Last April, Washington wheat, apple and cherry growers hoped U.S. and China trade negotiators would resolve differences and prevent imposition of damaging tariffs on our state’s leading crops. Unfortunately, that did not happened and the costs are adding up.
Thousands of Washington farmers now find themselves on the front lines of a battle between the two largest economies in the world.
Here’s what has happened so far.
Earlier this year, President Donald Trump imposed a 25 percent tariff on $34 billion of Chinese imports to punish China for its alleged predatory tactics toward American technology companies. China is notorious for ripping off U.S. companies that develop high-tech products and then manufactures cheap copies, which dramatically undercut our products on worldwide markets.
China swiftly responded with tariffs on 128 American products, including fruit, pork and metal pipes, in retaliation for U.S. tariffs on Chinese steel and aluminum. While many aerospace workers in the Puget Sound area breathed a sigh of relief because Boeing aircraft was not included in China’s retaliation, that wasn’t the case for our state’s farmers.
With the state’s cherry harvest in, the financial damages from the trade dispute for cherries alone is estimated at $86 million. A bipartisan group from our state’s congressional delegation is asking the federal government to offset losses from trade wars during the 2018 season.
President Trump set aside $12 billion in short-term federal relief to assist U.S. farmers and companies adversely impacted by the negotiations. Democrat U.S. Senators Maria Cantwell and Patty Murray and Republican Congressmen Dan Newhouse and Dave Reichert wrote to the Dept. of Agriculture requesting the aid.
Washington’s agriculture community is caught in the cross-fire of the “tariff bumping” between the United States and China and the cherry crop is particularly vulnerable. China is the top export market for sweet cherries grown in the state.
Unfortunately, agriculture products, unlike steel and aluminum, are perishable. Sweet cherries have the shortest growing season of any tree fruit. Cherry picking typically starts at beginning of May and ends by the middle of August. Sweet cherries must reach intended markets immediately. Unlike apples and wheat, cherries cannot be stored for shipping later in the year.
Mark Powers, president of the Northwest Horticultural Council, estimated that $130 million worth of Pacific Northwest cherries went to China last year. That is 11 percent of the total crop.
The 25 percent tariff increase that China has now levied on U.S. cherries was an unexpected twist for 1,400 growers in Washington. Those growers built their production around previously negotiated trade pacts.
Unfortunately, tariff bumping may not be over. Trump is considering $200 billion in new tariffs on Chinese products. It invites additional retaliation from China which could impact other Washington businesses.
Hopefully, the trade dispute will be resolved before the apple and wheat harvest are completed this fall.
Trade negotiations are always sensitive and the results never please everyone. It is a give and take process which traditionally crawls along at a snail’s pace.
For example, when the U.S.-South Korea trade deal was signed in 2008, it was negotiated over several years. In the end, new markets for Washington State beef, cherries and wines were opened; however, opponents point out the deal also opened greater access to American markets for Korean autos.
While the President has justifiable concerns over current trade agreements and is pushing hard for a better deal, it would be wise to slow down and consider the collateral damage which is occurring.
Washington’s cherries are the first to feel the adverse impact, but may not be the last.
Don Brunell is a business analyst, writer and columnist. He retired as president of the Association of Washington Business, the state’s oldest and largest business organization, after over 25 years as its CEO and now lives in Vancouver. He can be contacted at TheBrunells@msn.com.