China/US trade war could result in long term damage to California's reputation as supplier, warns economist
The trade war between China and the US could result in long term damage to California’s reputation as a reliable source of agricultural goods, a university economist has warned.
All the work that groups such as the California Wine Institute and the Almond Board of California have done to generate interest in the state’s speciality crops could end up benefiting US’s competitors, said Daniel Sumner, who leads the University of California Davis’ Agricultural Issues Center.
“Just the threat or potential for disruption actually affects trade,” Sumner told Western Farm Press. “We’ve seen it with Mexico with corn and dairy products. As the administration was threatening Mexico with disruptions the people who shipped to Mexico were already seeing problems. Mexico said ‘we can’t deal with a disruption in imports I guess we should open a line of supply to New Zealand and have a diversified portfolio'.”
Sumner claimed that the Chinese tariffs will affect some Californian crops more than others, adding that the new 15% tariff on Californian wine could escalate a modest slide in exports. Shipments from Calilfornia were down by 5.5% in value and 7.9% in volume in 2017, a dip the Wine Institute blames on such factors as the strong dollar, heavily subsidised foreign wine producers and competitors reaching free trade agreements with key markets.
Overall, the volume of California products shipped direct to China is small according to a Rabobank report. About 4% of US exports in the fruit and nut category and 2% of vegetable exports are currently shipped to the country.
In the meantime, the California Farm Bureau Federation (CFCB)and other groups are urging administration officials to find a quick solution to the China impasse. “There has got to be some common ground,” said Sara Neagu from the CFBF. “China is such a large market and this can be very destructive, not just in California but throughout the entire nation.