Will Lodi feel the squeeze?
Wine, fruits and nuts among possible products hit by China’s proposed retaliatory tariffs
China announced proposed tariffs on 128 products from the U.S. on Friday, totaling approximately $3 billion.
The proposal includes a 15 percent tariff on products such as wines, fruits and nuts, and was issued as a response to the $50 billion in tariffs President Donald Trump placed on Chinese goods earlier this week, reported Jessica Meyers of the Los Angeles times.
Randall Lange, co-founder and head of winery operations for Lange Twins Winery, said that the Chinese tariffs would certainly be felt by Lodi’s wine and agriculture industries, although he could not predict the full extent of the tariffs.
“A tariff against wine, fruits, nuts or other agricultural products like that is a tariff against the state of California. If they do it, it will have an impact, there’s no question about that, but the extent of that impact will depend on their needs. I don’t understand the reasoning behind the tariffs, but I know that a tariff like this is basically protecting one industry at the expense of others,” Lange said.
Bruce Fry, vice president of operations for Mohr-Fry Ranches, worries that the tariffs could also affect growers such as himself. If wineries are not able to sell as much wine to China as they were before, he said, they may not purchase as many grapes.
“As a grower, it trickles down as to what they (wineries) can sell. If they reduce their order, they have to figure out how that affects their inventory, which affects what kinds of grapes they buy,” Fry said.
Ironstone Vineyards has exported between 2,000 and 3,000 cases of wine to China per year, with Obsession Symphony and Ironstone Old Vine Zinfandel among the most popular varieties, according to Joan Kautz, sales and marketing manager.
Kautz fears that the 15 percent tariff may cause Chinese buyers to turn to countries such as Australia and Chile, against whom the U.S. already competes on the wine market. Such a setback would be particularly detrimental to Lodi wineries looking to increase their international profile, she added.
“Lodi makes a lot of really great wines that can be competitively priced, but it really doesn’t matter because any tariff probably distracts distributors and importers from doing their jobs. Their attention may go elsewhere. As we continue to build our image and brand, it’s important to keep their attention in a positive way,” Kautz said.
Lodi wineries have worked for years to open up the Chinese market. In 2008, current Lodi City Councilman Mark Chandler, who was serving as executive director of the Lodi Winegrape Commission at that time, traveled to China with members of the Lodi Chamber of Commerce to promote local wines. Two years later, Lodi’s Michael-David Winery was selling in China.
“Today, there are many Lodi wineries, big and small, who are often quietly exporting to China. For a small winery, even one container (approximately 1,200 cases) can represent a significant portion of their sales and volume,” Gayaldo said.
A delegation of Chinese wine buyers have also visited Lodi numerous times in the past decade, but the new tariffs may put those years of hard work in jeapordy.
The tariffs could also impact nut growers in Lodi, according to David Phippen, an almond grower and co-owner of the almond processing company Travaille & Phippen, Inc.
Although Phippen was not sure what the specific impacts might be, should the tariffs take effect, he said they would most likely impact growers such as himself who export nuts to China.
“Until something happens, it’s hard to say what the response could be. Obviously, it would raise the price to the ultimate consumer in China. The biggest risk is: Can they buy the product that they wanted to buy from California from somewhere else?” Phippen said.
Phippen explained that exporters try to purchase nuts for the lowest price possible, allowing them to maximize their profits when they resell the nuts to buyers in China. If the price for Californian nuts increases by 15 percent, Phippen said, exporters might look to countries such as Australia and Spain as alternative nut sources.
Not everyone seems to be worried about the tariffs, however, such as production manager Tom Gotelli of O-G Packing and Cold Storage Company, which has shipped cherries to China for the past four years, and walnuts for even longer,
Gotelli feels that Trump’s own tariffs will help improve the U.S. industrial economy, which he said was undercut by Chinese competition, even though China’s tariff’s might impact the U.S. agricultural economy.
“It may affect them (U.S. growers) and raise their prices, but we’ve got to give something up to get on a level playing field (with China). Trump is putting tariffs on other countries, particularly China, so I guess we’ve got a little bit of a tariff war going on. We put one, they put one, so we’ll see what happens,” Gotelli said.