Data examined by researchers at California State University, Fresno shows that Chinese importers may be sourcing tree nuts through neighboring countries as it becomes more expensive to import directly from the U.S. amid the trade war.

If China continues to impose high tariffs on tree nuts, that sector will need to step up their development of alternative export markets to preserve its role as one of the key economic drivers of California’s Central Valley, university researcher Serhat Asci said.

And while optimism is high following the first-phase trade agreement between the U.S. and China, many uncertainties remain, Asci said during a seminar Feb. 12 at the World Ag Expo in Tulare, Calif.

“We don’t see what’s going to happen in the future,” he said.

Among the export products sent to China by the United States, tree nuts constitute the third most important category of products after soybeans and corn, according to the USDA. All the major U.S. tree nuts sent to China are from California, with exports of almonds, pistachios and walnuts to China making up 55% of the Golden State’s total ag exports to that nation, Asci noted.

While the U.S. was China’s biggest importer from 2014-2018, sales of almonds and walnuts to the nation dropped dramatically in 2019 as retaliatory tariffs by China against U.S. farm goods took hold.

Exports dropped

The U.S. sent $300 million in no-shell almonds and $211 million in in-shell almonds to China and Hong Kong in 2018, but the value of last year’s shipments dropped to $199 million and $171 million last year, according to the Fresno State report.

The value of pistachios sent to China increased from $572 million to more than $748 million.

“We send less almonds and less walnuts to China,” Asci said.

Data has shown that Australia has sold more tree nuts to China since the trade war with the U.S. began, with the U.S. backfilling Australia’s domestic supply, Asci said. Vietnam has also been purchasing more U.S. in-shell almonds, he said.

A study by the University of California’s Agricultural Issues Center in 2016 showed the almond industry generates more than 100,000 production, processing and marketing jobs and contributes $21.5 billion to the state’s economy.

Pistachios generate more than 22,000 jobs in California and contribute $3.6 billion to the economy, according to a 2018 American Pistachio Growers report.

The market fallout from China’s retaliatory tariffs could cause the tree nut sector an estimated 7,584 jobs in the short run, with the total output decreasing by $1.17 billion, according to the Fresno State report. If the trend persists, the industry could lose an additional 5,165 jobs and see its output drop by another $803 million, the researchers assert.

Tree nut farmers and their support services are expected to be the hardest hit.

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