Year in Produce No. 1 — Trade troubles

Year in Produce No. 1 — Trade troubles

The dark cloud hanging over U.S. fruit exports won’t go away.

While a mid-December “phase one” trade agreement with China lifted spirits and forestalled any escalation in the trade war with China, it
did not immediately remove Chinese tariffs on fresh produce.

Retaliatory tariffs from major trading partners stemming from the Trump administration’s 2018 penalties on imports of steel, aluminum and other goods have frustrated U.S. fruit exporters since mid-2018 and those worries will continue into 2020.

While the Trump administration has put in place program to mitigate the effects of trade retaliation, those programs haven’t compensated for the loss of export sales, said Mark Powers, president of the Northwest Horticultural Council, Yakima, Wash.

And while there was hope and optimism for a mid-December limited trade deal with China, Powers said there is much uncertainty when China’s tariffs on U.S. fruit will be removed.

“I think the update is simply that we’re still waiting developments,” Powers said. “And so and while we wait, our growers are paying a price for these decisions.”

The trade mitigation programs put together by the USDA included direct payments, commodity purchases and funds for export promotions. The USDA allocated $12 billion for those programs in 2018 and a second round of funding in 2019 provided up to $16 billion to offset trade retaliation growers are facing. While growers of cherries, grapes, cranberries and nuts will receive direct payments, most of the funds provided to specialty crop growers came in the form of commodity purchases and funds for trade promotion in export markets. The success of those programs varied by commodity, Powers said.

Powers said many growers want to give the Trump administration time but the consequence of trade barriers are real.

“Ultimately, we’re now in year two and there doesn’t appear to be a short term end to this, and that is something that has real long term potential impacts.”

Nov. 5
Retaliatory trade tariffs continue to hurt U.S. fruit exports
By Tom Karst

Updated trade statistics show that total U.S. exports of fresh fruit dropped 8% from September 2018 to August. U.S. exports of fresh vegetables rose 7% in the same period, according to the U.S. Department of Agriculture. 

The numbers appear to confirm the stinging combined effect of retaliatory and standard tariffs of 50% or more applied by China and India over the past year. U.S. fresh fruit exports to China are off by more than one-third, while shipments to India are down 65% compared with the previous year.

Aug. 27
China adds to fruit tariffs
By Tom Karst

The hits keep on coming for U.S. fruit exporters.

China’s tariffs on U.S. apples, pears, cherries and U.S. commodities will increase an additional 10% Sept. 1.

The Aug. 23 move is another insult to the mounting injury caused by the more than year-long trade fight between China and the U.S.
In response to China’s decision, the U.S. announced planned tariff increases on a variety of Chinese goods, including vegetables, apples and mushrooms.

U.S. apples, pears and cherries are all subject to an additional 10% tariffs starting Sept. 1, said Todd Fryhover, president of the Washington Apple Commission. 

That will brings the total retaliatory tariffs on U.S. fruit to 50% since last year, he said. Combined with the existing standard tariff of 10%, imports of U.S. fruit must pay 60% of the value of the fruit to bring it into China.

“We did talk to our representatives who went out and called customers in China, specifically retail accounts and importers, and their comment was that they expect to continue to buy till it becomes unprofitable,” he said Aug. 26. 

With the end of one season and the start of another, Fryhover said it is hard to predict what will happen next, but the high tariff will be a heavy burden to bear.

For the 2018-19 marketing season, Washington apple exports to China are off 22.1% compared with the previous year, Fryhover said.
India’s retaliatory tariff of 20%, added its existing tariff of 50%, will also limit export sales there this season, Fryhover said. 

U.S. apple exports to India in June this year totaled 1,427 metric tons, down from 15,800 metric tons in June 2018.

Aug. 9
U.S., China up the ante in trade war
By Tom Karst

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. 

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.