Posts Tagged: trade

Farmers concerned about potential new tariffs

China has threatened to impose retaliatory tariffs on American exports following President Trump's plan to impose tariffs on steel and aluminum imports. Agricultural exports are in the crosshairs, reported Thaddeus Miller in the Merced Sun-Star.

China's tariffs would first hit U.S. products such as avocados and nuts with 15 percent duties, the article says.

"It doesn't really matter which one it is, whether it's alfalfa, almonds or wherever it may go," said David Doll, UC Cooperative Extension advisor in Merced County. "They're as much political as they are anything else."

The potential tariff would have a significant impact on Merced County, where almonds are the second largest commodity valued at $578.5 million in 2016.

The back and forth trade disputes happening between the U.S. and China make trade less predictable and could lead to disruptions that impact California food and wine producers, even before potential Chinese tariffs go into effect, said Dan Sumner, director of UC Agriculture and Natural Resources' Agricultural Issues Center in an interview with Julia Mitric of Capital Public Radio.

If China hits the U.S. with a 15 percent tariff on wine, that's a problem, Sumner said.

"We may think California wine is special, but not everybody does,” Sumner said. "And if it's 15 percent more expensive than it used to be because of the tariff, there'll be a substantial reduction in how much gets sold in China."

Sumner said the proposed tariffs would likely hurt California's tree nut growers more than its wine producers because a larger proportion of almonds and pistachios are exported.

In 2016, the value of pistachios sold to China was $530 million, more than three times the value of wine exports to that country, Mitric reported.

Farmers are disappointed Trump has scrapped TPP

California farmers could have reaped substantial profits if the 12-country Trans-Pacific Partnership had become law, reported Robert Rodriguez in the Fresno Bee, but President Trump pulled the U.S. out of the deal.

According to the American Farm Bureau, California fruit and nut producers could have made $562 million in sales through lower tariffs and the elimination of tariffs. Dairy producers could have made $53 million in additional revenue.

Rodriguez spoke with Daniel Sumner, director of the UC Agriculture and Natural Resources' Agricultural Issues Center. Sumner said an outcome of Trump's decision may be for the U.S. to negotiate individual deals with Pacific nations.

"Vietnam could prove to be very useful," Sumner said. In Vietnam, a growing middle class is making the country a more attractive destination for California agricultural products.

Trump also promised during the campaign to renegotiate the North American Free Trade Agreement (NAFTA), which Sumner said could prove difficult because Canada and Mexico are key California trade partners.

"When you unilaterally open a trade agreement that has been successful, it can be very scary," Sumner said. "It is a huge market for California."

Trade conflict with Mexico impending

California farmers will have to pay millions of dollars to Mexican authorities to export their products to the neighboring country if a trucking dispute is not resolved before summer, according to an article in La Opinión. Mexico plans to impose the new tariff in retaliation for the cancellation of a U.S. pilot program that permitted Mexican trucks to transport goods on U.S. highways.

The Border Trade Alliance reported this week that California agriculture will be the second most impacted economic sector if the two countries do not reach an agreement in relation to the free passage of Mexican trucks in U.S. territory, the article said.

"The retaliatory tariffs that Mexico has imposed on U.S. goods in response to the trucking impasse are hurting the U.S. economy and are a drag on President Obama's goal to double exports," BTA president Nelson Balido said in a statement released by the organization. "As Texas A&M University's Center for North American Studies recently reported, the U.S. agriculture sector alone has been negatively affected by the tariffs to the tune of $153 billion."

La Opinión reporter Claudia Nuñez spoke to the director of the UC Agricultural Issues Center, Dan Sumner, about the potential economic impact of the trade dispute.

"California exports about 20 percent if its agricultural production, principally to Mexico," he was quoted in the article.

U.S. and Mexican governments are involved in a a cross-border trucking dispute that could hurt both countries.

A Chinese slowdown is 'imminent'

UC Berkeley economics professor Barry Eichengren supplied three reasons in a Business Insider blog why he believes a slowdown in the growth of the Chinese economy is on the horizon.

For one, slowdowns are more likely in countries where the manufacturing sector’s share of employment exceeds 20 percent, since it then becomes necessary to shift workers into services, where productivity growth is slower, Eichengren said.

Further, slowdowns come earlier in economies with undervalued currencies. Currency undervaluation, he said, may boost economic growth in the early stages of development, when a country relies on shifting its labor force from agriculture to assembly-based manufacturing. However, it may work less well when growth becomes more innovation-intensive.

“Finally, maintenance of an undervalued currency may cause imbalances and excesses in export-oriented manufacturing to build up, as happened in Korea in the 1990s, and through that channel make a growth deceleration more likely," Eichengren was quoted.

Author of the Pragmatic Capitalism blog, Cullen Roche, concurred with Eichengren's assessment. The Chinese slowdown is not a matter of if, but when, the post concluded.

China offers California businesses opportunities and risks

The recent U.S. visit by China's president Hu Jintau has California experts considering opportunities for trade with the world's most populous country, according to an article in the Bakersfield Californian.

The story said China's manipulation of its currency is among the most significant barriers to trade between the two countries. China has resisted currency reform, but a CSU Bakersfield economist told reporter Courtenay Edelhart that the country will have to adapt if it wants to realize its superpower aspirations.

Edelhart spoke to UC Davis agricultural economist Colin Carter about agricultural trade with China. He said California farmers grow many of the same products as China, but Americans are stronger in food processing and technology, and have the advantage of a much more efficient industry structure.

"In China, the farmers still don't own the land they work, and the individual farms are pretty small," Carter was quoted. "To really compete on a global scale, the farms are going to have to get a lot bigger and more mechanized."

Interim director of CSU Bakersfield's Small Business Development Center. John Pryor, said local companies interested in the Chinese market should guard their competitive edge carefully.

"Any U.S. firm needs to be very cautious about their intellectual property risks. The Chinese have a long-standing reputation for stealing patented products or processes," Pryor told the reporter.

Chinese president Hu Jintau visited President Obama at the White House last week.

Read more