A bitter harvest for California
California’s agricultural community hopes the Trump administration will ditch its plans to impose tariffs on Chinese aluminum and steel, as the state’s farmers will be hit hard if its top trading partner imposes retaliatory levies.
Associations representing the wine, nut and citrus sectors have voiced concerns over potential 15 percent tariffs on US agricultural commodities, mostly produced in California.
“Growers are always concerned with tariffs placed on their products from any country,” said Richard Matoian, executive director of American Pistachio Growers.
“We certainly appreciate all the business we have with our Chinese buyers and consumers, and hope this continues into the future,” he added.
Despite the current 5 percent tariff on raw pistachios and 10 percent on roasted ones, Matoian said the sector has had record shipments to China.
In the last shipment year, exports to the Chinese mainland and Hong Kong totalled 63.6 million kilograms, representing 55 percent of total exports — the largest annual amount of pistachios ever shipped to China, according to the APG.
California’s almond industry also depends on exports despite strong domestic demand. Approximately twothirds of the almonds produced in California go to the export market, and China is one of the top buyers.
China also has been a growing market for California’s massive citrus industry. China is the state’s third-largest buyer of fresh citrus — mainly oranges and lemons — next to Canada and South Korea, according to California Citrus Mutual.
Fresh fruit, dried fruit and nut products, wine, American ginseng and other products are included in the first phase of China’s tariff plan.
The second phase covers products including pork, pork products and aluminum scrap. If no agreement can be reached between Washington and Beijing, the two-phase plan will target approximately $3 billion worth of US products.
“China’s decision to put products like wine in the first group of commodities subject to tariffs, leaving other commodities like pork in a second group, is an interesting strategy,” said Larry Karp, professor of agricultural and resource economics at the University of California in Berkeley.
“If China wanted to inflict pain on Trump’s base, you’d think that China would target pork before wine,” he said. The Chinese perhaps recognize that political mobilization within the US against Trump’s trade policy will take some time, he added.
“The Chinese might think that the threat of pork and soybean tariffs is more valuable to them, compared to the actual imposition of the tariffs. Once the tariffs have been imposed, it will be politically costly for both China and the US to reverse them,” Karp explained.
He also noted that the immediate effect of Chinese tariffs on US wine producers is probably modest, but the US wine industry might nevertheless be quite concerned about the long-term effect of such tariffs, arising from diminished access in the future.
China is the fastest growing market for US wines, nearly 90 percent of which are produced in California. The number of consumers of imported wine in China increased 2.5 times in the past five years, according to the California Wine Institute.
The Californian wine industry is already at a disadvantage in terms of tariffs in the Chinese market since its competitors, such as Chile and Australia, enjoy free trade agreements with China, said Pat Patrick, president and CEO of Lodi Chamber of Commerce.
“The two countries should try to get to some sort of a reciprocal arrangement. It’s best for both countries to find a balance and to work towards it,” he said.