Had China’s announcement this week to stop purchasing U.S. agricultural products been the first volley of a trade war, local trade officials would have taken it like a punch to the face.
But two years into an off-again, on-again trade war, Washington agriculture officials just kind of shrugged this one off.
“For the wheat side, they haven’t been buying any wheat for over a year,” said Randy Fortenbery, an agriculture economist at Washington State University. “The ag markets have kind of ignored it.”
China’s announcement on Monday that it will stop purchasing U.S. ag products follows a monthlong cease-fire between President Donald Trump and China President Xi Jinping over arguments about an unfair playing field and the theft of U.S. companies’ intellectual properties.
That goodwill ended when Trump announced he would impose new tariffs Sept. 1 on the $300 billion in Chinese imports he had previously left untouched following 12 rounds of negotiations without an agreement.
It’s an extension of the trade war that started in 2018 when China placed 50% tariffs on Washington cherries. Even so, the Evergreen State was still able to ship about 20,000 tons of the delicate fruit to that country.
That was down from the record amount of 30,000 tons shipped in 2017, said Keith Hu, international program director for the Washington State Fruit Commission.
“No doubt, it’s definitely a road block,” Hu said. “We don’t want to see a 50% tariff.”
While cherry production, which is just winding down, is a bit down year over year, Washington growers were still able to send about 20,000 tons to China. The key was that they sold the fruit prior to China’s announcement, Hu said.
“Our number is down, but 80% of the crop is sold in North America,” he said. “China is about 10% of the market. It’s a big market, but it’s not critical. We had a good year.”
The same may not be said for apples, which is Washington’s No. 1 cash crop. China had been one of the top five export markets following Mexico, Canada and India, he said.
“I just saw a couple apple guys at the meeting,” Hu said. “They are worried. It sounds like they have a pretty good crop, too.”
The problem, as agriculture economists have explained time and again, is that trade officials work for years to set up new markets. An open trade war can undo all that work in days and the damage can linger as other countries swoop in to sell their goods, replacing those that had been grown in Washington.
Fortenbery said the farmers hit the hardest by China’s no-buy policy are soybean and pork producers in the Midwest. But even the hog markets didn’t seem to move after Monday’s announcement.
“The grain market has kind of ignored it completely because we haven’t really been doing business with them anyway,” he said. “I think the market has gotten to the point that until they see purchases and shipments, they are not going to get excited about the China market.”
Even though Washington growers were able to ship cherries to China in 2018, the tariffs had a huge impact on local growers, who often bore the brunt of the additional costs, said Karina Gallardo, an associate professor at WSU who studies tree fruit economics.
The China tariffs had a $100 million impact on Washington’s cherry industry and hurt the apply industry by another $40 million, Gallardo said.
“The problem with cherries in Asia, especially China, was that it was a growing market,” she said. The impact wasn’t as severe on the apple industry because its export base “is more diversified. But for cherries, China was their destination.”
While the markets barely changed with the announcement on Monday, the changing trade war could have much greater impact on markets going forward, Hu said.
“We do not know what is going to happen,” he said. “It could all end or it could drag on another five more years.”