YAKIMA — While many growers in Washington state and the elected officials who represent them have bemoaned the effects on agriculture of a nearly five-year trade war with China, other U.S. industries are benefiting.
This is why reducing or repealing trade barriers and tariffs with China and India is a complex and perhaps frustrating process, noted Shannon O’Neil, vice president and senior fellow for Latin America studies at the Council on Foreign Relations.
O’Neil discussed tariffs, trade and globalization issues during the council’s April 11 webinar for local journalists about regionalization and U.S. economic competitiveness. She noted the U.S. chose to sit out recent rounds of global trade agreements.
“Over the last five years, the rest of the world has been negotiating agreements,” O’Neil said. “The U.S. is not part of any of them, and as they came into force, U.S. products are relatively more expensive. We are no longer competitive in those markets.
“Lots of agricultural sectors have been hit very hard by the lack of access,” she added.
Tariffs on tree fruit
Earlier this year, the Washington state congressional delegation wrote a letter to U.S. Trade Representative Katherine Tai and Secretary of Commerce Gina Raimondo to help remove India’s tariffs on apples and other fruit.
Tariffs on U.S. fruit were imposed by China and India in 2018 to retaliate against our nation’s steel and aluminum tariffs, and the results have been far fewer exports to two of the world’s largest countries.
In their letter, the congressional delegation noted that prior to India’s implementation of tariffs, the Asian nation was Washington’s No. 2 export market, with $120 million in tree fruit exported there annually by 2018. In the 2021-22 season, Washington growers exported just over $3 million of tree fruit to India.
Riley Bushue, director of congressional relations and export programs for the Northwest Horticultural Council, said tariffs imposed by China and India on apples, cherries and pears have cost Washington farmers an estimated $800 million in lost exports between 2019 and 2022.
“When you look at those types of losses, that’s tough for growers to sustain — and quite frankly, some haven’t,” Bushue said. “Many operations have gone out of business and shut down.”
The congressional delegation’s letter noted the export losses have coincided with expense increases that have forced multigenerational farms out of business in Washington.
In particular, the Red Delicious variety accounts for nearly all of Washington’s apple exports to India, meaning that families operating legacy Red Delicious orchards were disproportionately affected by the tariffs. The 2022 Red Delicious crop was the smallest in Washington since 1968, the congressional delegation’s letter noted.
Steps toward ending India’s tariffs
In the three months since the congressional delegation’s letter was issued to Biden administration officials, some positive steps have occurred regarding trade with India.
U.S. Sen. Maria Cantwell, D-Wash., was part of a congressional delegation of nine U.S. senators who traveled to India in February, and Cantwell said she discussed the tariff issue directly with Indian Prime Minister Narendra Modi.
“To my great interest, (Modi) said the U.S. and India should consider a free trade agreement,” Cantwell said during a March 23 U.S. Senate Committee on Finance hearing on trade policy.
Addressing Tai, the U.S. trade representative, Cantwell asked her what steps could come next in easing the trade barriers between Washington farmers and Indian consumers.
Tai said during the hearing she agreed with Cantwell on the importance of easing the tariffs, and that her team will work to “improve the situation.”
Losing market share
During the April 11 Council on Foreign Relations webinar, O’Neil said the U.S. does not have “preferred access” — trade without tariffs of the possibility of tariffs — to most of the world’s markets.
“We have preferred access to less than 10 percent of the world’s GDP (gross domestic product),” O’Neil said.
The North American Free Trade Agreement, signed 30 years ago with Canada and Mexico, did provide a short-lived boost to U.S. manufacturing and provided strong regional trade partners, she said. But other trade agreements negotiated since then in Europe and Asia are stronger.
Even before tariffs were established five years ago, U.S. exports to China have not kept up compared to other countries, O’Neil said.
“We lost market share,” she added. “As the Chinese economy grows, we’re not benefitting from that growth.”
The U.S. Trade Representative’s office began its required four-year review of the Trump administration’s initial tariff actions and their subsequent modifications, the Council of Foreign Relations reported. There were 434 comments from domestic industries and trade associations to continue the tariffs.
Examples of industries protected by the tariffs on Chinese goods include mining, steel, technology and plywood, the CFR reported.
Of all comments received by Tai’s trade representative office, only 22 percent were in support of continuing the tariffs. Other major exports to China were hurt by the trade barriers, including Washington’s tree fruit industry.
Over the years, the benefits of protectionist trade policies tend to be targeted toward specific industries, while the costs are more widely spread among larger groups of affected businesses — and consumers, O’Neil said.
It can be argued that the Chinese and Indian tariffs have contributed to inflation, for example, with a CFR report estimating the tariffs contributed between 0.3 to 1.3 percent of last year’s consumer price index, which ranged between 6 to 9 percent year-over-year during most months of 2022.
Ultimately, elected officials and the voters they represent must push Tai and other administration officials to lift tariffs and negotiate new trade agreements, O’Neil said.
“Polls show a strong majority of Americans see trade as an opportunity and not a threat,” she added. “I do think there is a space and real political winds, particularly in agricultural states, to be part of these (trade) agreements.”
