China to Cut Tariffs on U.S. Fruit but Virus Worries EscalateFebruary 26, 2020
China will allow its importers to apply for substantial tariff relief on U.S. fruit starting in early March.
Even so, worries about the effect of the expanding coronavirus are taking off some of the shine from that report.
“The latest that we have heard is that the import tariffs for all U.S. fruits will be reduced to 25%, starting from March 2,” said Rebecca Lyons, international marketing director for the Washington Apple Commission, Wenatchee, Wash. Chinese importers have to apply online for the tariff exclusion, she said.
That reduction of tariffs on U.S. fruit is less than half of Chinese retaliatory tariffs at their peak of 60%, but still higher than in early 2018 when the U.S.-China trade war began.
“It is certainly good news,” Lyons said, “We won’t be down to the original 10% but it is better to be at 25% than 60%.”
The U.S. Department of Agriculture has not yet confirmed China’s tariff reduction; news so far has come from the commission’s Chinese marketing representatives, she said.
Lyons said the spread of the coronavirus has caused some retailers in Taiwan to pull back from in-store promotions.
“As you can imagine, stores are saying (they) don’t want to do any sampling,” Lyons said.
In response, Lyons said the apple commission is increasing consumer advertising rather than face-to-face activities.
“We’re having to be very flexible and nimble when we look at our promotional program and how we how we react to the latest news out of out of China,” she said.
In general, U.S. export apple promotions in China are beginning to wind down as the Southern Hemisphere export season draws closer.
Apple exports to China so far this year, Lyons said, are down 21% compared with a year ago and off 50% from two years ago.
The same good news-bad news dynamic was at play for California orange exporters, said Casey Creamer, president and CEO of California Citrus Mutual, Exeter.
California Citrus Mutual reported on its website that China’s tariffs on U.S. oranges on Sept. 1 of last year totaled 70%, but after the pending March 2 tariff exclusion, those tariffs are expected to fall to 35%.
But Creamer said Feb. 25 that Chinese importers were still unclear on some aspects of the program, and citrus handlers were hoping that the March 2 exclusion would be followed by removal of the remaining retaliatory tariff.
Creamer said there is a lot of uncertainty in China regarding the coronavirus, and that’s affected the supply chain.
“(Chinese officials) have instructed their people to stay indoors,” he said, adding that the lack of port workers and shipping containers has caused cargo disruptions.
The coronavirus comes at a bad time for California citrus exporters, he said.
“If we don’t get this thing straightened out in the next 30 days, we’re missing our major window for export,” he said. “We’re getting excited about regaining some market share, but the coronavirus is holding us back at this time.”
Creamer said the livelihood of growers depends on better days.
“Unfortunately, if it doesn’t correct itself here very soon, and you’re going to start seeing a lot more properties going up for sale and people getting out of the business.”
Potato chip breakthrough
As part of the U.S.-China Phase One Economic and Trade Agreement, the USDA said China will allow imports of U.S. fresh chipping potatoes from Washington, Oregon, and Idaho. It’s the first time fresh U.S. potatoes have been allowed into China, albeit for the processing market.
In a news release, National Potato Council vice president of trade affairs Jared Balcom thanked the USDA’s Animal and Plant Health Inspection Service, Foreign Agricultural Service and the U.S. Trade Representative’s office.
“Today’s announcement is 20 years in the making and will allow Chinese consumers for the first time to enjoy potato chips sourced from high-quality U.S. fresh potatoes.”
The NPC said China is top 10 export market for U.S. potatoes and could grow substantially with better market access.
By The Packer