Newly-enacted U.S. tariffs on aluminum and steel imports have several nations warning of an all-out trade war, and locally, the Central Valley’s agricultural exports could take a hit.
President Donald Trump on Thursday imposed a 25 percent tariff on imported steel and a 10 percent tariff on aluminum imports, which are set to go into effect in two weeks. While the administration clarified this week that Canada and Mexico would be exempt, the new policy singles out China as a prime target.
The move fulfills a Trump campaign promise, but has been widely criticized by economists, business owners and politicians alike.
“President Trump’s decision to impose steep tariffs on steel and aluminum imports will not protect America,” said U.S. Senator John McCain. “Reminiscent of failed protectionist trade policies of the past, this decision will harm the American economy, hurt American workers and damage relations with America’s allies and partners.”
While the newly-imposed tariffs will cause the price of steel and aluminum to go up here in America, other commodities will take a hit as well, including agriculture. Historically, agricultural products have taken a hit when the U.S. targets imports of industrial goods, with other countries imposing countermeasures like tariffs on U.S. goods or even outright bans.
China has already warned that it will take “strong measures” to protect its interests against the new tariffs. The country’s powerful industry body, the China Iron & Steel Association, has also urged Beijing to retaliate against the measures by taking action on American agricultural and other products.
The European Union has called the new tariffs “deeply unjust,” and has said it is considering new tariffs on American products ranging from cranberries to peanut butter.
The response is a familiar one – in 1995, the United States banned Mexican trucks from driving more than a short distance over the border, and in retaliation, Mexico placed tariffs on food items from ketchup to frozen corn in 2009. The truck ban was lifted in 2011, as were the tariffs, but the damage had been done: it was found in a later study that the tariffs decreased sales of those commodities to Mexico by 22 percent, or nearly a billion dollars.
As a result of the current steel and aluminum tariffs, local agriculture could see economic woes. According to the U.S. Department of Agriculture, China imports about 100,000 tons of almonds each year, and 45 million metric tons of food grown in the United States every year ends up in China. Should the country place retaliatory tariffs on any food items, Stanislaus County should be prepared.
The U.S. Department of Commerce reported that in 2015, Stanislaus County exported nearly $2 billion in goods – mostly almonds and walnuts, of which a majority of the state’s total crop is exported.
“We export 70 percent of the almond crop to other countries – it’s our number one crop in Stanislaus County,” said Stanislaus County Farm Bureau Executive Manager Wayne Zipser. “We don’t know how these tariffs will affect us yet, but we do help feed the world here in the Central Valley so I would think it wouldn’t, but you never know.”
An almond farmer himself, Zipser said that growers are “nervously watching” the tariff situation. The Almond Board of California is aware of the European Union’s list of potential products that could be targeted for a retaliatory tariff, the organization said in its March 2018 newsletter.
“Based on this initial report, almonds are not on the targeted list,” said the ABC. “However, ABC will continue to monitor developments and outcomes of potential steel tariffs, and how our key global export markets might respond.”
Zipser added that while the tariffs are an important topic, many farmers are also anxiously awaiting an update to the 1994 North American Free Trade Agreement between the U.S., Canada and Mexico – talks that have been ongoing since August but have recently been soured by the two countries’ inclusion, then exclusion, in the steel and aluminum tariffs.
“It’s worked well for the agricultural industry for many years, and these tariffs are certainly upsetting our trade partners. That gives agriculture a little bit of concern about what may happen down the road,” said Zipser. “We had some concern originally when Nafta was adopted, but it turned out to really benefit us.”