exporters may depend on what countries are targeted by steel and aluminum tariffs.

If countries do retaliate against U.S. exports, it is unknown if they will go through a formal World Trade Organization process or simply act outside the WTO process.

“That’s a real concern from a policy perspective,” he said.

There is no question that U.S. exports, including fresh produce, might face retaliation with the new steel and aluminum tariffs, said Desmond O’Rourke, economist and president of Belrose Inc., Pullman, Wash.

Mexico, more than Canada, has demonstrated it is willing to retaliate against the fresh fruit industry when it is unhappy with the U.S., O’Rourke said.

Mexico put in place tariffs up to 45% on fruit imports in 2009, shortly after the U.S. ended a pilot program that allowed Mexican truck drivers to operate in the U.S. The tariffs were lifted in 2011 when Mexican trucks were allowed access to the U.S.

O’Rourke said Trump’s move is not unprecedented, and that every president since Lyndon Johnson imposed steel tariffs at various times.

“The steel guys are the greatest whiners in the world,” he said. “They are even better than farmers in saying ‘We are in trouble and we need subsidies,’” he said.

There also may be more uncertainty about Trump’s trade strategy than other recent presidents, O’Rourke said.

“There is this general feeling about Trump that he is unreliable and he could start a trade war which he couldn’t control, but all the other presidents took the same sort of gamble,” he said.

China has waged a “secret trade war” with the U.S. across many industries, including fresh produce, he said.

O’Rourke said China has put in place trade measures that limit U.S. exports, such as deliberately holding back imports of U.S. apples.

“China should be importing 500,000 metric tons of apples, but last year imported only 68,000 metric tons,” he said. “That’s not accidental.”

Concern about a “trade war” is overblown in the sense it is already happening, he said.

“They have been getting away with a lot of unfair trade practices,” he said.

While China needs U.S. soybeans, items like apples, pears and cherries could be an easier target for retaliation, O’Rourke said.