Since President Trump’s announcement in the spring of 2018 that tariffs on steel and aluminum imports go into effect targeting China and other countries worldwide, many U.S. trading partners have answered with retaliatory tariffs on U.S. goods that included more than 800 U.S. food and agricultural products.
While China marks the major target of what some are terming the new trade war, other countries, including the European Union (EU), Turkey, Canada and Mexico, are also imposing or considering retaliatory tariffs on U.S. agricultural products that create additional troubles for U.S. farmers, who are already suffering from low crop prices and growing international competition across the global marketplace.
U.S. soybean farmers may be the hardest hit by the ongoing trade issue, but California tree nut producers are also feeling the squeeze of unstable global markets as a result. While better poised to suffer the tariff setbacks than many commodity crop farmers because of strong demand and more stable prices, nut growers are still feeling the pressure, if for no other reason than the timing for a quick resolution to trade issues remain unknown.
In response to U.S. agriculture woes over the trade war, a development the president has called “beneficial in the long run,” Agriculture Secretary Sonny Perdue worked closely with the White House to develop a Market Facilitation Program (MFP) that would provide some support for losses suffered by U. S. farmers, including California nut producers.
Without question, MFP payments have helped qualifying U.S. farmers to find some relief from retaliatory tariffs, but most agree the program falls short of covering all their losses and represents only a temporary, stopgap measure.
Perdue and the Trump administration have been quick to respond that continuing negotiations with China could bring a close to an escalating trade war in recent weeks. Though a 90-day delay has passed, the President extended that deadline until he meets with China President Xi Jinping the last week of March at his Mar-Lago Resort.
“As a result of these very productive talks, I will be delaying the U.S. increase in tariffs now scheduled for March 1,” Trump tweeted on Feb. 24.
Clock is ticking
But as the clock continues to tick on negotiation efforts, U.S. farmers who generally expressed support for trade negotiations in the beginning with hopes of securing more favorable trade terms with China, are starting to voice their concerns that if negotiations fail to postpone additional tariffs in the escalating trade dispute, long term damages to their ability to compete in the global market could be significant.
Those fears may have been heightened after U.S. trade officials failed to offer much optimism in negotiations with China prior to the President’s tweet. U.S. Trade Ambassador Robert Lighthizer said days before the delay announcement that a deal is “either imminent, still out of reach, or somewhere in between.” In testimony before Congress last week, Lighthizer repeated those concerns.
“Much still needs to be done,” he said.
But nut industry representatives say they are still hopeful trade issues may improve soon.
“We’re optimistic that we can potentially see some results from these negotiations,” California Walnut Board and Commission CEO Michelle Connelly told the Sacramento Bee last week.
Almond shipments down
Julie Adams, Vice President, Global Technical, Regulatory & Government Affairs for the Almond Board of California, said Almond shipments are down about 8 percent under the current 50-percent tariff rate with China.
“We have seen a softening of prices across all our markets because of global uncertainties,” she said.
But she added that domestic and many international markets remain strong for almonds and even with elevated production numbers and current trade issues, California almonds are staying ahead of supply so far.
As far as other markets, trade with Canada and Mexico remains in stasis until the new U.S., Mexico, Canada Agreement is ratified by lawmakers in all three countries. The latest news indicates Canada and Mexico have ongoing talks in progress that could potentially bring that issue into question once again, and a new Democratic Party-led House in Washington may not be key to pass the agreement either.
Until then, all bets are off and only time will dictate the outcome.