Trump slows advance in China trade war. What’s it mean for California, Valley agriculture?

Trump explains delaying some tariffs in trade war with China

The U.S. is delaying certain tariffs on Chinese-made cellphones, laptop computers and other items and removing other Chinese imports from its target list altogether. The tariffs will be delayed until Dec. 15.
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The U.S. is delaying certain tariffs on Chinese-made cellphones, laptop computers and other items and removing other Chinese imports from its target list altogether. The tariffs will be delayed until Dec. 15.

In the escalating trade war between Chinese leaders and President Donald Trump, agriculture in California and the Valley stands to potentially be hit even harder than it has already by tariffs.

Plus, a declaration was made earlier this month by the Chinese government that it was ceasing all purchases of American farm products.

Farmers and ranchers across the state shipped almost $2.3 billion worth of crops and commodities to China in 2017-18. Most of those products have been subjected to increasing import tariffs in the tit-for-tat maneuvering between Trump and Chinese President Xi Jinping.

Trump had announced plans to impose duties starting Sept. 1 on about $300 billion in Chinese goods coming into the U.S. that aren’t already being taxed with tariffs, with the effect of making an even wider range of products from China more expensive for American consumers.

The Associated Press reported Tuesday, however, the Trump administration will delay some of those tariffs and drop others altogether.

The partial retreat on the new taxes came in apparent response to pressure from businesses and growing fears the trade war is threatening the U.S. economy.

Import duties or tariffs add to the cost of foreign products coming into a country. That means American exports to China are more expensive for Chinese consumers, while American consumers face higher prices for products imported from China.

The latest U.S. tariffs on China planned by Trump were estimated by some economists to cost U.S. households an average of $200 a year. That’s on top of the roughly $830 cost imposed per household from Trump’s existing tariffs, according to an analysis by the New York Federal Reserve.

The administration is postponing 10 percent tariffs until December on such popular consumer goods as electronics – cell phones, laptop computers, video game consoles, toys and computer monitors – as well as some shoes and clothing. “We’re doing (it) just for the Christmas season, just in case some of the tariffs could have an impact” on retailers, Trump told reporters Tuesday in New Jersey.

While that announcement provided some relief to companies that rely on retail sales in the back-to-school and holiday seasons, it may not do much for farmers who find themselves in the crossfire of a trade war not of their making.

Trump, through tweets and his trade representatives, are dueling with China over allegations that Beijing steals trade secrets, forces foreign companies to hand over technology, and unfairly subsidizes Chinese businesses. The tactics are generally part of China’s ambitions to become a global leader in advanced technologies.

But a dozen rounds of negotiations between the U.S. and China have yet to produce an agreement. Earlier this year, frustrated with a lack of progress, Trump raised tariffs on about $200 billion of Chinese imports by 15 percentage points to 25 percent. On Aug. 1, he threatened to impose the additional tariffs on Sept. 1.

While negotiations are expected to resume in September, the prospect of more American tariffs have prompted China to weaken its currency, the yuan – a signal that China plans to get tougher with the U.S. rather than back down.

Impact on Valley crops

In the meantime, products grown in California face tariffs that effectively raise the cost of their products in China by anywhere from 15 to 90 percent, depending on the commodity.

The most recent increase in tariffs came in May – and products of most significance in the Valley are among those bearing the brunt.

Almonds exported to China, for example, are subject to a 50 percent tariff, while dairy products face up to a 40 percent tax.

Other tariffs include a tax of 26 to 65 percent for cotton, up to 55 percent for oranges or related products, up to 50 percent for beef or beef products, and 60 to 65 percent for walnuts, according to information from the U.S. Department of Agriculture’s Foreign Agricultural Service.

Fresh tree fruit such as cherries, plums and apricots are slapped with 50 percent tariffs; for dried fruit, tariffs are 50 percent on raisins and 65 percent on dried apricots and prunes

The cost of tariffs on Chinese goods by the U.S. does not include the expense of subsidies paid by the Trump administration to farmers across the U.S. — including California and the Valley — to make up for their potential lost sales to China.

More than $8.5 billion in payments was made to U.S. farmers. Farmers in California received about $76.3 million in federal subsidy payments for economic harm they may have suffered.

Dairy producers, hog farmers, and growers of cotton, almonds, cherries, wheat, corn, and soybeans in the central San Joaquin Valley – Fresno, Kings, Madera, Merced and Tulare counties – were paid more than $44.8 million.

Another series of subsidy relief payments, with an expanded range of crops and commodities, is being planned for 2019-20 year.

Farmers in the Valley would rather see a negotiated truce in the trade war rather than rely long-term on subsidies to ease the effect of China’s tariffs, Fresno County Farm Bureau President Ryan Jacobesen told The Bee earlier this month.

“It’s welcome news that the president has put an emphasis on making sure agriculture stays strong,” Jacobsen said. But, he added, “we understand that it’s for the short-term, a fill-the-gap type of program to deal with the ramifications we’ve had in this trade battle.”

“For us in the industry, a resolution is something that we badly want to see,” he said. “We’re optimistic that we’ll see some trade agreements come sooner rather than later; I hope we’re talking about months from now rather than years.”

But some analysts suggest that China’s leadership may be preparing for a long trade standoff with the U.S. – something that could continue for years, as the government has told Chinese exporters to find new markets for their products and replace American farm goods with imports from Russia, Brazil and other countries.

The Associated Press contributed to this report.
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Lifelong Valley resident Tim Sheehan has worked in the Valley as a reporter and editor since 1986, and has been at The Fresno Bee since 1998. He is currently The Bee’s data reporter and covers California’s high-speed rail project and other transportation issues. He grew up in Madera, has a journalism degree from Fresno State and a master’s degree in leadership studies from Fresno Pacific University.