A Trade War Story: Some Implications of Higher Chinese Tariffs on U.S. Fruits and Tree Nuts
For the U.S. fruit and tree nut sector, the impact of recently instated Chinese trade tariffs will be partially offset by increasing Chinese demand, but U.S. exports to China will decrease. U.S. walnut, mandarin, grape, cherry, and peach exports to China are expected to be hit hardest.
A fast-growing middle class in China has driven consumption of fruits and tree nuts and has propelled rapid U.S. export growth to that country over the last decade.
Increasing Chinese demand will partially offset the impacts of the tariffs, but reduced U.S. fruit and tree nut exports to China will follow. U.S. walnut, mandarin, grape, cherry, and peach exports to China are expected to be hit hardest. Milder, but still significant, negative effects are expected for other U.S. fruit and tree nut exports. The potential change in total demand for U.S. fresh fruits and tree nuts – domestic and export demand for the rest of the world – is still positive for most of the analysed commodities, particularly for almonds, walnuts, mandarins, and lemons.
The effects on U.S. fruit and tree nut prices will depend on the magnitude of domestic supply changes and how strategic challenges are managed. In general, pricing pressure is expected. Risk management strategies exist but will take time to implement and come to fruition.