Retaliatory Tariffs on Cranberry Industry
Due to President Trump’s decision to impose tariffs on steel and aluminum imports, retaliatory tariffs have been imposed on many U.S. goods. Canada, Mexico, China, and the European Union are among those who have instituted retaliatory tariffs on U.S. imports such as cranberries and cranberry products. President Trump claims that the specific measures are meant to protect U.S. national security interests.
The current trade war is drastically hurting the U.S. agricultural economy and is specifically impacting the states that hold large cranberry markets. Mexico alone has imposed a 20% tariff on U.S. apples, cranberries and potatoes. These retaliatory tariffs have crushed the demand for cranberries and have unfairly impacted the cranberry farmers caught in the middle of a trade war. These negative results depress commodity prices and hinder the spending power of farmers to buy equipment and pay their bills.
Cranberries are grown almost exclusively in the United States, Canada, and Chile and about a third of U.S. cranberry production is exported. China imports $50 million worth of US cranberries a year according to the US Department of Agriculture, while the European Union imports $130 million in cranberries, 38% of US exports. In June 2018, a retaliatory duty of 20% on cranberry concentrate from the European Union came into effect, in addition to the planned 25% duty on dried cranberries that will come into effective in March 2021 (or sooner pending WTO ruling). The June 2018 duty of 20% was placed on a 2017 US export value of $30,000,000 with a potential impact of $6,000,000. The EU plans to impose a higher tariff on sweetened dried cranberries in the near future. On June 15, China also increased their original duty of 15% prior to the trade war to 25%, equaling a total duty of 40% placed on cranberries. This was on a US export value of $45, 000, 000, with a potential impact of $11, 250, 000. Similarly, Canada has already placed a 10% retaliatory duty on cranberry juice drinks and cocktails that came into effect in July.
Cranberries are a key part of Wisconsin’s economy and the region’s agricultural output. Thus, immediate action must be taken to support farmers hurt by retaliatory tariffs and to protect the agricultural community. It is crucial that the key actors in this trade dispute look at the potential impact on both the farmer and the consumer when evaluating tariffs on cranberry products.