California Farm Bureau Federation President Jamie Johansson speaks at a news conference in Acampo about the impact of retaliatory tariffs on California agricultural exports. The event was hosted by Farmers for Free Trade and CFBF.
Photo/Ching Lee
May 2, 2018 - By Ching Lee - The impacts were felt almost immediately.
In early April, just as China implemented retaliatory tariffs on certain U.S. agricultural products—including wine, fruits and nuts—San Joaquin County winegrape grower Aaron Lange experienced the initial fallout: A Chinese import firm with which his business had recently established a new relationship canceled the order. Another customer put on hold an order for 700 cases of wine, pending negotiation of who will pay the additional 15 percent duty.
"I guarantee you it's going to be coming out of partly my pocket, to make sure that we maintain our market access to the China market," Lange said. "This hurts California's ability to compete with other nations by every stretch of the imagination."
Lange made his remarks during a news conference last week at his family winery and vineyard in Acampo. The event was hosted by Farmers for Free Trade and the California Farm Bureau Federation, and featured farmers and leaders from the state's farm and food sectors emphasizing the importance of trade to agriculture and the negative impacts of the new tariffs on California exports.
In his opening comments, CFBF President Jamie Johansson noted that since the North American Free Trade Agreement took effect in 1993, U.S. fresh fruit and vegetable exports to Canada and Mexico have more than tripled.
"We know what that means in California," he said, pointing out that exports not only support the state's farms but also other sectors.
The Port of Oakland, for example, which ships more than half of the state's agricultural exports, supports more than 70,000 jobs in the region and more than 800,000 jobs across the nation, he added.
With farmers across the country telling these stories about agriculture and trade, Johansson said the White House has responded, saying "they will work to make sure that agriculture isn't hurt."
In addition to the initial $3 billion in Chinese tariffs, which came in retaliation for new U.S. tariffs on steel and aluminum imports, the two sides have threatened further countermeasures, with plans by China to impose tariffs on $50 billion worth of U.S. goods, including agricultural products.
Lange said the dispute not only hurts his wine export business but also affects materials needed on the farm, pointing out that the steel stakes, wires, anchors and tin posts used in his vineyard will now cost more due to higher U.S. tariffs.
"It absolutely affects our ability to be successful here in California and affects every California farmer, and not only the farmers but those people who we employ," he said. "Our ability to be successful directly relates to our ability to offer jobs and to make California profitable and successful in the long term."
California Food and Agriculture Secretary Karen Ross said she does not appreciate agriculture being used "as a bargaining chip" in trade disputes, and said she has seen too frequently in recent years "only negative comments about trade." She noted the hundreds of thousands of jobs at California ports and in food manufacturing that have benefited from trade, which she said helps both rural and urban communities.
Ross stressed the importance of farmers, ranchers and agricultural businesses working together to "help people understand how we are all impacted in many beneficial ways by keeping markets open" and growing those markets.
The message that trade is unfair and bad for the country permeated the 2016 election, and it was why Farmers for Free Trade was founded, explained Brian Kuehl, the organization's executive director. The nonprofit grew out of a "need to rebuild American support for trade," he added.
As federal affairs director for K.Coe Isom, the nation's largest agricultural accounting and consulting firm, Kuehl said "we know firsthand how much farms rely on trade," noting that 20 percent of U.S. farm revenue comes from trade.
San Joaquin County farmer Jeff Colombini said "exports are really important to me," noting that more than 25 percent of his apple crop, 50 percent of his cherry crop and 80 percent of his walnut crop will reach foreign markets.
The crops he grows have benefited particularly from NAFTA. With apples, for example, Mexico has been a "great" market, he said. Though Mexico and Canada are currently exempt from the U.S. metal tariffs, Colombini said he's concerned the NAFTA partners also will impose retaliatory tariffs when their exemptions expire.
With China now being the sixth-largest export market for U.S. apples and with California cherry exports to China doubling in the last five years, Colombini described the Asian nation as having "the greatest potential." Recalling how a 2010 trade dispute with Mexico about a trucking issue and a 2015 West Coast port slowdown hurt the state's agricultural exports, he said crops that don't find a home overseas end up on the domestic market, lowering prices and affecting "everyone's bottom line."
Increased tariffs also have hurt food manufacturing, said Rob Neenan, president and CEO of the California League of Food Processors. About $9 billion worth of food and beverage products are exported from California every year—15 percent of the U.S. total.
Tariffs hit food manufacturers from both directions, he said, noting that most of the tinplate steel used in the nation's cans is imported, largely from China, because it's less expensive and better quality. Some 24 billion cans are used annually in U.S. food processing, he said, and the new 25 percent tariff on tinplate steel would increase costs by about $5 billion.
"Who's going to pay for that? You are, the consumers," he said. "It's also going to make the U.S. industry less competitive in the marketplace, because the peaches that are canned here in Lodi and Woodland and up and down the valley, they compete directly with peaches from Greece, from China, from Chile and from other places."
He said food producers support fair market access, and prefer the U.S. government use existing trade-resolution mechanisms to work through trade disputes "rather than risking a global and unwinnable trade war."
(Ching Lee is an assistant editor of Ag Alert. She may be contacted at clee@cfbf.com.)
Reprinted with permission: California Farm Bureau Federation
