China’s tariff reductions on U.S. goods may be overshadowed by logistical disruptions due to the coronavirus that’s working its way through the nation’s population.
China announced Feb. 6 that it is cutting its tariffs on $75 billion in U.S. goods as part of its phase one trade deal with the U.S.
That includes a 5 percentage point reduction in the tariff on fruit, said Mark Powers, president of Northwest Horticultural Council in Yakima. The tariff has been 60%.
“The tariff reduction and coronavirus issues are probably offsetting, I would guess. We continue to ship but not at significant volumes,” said Tim Evans, sales manager of Chelan Fresh Marketing, a major Washington fruit marketer.
The company handles about 10% of the state’s apple shipments to China and is down slightly from last year and “very significantly” from two years ago, before the tariff wars began, Evans said.
“We only do a few loads a week,” he said.
A load is 1,000 40-pound boxes.
A 5% tariff reduction helps but the remaining 55% “is a pretty substantial rate for importers,” Evans said. “We are hopeful it will be further reduced.”
Washington apple shipments to China, September through the end of January, were 385,063 boxes, down 22.3% from 495,702 for the same period a year earlier, said Desmond O’Rourke, a retired Washington State University agricultural economist and apple analyst.
A total of 908,809 boxes, under a 50% tariff, were exported in the 2018-19 sales season, and 1.7 million were exported the year before at a pre-trade war low tariff.
O’Rourke said the tariff reduction helps but that the remaining 55% is “still very high by historical standards” especially when France, Turkey, Chile, New Zealand and other apple exporters don’t have the same tariff.
He said the reduction could be negated by quarantines and restrictions on movement in China because of the coronavirus.
Chilean cherries shipped to China have been “impacted quite a bit” by coronavirus restrictions, Evans said.
Brian Focht, manager of the Washington Apple Growers Marketing Association, in Wenatchee, said several Washington apple shippers are shipping at reduced volumes to China because of coronavirus restrictions.
“It’s hard to predict how long it can go on and if it will offset the 5% tariff reduction,” he said.
Todd Fryhover, president of the Washington Apple Commission, in Wenatchee, said any tariff reduction is appreciated but that 5% will have no impact, especially with the coronavirus.
A second round of tariff reductions is scheduled for June but that will be too late since southern hemisphere apples will be in full season then, he said.