China tariffs

Francisco Gutiera, left, carefully dumps his picker bag of Gala apples with the help of Ray Diaz as harvest starts at Mt. View Orchard, East Wenatchee, Wash., on Aug. 26. Higher Chinese tariffs make exports to that nation uncertain.

WENATCHEE, Wash. — China unleashed a new round of tariffs on U.S. goods Sept. 1, including an additional 10% on apples, pears and cherries for a total of 60%.

Within the tree fruit industry there’s uncertainty and mixed reactions about what this means, particularly because it might be moot if China’s private company importers follow the government’s Aug. 6 directive to government importers banning all U.S. agricultural goods.

Desmond O’Rourke, retired Washington State University agricultural economist, says direct apple exports to China will be dead this winter. Some product may make it into China through Hong Kong and Vietnam, depending on the severity of Chinese customs enforcement, he said.

O’Rourke is a world apple market analyst who has studied China and has warned it would not be a reliable market.

“All big companies in Hong Kong are under tremendous pressure to say nothing critical of the government, so importers won’t go against the government,” O’Rourke said.

The CEO of Cathay Pacific, an airline headquartered in Hong Kong, resigned under government threat after saying protesters had a right to speak freely, he said.

“The bigger issue is not the specific tariff on apples but the potential for breakdown of the entire U.S.-China economic relationship,” O’Rourke said.

Toni Adams, Washington Apple Commission spokeswoman in Wenatchee, is more optimistic, noting that even with a 50% tariff more than 900,000, 40-pound boxes of Washington apples were imported by China during the 2018-19 sales season now ending.

Sales to China typically start in November and are heaviest through February.

“Washington apples have retail presence as a product. Chinese consumers expect it to be on the shelves. Strong demand even in the face of steep retaliatory tariffs provides optimism that shipments will continue in the 2019-20 season,” Adams said.

China has been willing to pay good prices for quality fruit, making it a value market improving grower returns, she said.

Tom Riggan, general manager of Chelan Fresh Marketing, a major exporter, said exports to China will be affected by any increase in tariffs but will continue because importers will buy “based on consumer demand regardless of any ban.”

He said he remains hopeful the trade dispute will end soon.

Mark Powers, president of Northwest Horticultural Council in Yakima, said the situation remains uncertain and that while he suspects there will be some shipments to China this season it won’t be as much as growers need.

Jim Bair, president and CEO of U.S. Apple Association in Falls Church, Va., said the new round of tariffs only adds more uncertainty.

Total U.S. apple exports were down 27% by volume and their value dropped 22% from $1.1 billion to $854 million in the 2018-19 sales season because of tariffs and trade tensions, Bair said.

“As tariffs pile up, we’re watching what was an emerging market (China) diminish,” he said.

With the 2019 harvest expected to be the ninth largest in history, it is “critical to mend fences with our trading partners as soon as possible,” Bair said.

Washington apple exports to China reached 1.7 million boxes in 2017. The industry once figured it could grow to a 10 million-box market worth about $250 million.

China is Washington’s sixth largest apple export market, representing about 3% of the total.

An Aug. 28 USDA Global Agricultural Information Network report lists the Sept. 1 China tariff increases on more than 1,000 U.S. items.

Cherry exports are finished for the year and U.S. pears have a small market in China. Tariffs on peaches, plums, apricots and almonds also went up 10 percentage points to a new total of 60%.

A lot of meats went up to new totals of 40-60% and vegetables to new totals of 20-50%.

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