How will tariffs impact WA’s trade-dependent agriculture industry?

At the beginning of April, President Donald Trump announced plans to impose tariffs on all international imports — then promptly backpedaled amid a plummeting stock market and massive protests nationwide.

The tariffs were especially unpopular among Washington’s congressional delegation. While Trump has said implementing the tariffs was a response to “foreign trade and economic practices that have created a national emergency,” U.S. Sen. Maria Cantwell and a bipartisan group of co-sponsors have proposed legislation to prevent future tariffs like the ones Trump proposed, which could negatively impact the economy — especially in Washington state, one of the top exporters among U.S. states and territories.At a town hall organized by the Washington State Democratic Party in Yakima earlier this month, former Gov. Jay Inslee said previous tariffs had resulted in massive losses in export volume for Washington. During the first Trump administration, the state’s apple market in India was hampered by a retaliatory tariff.By the time that tariff was lifted in 2023, Washington’s apple market in India was all but decimated. In 2019, the market brought in $120 million annually. After the tariff was imposed, that number fell to just under $3 million in 2022.It also meant apple growers had to find another market for Red Delicious, a variety that has lower demand domestically but was more popular in India.“This is the greatest food-producing place [on] the whole planet, with hardworking people and the best soil,” said Inslee. “It deserves a president who will open markets to our products, not close them.”It’s not clear even to economics experts what Trump hopes to accomplish by imposing tariffs like the one that so damaged Washington’s apple exports in recent years.“Is it bringing manufacturing to the U.S.? We don’t know whether it’s actually punishing bad actors in the world trade system,” said Debra Glassman, teaching professor of finance and business economics at the Foster School of Business at the University of Washington.In the chaotic days since he introduced them, Trump has rolled back some of his planned tariffs. But he’s forged ahead with a 10% tariff rate on all imports and additional tariffs on imports from China. Tariffs on auto and steel imports from Mexico and Canada remain intact under a separate order from Trump. Trump initially applied universal tariffs under this order, but later exempted goods under the three-country USMCA trade agreement between Canada, Mexico and the United States. Trump has also exempted sales of electronics, such as smartphones and laptops, from the 125% tariff on goods imported from China. How could Trump’s tariffs impact Washington?In a virtual roundtable organized by U.S. Senator Patty Murray on April 8, Washington State Department of Agriculture international marketing program manager Rianne Ham said retaliatory tariffs from China had previously weakened Washington’s sweet cherry market.Before Trump’s 2018 tariffs on steel and aluminum in China and other countries, China had been one of the fastest-growing export markets for cherries grown in the Northwest. During the 2017 cherry season, nearly 60 million pounds of cherries sourced from five states — the largest portion from Washington — were exported to China, making it the top export market for the fruit, ahead of Canada.After the implementation of Trump’s first tariffs, China retaliated with two tariffs. Those additional tarriffs — totalling 40% — equalled a 50% tariff on U.S. products, including cherries.The cherry market in China has never bounced back. In 2017, cherries exported to China were valued at $100 million. Now, the country imports about a third of that amount.When an exporter loses a market this dramatically, it forces them to find new markets or simply sell domestically. That means cherries once slated for export could end up in U.S. grocery stores. A greater supply could mean lower prices for consumers, but the loss in export volume decreases earnings for growers: Because cherries sell for more abroad, domestic sales cannot make up for income lost when overseas markets shutter, said Jeff Luckstead, professor of agricultural and resource economics at Washington State University’s Carson College of Business.Further complicating this dynamic is the likelihood that new tariffs will be met with retaliatory tariffs from other countries. One notable example of this came during the 1960s, when the U.S. imposed tariffs on light trucks as a way of retaliating against European countries that had imposed tariffs on the sale of U.S. chickens. The truck tariff, which is still in place even now, led most countries to scale back production of pick-up trucks, which reduced competition for U.S. manufacturers of the vehicles.Tariffs like the one on light trucks may occasionally be helpful to domestic manufacturers, but the benefits rarely outweigh the negative impact on consumer prices.And in export-heavy industries such as aviation and agriculture, any retaliatory tariffs that follow Trump’s would also have a negative impact.Luckstead said there are also negative impacts on free trade, namely lost jobs. This was apparent several decades ago, when companies took car manufacturing operations abroad. Lost jobs are a concern, he said — one the U.S. should have addressed.Still, said Luckstead, some jobs in the U.S. did grow: As manufacturing jobs were lost, more auto design positions opened up. But manufacturing workers can’t seamlessly transition into auto design roles, and tariffs are less likely to receive support if they’re perceived to decrease manufacturing.Washington trade by Crosscut EditorImpact on trade relationshipsWhat’s unusual about Trump’s recent tariffs are how widespread they are, Glassman said. Generally, trade disputes have been against a small number of countries.Trump’s tariffs would impact countries that have historically had good trading relationships with the U.S., like Canada, Japan and South Korea.During the tariff roundtable discussion, Ham, of the Washington Department of Agriculture, said the foundations of successful trade partnerships are relationships built between countries and their business communities over many years or even decades.She said growing anti-American sentiment in countries like Canada could have a deleterious effect on America’s trade relationships, which are vulnerable to anything that sours relationships or makes the U.S. seem like an unreliable trading partner. “Trade is based on relationship and trust,” she said.Legitimate trade issuesMark Powers, president of the Northwest Horticultural Council, which represents the region’s tree-fruit industry in federal policy matters, said he hopes Trump’s tariffs induce some countries to negotiate trade provisions that would remove both tariffs and non-tariff barriers, making some international markets more accessible for apples, pears and cherries grown in Washington state.He acknowledges that tariffs from countries like China have had a massive negative effect on Washington’s fruit market, and additional tariffs would further reduce the state’s market share of cherries in the country. But he is hopeful some countries might respond differently.“It’s really on a bilateral basis, as we see it, on how countries respond,” Powers said.But Powers said he feels the current trading system is “unfair and challenging to our growers.”Some countries, including Australia, have outright refused to import Washington apples, he said, for no other reason than to reduce competition for their domestic markets.While Trump’s approach is a “novel way to address it,” he said, not much has been done in recent years to take on trade barriers that limit international market access for products made in the U.S. — and Washington.“Pretty much anyone that wants access to the U.S. can sell here and they can sell here at duty-free levels,” he said. “We’re just asking for that same kind of treatment going in the other direction.”

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