Three years after gaining full access to Chinese consumers, U.S. apple growers may be hit with a 15 percent tariff in a rapidly growing market. Beijing listed agricultural products, including fresh fruit, pork and wine, as potential targets for retaliation because of Trump administration tariffs on imported steel and aluminum, putting U.S. producers on edge about the possible loss of valuable markets.
The largest U.S. ag export to China, soybeans valued at $14 billion a year, was not on China’s list of products being considered for counter-measures. However, China did not say how it will respond to the White House plan to impose tens of billions of dollars of tariffs on Chinese-made goods on grounds of intellectual-property theft. “I don’t believe the president intends to start a trade war,” said U.S. trade representative Robert Lighthizer told senators hours before the tariffs were announced last week.
“Within three years, China has become our 10th-largest market and has tremendous promise for continued growth,” said Jim Bair of the U.S. Apple Association. “U.S. growers face losing an important and expanding export market, to which access was a hard-fought battle.” Roughly one in four “fresh” apples – eaten raw by consumers – are exported. One of the 10 largest foreign customers, China buys 2.5 million boxes of U.S. apples a year.
China is the largest buyer in the world of U.S. ag exports, forecast to spend $21.6 billion on them this year. One in every $6 of U.S. ag export sales comes from China.
The Commerce Ministry listed fresh fruit, nuts, wine and steel pipe among items facing a 15 percent tariff because of U.S. actions on steel and aluminum imports. Pork was on list of products that would see 25 percent tariffs if need be.
“We sell a lot of pork to China, so higher tariffs on our exports going there will harm our producers and undermine the rural economy,” said president Jim Heimerl of the National Pork Producers Council. China is the No. 3 market for U.S. pork. Sales totaled $1.1 billion last year.
Ethanol also is on the list of products being considered for a 15 percent tariff, said the biofuels group Growth Energy. It said China is an important market for U.S. ethanol and for a co-product of ethanol, distillers dried grains (DDGs), a high-protein supplement for livestock feed. Growth Energy said a tariff on U.S. ethanol “could undercut our potential to increase exports” at a time when China has a goal of moving to a 10 percent blend into its gasoline supply by 2020.
The export-promoter U.S. Grains Council said the farm sector has seen a series of Chinese actions against DDGs, ethanol and corn. In 2016, for example, China set duties of 10-11 percent on DDGs on grounds they were being dumped. “We have supported targeted U.S. government efforts to address these issues but nevertheless remained dedicated to the China market because it holds immense growth potential for U.S. agriculture,” said Tom Sleight, the council’s chief executive.
China is the largest importer of U.S. sorghum and is tied with Thailand for fourth place on the list of top markets for DDG exports.
In late February, the USDA said U.S. soybean sales were down by 25 percent from the same point in 2017 while Brazilian sales more than tripled. China buys 60 percent of the soybeans on the world market and Brazil accounted for half of China’s purchases in 2017, its largest-ever share of the market.
At the start of this year, China toughened its standards on so-called foreign matter, such as broken kernels, dirt and weed seeds, in U.S. soybeans. A month later, the Commerce Ministry began an anti-dumping investigation of U.S. sorghum, possibly a response to U.S. tariffs on Chinese-made washing machines and solar panels, and met with domestic companies to discuss possible anti-dumping and anti-subsidy reviews of U.S. soybeans, reported Bloomberg.
“We expect all countries to trade fairly, and we support enforcement of trade rules,” said President Zippy Duvall of the American Farm Bureau Federation in a statement that reflected the sentiment of many U.S. farm leaders. “But we also hope trade disputes can be resolved without harming an industry that is a bright spot on trade and is so important to rural America.”