Some Chinese customers are canceling orders with Pacific Northwest producers as the tariff rate on U.S. cherries now totals 50 percent.
Cherry producers in the Pacific Northwest are experiencing the harsh realities of retaliatory import tariffs imposed upon their fruit by China.
The region produces about 80 percent of the sweet cherries sold throughout the United States, and one-third of this production is exported overseas.
During last year’s season, China surpassed Canada for the first time as the top export market for Pacific Northwest cherries, even though U.S. cherry exporters paid a 10 percent tariff to ship this fruit to China due the United States’ most favored nation status. It’s estimated that 11 percent of the region’s total cherry exports, valued at about $130 million, were shipped to China during the 2017 season.
On April 2, China imposed an additional 15 percent tariff on U.S cherries shipments in retaliation for the United States’ Section 232 tariffs imposed on steel and aluminum. This was followed on July 2 with China imposing an additional 25 percent tariff on cherries in retaliation for the U.S. Section 301 tariffs imposed on Chinese products due to alleged intellectual property violations. The tariff rate on Pacific Northwest cherries now totals 50 percent.
Cass Gerbers, president and CEO of Gerbers Farms in Brewster, Wash., one of the largest U.S. producers of sweet cherries, told members of the House Ways and Means Committee’s trade subcommittee Wednesday that of the estimated 5 million boxes of cherries produced by his farm this season, about 1.5 million boxes had been planned for the China market. The farm has since trimmed this order for China by two-thirds.
“With the recent tariff actions our customers have canceled orders and redirected our program downwards by approximately 1 million boxes, thus forcing all of this orphaned fruit into the U.S. domestic market or potentially elsewhere in the world, pushing down prices with the extra volume,” he said in his prepared testimony.
Gerbers told the subcommittee during questioning that prior to the imposition of China’s tariffs, he could sell his cherries in the Chinese market at about $8 per pound compared to just over $2 per pound in the U.S. market. When the farm attempted to raise its prices with its Chinese buyers to $10 per pound to make up for the newly imposed import tariffs, many canceled their orders.
“We have worked decades to build these markets,” Gerbers said, adding that it’s easy to lose a customer if you cannot fulfill your orders and winning them back may take years.
He further warned that if the tariffs remain in place for the 2019 cherry crop, Chinese buyers will simply turn to growers in the European Union and Turkey.
“Now we will be opening the door to all of our competitors who also grow cherries elsewhere in the world, who will snatch up these markets as soon as we stumble,” he said.
Cherry exports souring with China tariffs
