September 2018 | News | Trends

Tariffs Go Nuts

Tags: Logistics, Supply Chain

Almonds are an especially lucrative product for California—the state's almond industry currently supports more than 100,000 jobs and accounts for approximately $11 billion of the state's economy. Instead of being roasted and seasoned with salt, however, almonds are being roasted by escalating Chinese tariffs.

Earlier in 2018, President Trump implemented steep tariffs against offshore aluminum and steel. China reciprocated with an extensive range of retaliatory tariffs, affecting approximately $60 billion worth of Made in America products. The Chinese government plans to impose tariffs on up to $130 billion worth of goods, which basically accounts for almost all U.S. goods imported to China.

One of the United States' main sources of income in the global market stems from food and beverage goods, including agricultural products. Countries all over the world purchase U.S. pork, corn, soy, and many other products. China has made no secret it plans to hit agricultural products hardest. This includes almonds, of which the United States produces and exports some 80 percent of the global supply.

In the past decade, China has become one of the largest export markets for American almonds, with hundreds of millions of pounds exported over the past few years. In implementing a 50-percent tariff against U.S. almond exports, China is sending a clear message.

Because American almond producers are highly dependent on exports to China, this tariff disrupts their business in multiple ways. Not only do they have to raise their prices to cover the tariff costs, China can also opt to purchase cheaper, un-tariffed almonds from Africa and Australia.

Plus, as the Wall Street Journal reports, China also "quietly closed a trading loophole that for years allowed large volumes of American almonds to be transported into the country via Vietnam without incurring import taxes." It's likely the Chinese government will continue to systematically shut down similar trade routes.

While the almond agricultural community is apprehensive about the future, it's still too soon to tell how long the trade war will go on, and how much damage it will do.

—Kristin Manganello, for Thomas






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