U.S.: China tariffs likely to affect apples, citrus more than cherries, says PMA rep - FreshFruitPortal.com

U.S.: China tariffs likely to affect apples, citrus more than cherries, says PMA rep

Apples and citrus will likely be hit harder than cherries by the tariffs China is implementing on a large range of U.S. agricultural products, according to a Produce Marketing Association (PMA) representative. 

Richard Owen, vice president of global membership and engagement, also said it was difficult to predict where the situation would eventually end up and what the effect will be on the fruit and vegetable industry.

Last week China published a draft list of products it would soon hit with a 25% tariff, in response to U.S. duties. Both countries have announced tariffs on US$50 billion of goods, although - at least initially - the duties will only apply to US$34 billion of goods, effective July 6.

The tit-for-tat trade war could escalate even further, with Trump on Monday threatening a 10% tariff on US$200 billion of Chinese goods in response to Beijing's retaliation.

China had already implemented a 15% tariff rate on a range of U.S. horticultural products on April 2 in retaliation for U.S. tariffs on steel and aluminum imports. Owen said it was his understanding that the total tariff rate on exports would only be 25% from July 6 - as opposed to 40% - but there has been no official confirmation from China on this matter.

Speaking with Fresh Fruit Portal, Owen said it was hard to know the how produce trade would be affected, but believed that what happens with cherries over the next couple of months would be revealing.

"Cherries will be a very good test because they are already being shipped into China and we'll be in the heart of cherry season from the U.S. in the next few weeks," he said.

"Cherries are fortunately considered a premium product in China, so the consumers are willing to pay more of a premium for those cherries versus what they might for other products that are considered more of a commodity or that have a longer shelf life once they’re in the country."

Owen added that the lack of competition U.S. cherries face in China was another reason why the market was likely to absorb the increased costs. He therefore expected the industry to continue with the cherry programs that are in place, but said a bigger question mark remained over other crops.

"[China] certainly has more choices of sourcing apples from different places in the world. Citrus, again, can be supplied just about year-round, depending on what market you’re coming from, and then table grapes will probably be into the mix sometime as well when they come in season from the U.S., because we also ship quite a few grapes over," he said.

"So I think cherries will be the good first test to see how the market reacts, how much of a loss there would be in terms of volume because of the tariffs, and then we can probably look at apples and other commodities coming behind it."

Looking ahead, Owen said that if the trade tensions continue to escalate, it would have an adverse impact on the U.S. produce industry. He said growers who have invested a lot of time and energy to grow products to sell in the Chinese market would be deterred as their products would be more expensive, while China may also diversify and look for more steady trading partners.

"I think the overall message is that these are kind of in disruptive times, because we don’t know what is going to come next," he said.

"We can fully expect - based on what we’ve seen - for China to come back in some form or fashion to impose its next round of tariffs to equal our US$200 billion. 

"So where is the endgame? I'm not quite sure. I think it’s to try to get to the negotiating table to address some fundamental issues that the U.S. administration has in trade with China, most notably the trade deficit. But this is coming at the cost of a number of different industries, fresh produce being one of those."

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