India is on President Donald Trump’s trade war hit list and that’s bad news for California’s almond growers.

India has struck back against the United States by imposing tariffs on 28 products. Among them: almonds, apples, lentils, and walnuts.

The 70% tariffs went into effect Sunday. They are retaliation for Trump’s decision to revoke India’s trade privileges.

Sen. Dianne Feinstein (D-California) said in a Twitter post that California exports more than $650 million in almonds annually to India and Trump’s “actions are hurting” the state.

India is also the second-largest buyer of U.S. apples, snapping up $156 million worth in 2018.

The United States is the world’s largest walnut exporter, shipping more than twice as many pounds as No. 2 Mexico. More than 99% of U.S. walnuts are grown in California’s Central Valley.

Australian Capitalize on Chinese Almond Market

According to the Almond Alliance of California, the state’s 6,000 growers produce 100 percent of the commercial domestic almond supply and 80 percent of the world’s supply. Almonds have become the state’s most profitable crop, resulting in a huge expansion in acreage over the past 20 years.

California almond orchards are expected to produce 2.5 billion pounds of nuts in 2019. That is up 8.69% from last year’s 2.30 billion-pound crop, the alliance said.

China also has imposed tariffs on U.S. almonds.

“These retaliatory tariffs have impacted California’s market share of almonds in China, a region that the California almond industry has invested in for over 30 years to develop.” — Almond Alliance of California

Through the first three months of 2019, the state’s almond shipments to China were down 40% compared to the first quarter of 2018, the alliance said.

However, growers are eligible for trade mitigation rebates from the Trump administration.

In contrast, Australian growers had increased their almond exports to China by 2000%. There is no Chinese tariff on Australian almonds because the countries have a free-trade agreement.

“These retaliatory tariffs have impacted California’s market share of almonds in China, a region that the California almond industry has invested in for over 30 years to develop,” the alliance said in a May 23 news release.

India’s Growing Trade War With U.S.

India’s tariffs are another example of tit-for-tat in the complicated world of international trade. Trump’s decision to end the preferred trade program with India was a response to complaints from U.S. dairymen and medical device makers about the impacts of India’s tariffs on American imports.

In 2018, India exported about $54 billion in goods to America while importing about $33 billion in U.S. goods, according to U.S. trade records.

India announced the tariffs in 2018, but they were delayed while the countries tried to negotiate their differences. One of India’s biggest complaints: Trump’s import tariffs on Indian steel and aluminum.

While two of Trump’s goals are to cut the huge U.S. trade deficit and protect American industries, the fact is that India enjoys a small surplus in trade with the United States. In 2018, India exported about $54 billion in goods to America while importing about $33 billion in U.S. goods, according to U.S. trade records.

In May, the Trump administration raised tariffs to 25% from 10% on $200 billion worth of Chinese goods. The president is also threatening to target another $300 billion of exports from China.

Is Relief in Sight?

Given Trump’s freewheeling trade policies, it’s difficult to predict what’s next.

But Reuters reports that Secretary of State Mike Pompeo says he’s open to resolving trade differences with India. He plans to visit the country later this month.

One Response

  1. Martin Querin

    Funny thing is there are thousands of acres of almonds owned by Indian farmers growing food to ship to their homeland; where their groundwater pumping has depleted their aquifers, lowering them as much as 900-feet. So India imposing tariffs on food items will in the end hurt India more than California, where Ag makes up less than 2% of the State’s GDP. India hasn’t gotten a handle on their population problem and it is spreading to the rest of the world. They need food more than we need their Ag dollars.

    Much ado about nothing to make political hay and a Country imposing a “penalty” that is not connected to their own self-interests. More political “unintended consequences”; India might want to rethink that tariff…and boring political rhetoric.

    Reply

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