India tariff threat on U.S. apples comes during "remarkable season"

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India tariff threat on U.S. apples comes during

U.S. apple exporters shipping to India could be hit with an additional 30% tariff in the coming weeks if the Asian country follows through on a threat to implement retaliatory trade measures. 

On May 18, India notified the World Trade Organization (WTO) of its intention to take punitive action against the U.S. in response to new duties on steel and aluminum imports, according to Washington Apple Commission president Todd Fryhover.

India came up with a list of commodities it would target, which included apples, Fryhover said.

"Currently we have a 50% duty going into India, so if this were to move forward and India actually does take will be 80% duty," he said.

Other countries shipping apples to India are also currently subject to a 50% tariff, he said.

Fryhover said a WTO document states the tariff would come into effect by June 21, 2018, but he said it was unclear what that date would refer to.

"Is it going to be the ocean bill of lading, the arrival date or the date it clears customs? Those have huge implications," he said, noting there were more than 30 days between a consignment leaving a port and arriving in India.

"There’s a huge discrepancy in interpretation that still needs to be vetted."

The threat of additional duties comes during what has so far been an excellent season for exporters in the top U.S. apple production state shipping to India, thanks in part to China's exit from the market following a ban in May last year.

"This year it’s been fairly remarkable," Fryhover said.

"What we have seen in the last two months has been unprecedented demand from India. It is absolutely amazing how much demand we have had."

He said that between May 1-15 Washington shipped over 900,000 boxes to India.

"It has been not only remarkable in volume and but remarkable in varietal diversification. Gala is well over 200,000 cartons, Fuji is well over 200,000, and we’re even seeing some proprietary varieties moving into that marketplace."

The significant uptick in volume means that India is currently Washington's number two market for the season, overtaking Canada and just one behind Mexico.

Fryhover said the tariff threat was therefore "certainly not great timing," but he said the industry was "starting to get used to an ever-changing and fluid trade issue forum."

Asked what effect the additional 30% tariff could have on U.S. apple exports to India - which is still mainly made up of Red Delicious -  Fryhover said there were still too many unanswered questions to give a clear answer.

"I think industry feels a lot more comfortable with their position now than they did a month ago, but that decision is really going to have to be made by each individual shipper, and I don’t think they’ve really come to a conclusion yet because there are so many questions to answer," he said.

Domestic market conditions

Fryhover also said that domestic movement has been "adequate" over recent months, while there has been a dramatic uptick on export movement.

"Domestic movement is down 9.4% on last year, but exports are up 11.1%, so we're about even where we need to be," he said

The industry has currently shipped 76% of its volume, which he said was "within a normal margin" for this time of year. Organic shipments are up 20% at 2 million boxes, and much focus will be on Granny Smith over the coming months as the variety saw a big crop with a large proportion of small sizes.

"We’re looking forward to continued domestic and international support and we’re on target to be out and ready for the next crop year," he said.

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