China’s retaliatory tariffs continue to take a toll

China’s retaliatory tariffs continue to take a toll

Unrelenting trade friction with China will likely cost U.S. fruit growers export sales again in 2019.

“Nothing is changed from the first week in July of last year,” said Mark Powers, president of the Northwest Horticultural Council. For U.S. and Northwest growers of cherries, apples and pears, exports to China face 40% retaliatory tariffs put in place in response to U.S. Section 232 steel and aluminum tariffs and Section 301 tariffs based on technology transfer concerns. On top of that, there’s the normal tariff rate of 10% and a value-added tax.

Last year, Northwest cherry shipments to China were off 41% compared with the 2017 season, Powers said.
Administration officials were negotiating with Chinese trade representatives the week of May 6. President Trump threatened to levy additional tariffs on Chinese goods in response to China retreating from earlier commitments in the trade talk, according to media reports.

If that happens, China may retaliate, but Powers said the tariffs they already have in place against fruit are punitive.

“I would argue they are better off picking other products,” he said.

The Trump administration’s $12 billion in trade mitigation/trade facilitation/commodity purchases provided to growers last year to mitigate the effect of reduced export sales isn’t expected to be repeated, Powers said.
Powers said he hopes that U.S.-China talks can resolve outstanding issues in time to remove China’s retaliatory tariffs for this season.

“Part of our concern is that even if there is a solution (this week), it’s our understanding that (U.S. tariffs) may not come off immediately,” he said.

If the U.S. doesn’t take down its tariffs immediately after a deal, Powers said it is unlikely that China would either.

“For the cherry guys, in particular, that’s a real problem, because cherry season is right around the corner,” he said.

While China’s punitive tariffs are a concern for the 2019, Powers said cherry growers expect good sales to South Korea, Australia and other markets.

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