YAKIMA, Wash. -- U.S. Sen. Maria Cantwell planned to be in the Yakima Valley Monday to talk to local agriculture officials about international trade and ongoing work in Congress on the farm bill, which expires at the end of September.
But Cantwell made sure to let officials know her concern about China’s plan to implement tariffs Monday on 128 U.S.-made products — including apples and cherries grown in the Yakima Valley — in response to President Donald Trump’s tariff on steel and aluminum imports.
“Farms being collateral damage in a trade dispute is just not worth it,” Cantwell said during a brief interview. “What we need to do is resolve our issues and have a larger discussion. If we think there’s too much flooding of (foreign) steel, then go to the international community and try to cut down on steel exports. ... The key to success is to push to open up markets and try to resolve disputes in a way that helps us maintain a level playing field.”
The impact of Chinese tariffs on cherries and apples, which have a statewide combined production value of nearly $3 billion — $2.3 billion for apples and $502 million for cherries — could be massive. Last year, China surpassed Canada as the top importer of Northwest-grown cherries. Washington apples have a much smaller presence in China, but many in the industry say there’s sizable potential for future growth.
But agricultural officials didn’t spend much time during Cantwell’s visit wringing their hands over China’s announcement, namely due to the timing. There are still a few more months until the start of the cherry harvest and even more time until the apple harvest in the fall.
“If there’s a silver lining, it’s that there is a little bit of a cushion for the U.S. and China to come up with a resolution,” said Kate Woods, vice president of the Northwest Horticultural Council, a Yakima-based organization that handles policy issues, including trade, for the region’s treefruit industry.
But Desmond O’Rourke, president of Belrose Inc., a Pullman-based consulting firm that tracks tree fruit exporting trends, said the tariffs reflect China’s tendency to play fast-and-loose with its trade relationships — a technique that has adversely affected a number of U.S. industries in the past.
“I’ve been warning my clients that reliance on China is risky,” he said. “This is one more example (of why).”
The situation raises several questions about the Chinese market for Yakima Valley grown cherries and apples and the impact tariffs could have on future sales:
How big is the region’s apples and cherries market in China?
In 2017, about 2.9 million 20-pound boxes of cherries, valued at $127 million, grown and packed in Washington and Oregon were exported to China, surpassing Canada as the top exporter of cherries from the region, according to figures from the Northwest Horticultural Council.
Since cherries grown in one state can end up being packed in another, it’s difficult to break down the figure further, Woods said.
Exports of apples from the Northwest, mostly from this state, to China are much smaller. Last year, the region shipped 1.8 million 40-pound boxes of apples, valued between $45 million and $50 million, to China. The country is the fifth largest importer of apples, behind Mexico, Canada, India and Taiwan.
What is the potential impact of a tariff?
A tariff could slow momentum on ongoing efforts by the Washington state apple industry to increase exports to China. China recently allowed for full varietal access, which means the country now allows for import of a selection of apple varieties beyond Red Delicious and Golden Delicious, said Sean Gilbert, general manager of Gilbert Orchards, an apple packer and shipper as well as a cherry grower.
“The Chinese market is one we’ve been trying to get open as an industry for a number of years,” he said.
With cherries, a tariff could mean an increase in already high prices — Chinese residents have paid $7 to $10 a pound, said Keith Hu, international program director for Northwest Cherry Growers, which markets cherries for growers in Washington, Oregon, Idaho, Montana and Utah.
Jeff Webb, director of international business development for Domex Superfresh Growers, the family-owned tree fruit marketing farm, said he’s already had a number of conversations with retailers and importers in China, who benefit from selling cherries, which are seen as a high-end product. “It’s not good for our buyers in China either,” he said.
However, the impact, at least for cherries, could be minimal if they remain a high quality product, Hu said. Consumers may be willing to pay a higher price if the product is still above-average or excellent quality.
“But will they buy at the same rate as last year or the year before, that’s unknown,” Hu said.
Which countries could take advantage of a tariff on U.S. apples?
There are a number of apple producing countries that could benefit from tariffs on U.S. apples. They include New Zealand, Australia, Chile, France and Poland. Some of the countries harvest at different times of the year, but store and sell apples year-round, like the U.S. does. A tariff on U.S. apples also may provide a boost to China’s apple industry. One disadvantage of Trump’s unilateral approach with this trade dispute is that other countries likely have fewer qualms about taking U.S. market share, said O’Rourke of Belrose Inc.
“It’s too easy for China to find an alternative supplier for apples,” he said.
China doesn’t have as many options for cherries, especially one that ships during the same period as those grown in the Northwest, Hu said. Chile also is a cherry grower, but their cherries are harvested and shipped in November and December, versus June to August for Northwest cherries.
Turkey produces cherries at the same time as the U.S. and has worked to ship more to China. In the past, the U.S. had an edge due to price and quality.
“There is a possibility that with a price increase (with a tariff), that we could see Turkish cherries developing a foothold,” Hu said.
Where else could Washington cherries and apples go?
While Gilbert, the Gilbert Orchards general manager, hopes for a resolution between the U.S. and China, “I’m not holding my breath either,” he said.
But with about two months until the cherry harvest, Gilbert and others in the cherry and apple industries do have time to make plans to ship to other countries. “Knowing about the tariff now gives us a little bit of flexibility,” Gilbert said.
Other top Washington apple export markets also are in Asia, including Taiwan and India. For cherries, Korea and Japan are top markets. For both apples and cherries, countries in southeast Asia, such as Vietnam, are growth markets.
But for apples, countries vying for market share in China also are looking to ship more to Southeast Asia and other growing markets. And China’s apple industry also is looking to gain traction in those countries as well, Gilbert said.