November 18, 2024
SHANGHAI – Mr. Manuel Garibay journeyed from the American northwest to the bustling city of Shanghai in early November, with aspirations of selling dried cherries to an eager Chinese market.
However, amidst a sea of potential buyers at China’s grandest import expo, he expressed apprehension that this lucrative market—integral to achieving a fifth of his company’s profits—might become increasingly elusive.
With the chilling prospect of a renewed trade war appearing imminent under a second Donald Trump presidency, the sales manager for Royal Ridge Fruits, a prominent cherry grower in Washington state, anticipates that Beijing might respond with retaliatory sanctions targeting agriculture, which would directly affect his business.
“I think if tariffs are imposed, it could potentially kill all our Chinese business,” he shared with The Straits Times on Nov 6, shortly before Trump’s victory in the US presidential election.
The American agri-food sector is girding itself for another wave of economic challenges, especially if Trump intensifies the ongoing trade conflict that has already inflicted significant damage.
Deeply intertwined with the Chinese market and considered a vital support base for Trump, the farming industry represents a prime target for Beijing’s retaliatory measures against US tariffs.
When Trump instituted tariffs as high as 25 percent on various Chinese goods in 2018, China retaliated with corresponding duties on a range of US exports including soya beans, pork, and various fruits.
The US Agriculture Department estimated that American farmers suffered over US$27 billion (S$36 billion) in export losses from mid-2018 to 2019—largely attributed to the effects of tariffs imposed by China.
A temporary truce known as the Phase One agreement was eventually negotiated in 2020 during the Trump administration, which led Beijing to grant limited tariff waivers to bolster its purchases of US agricultural products.
This time around, the President-elect has proposed imposing taxes exceeding 60 percent on imports from China.
“US soya beans and corn are prime targets for tariffs,” noted economists from the American Soybean Association and National Corn Growers Association in October.
A report commissioned by both associations released earlier that month projected that farmers could incur losses of up to US$7.3 billion combined in annual production value over the upcoming decade if China escalates tariffs to 60 percent.
“The soya beans, the beef, the chicken—they’re going to hurt,” remarked Daniel Benefield, an American whiskey exporter from Rad Beverage International, while attending the Shanghai import fair.
Although he believes that his industry may escape the worst impacts due to low Chinese imports of American spirits, he fears that agriculture will certainly be “hit” considering the substantial volumes involved.
China remains the largest overseas market for US agricultural products, and this sector accounted for one-fifth of total US exports of goods to China in 2023.
In response to the potential for renewed trade conflicts, some industry figures within China are reportedly hedging their bets by stockpiling American commodities.
“I understand that some Chinese importers are trying to buy as much as possible (of US agricultural products) at this point,” said Mr. Eric Zheng, president of the American Chamber of Commerce in Shanghai, on Nov 12.
The business chamber was instrumental in organizing a showcase of US agricultural goods at the China International Import Expo in Shanghai from Nov 5 to 10, where deals exceeding US$711 million spanning products from soya beans to ginseng were successfully negotiated.
Analysts based in China caution that while US agriculture stands on the brink of another trade war clash, the dynamics differ significantly from those in 2018.
Since the start of Trump’s trade skirmish, China has reduced its reliance on US agricultural products, enhancing its domestic agricultural production and diversifying its import sources.
For instance, China’s soya bean imports from Brazil have notably surged, while the US has witnessed a dwindling market share. Nevertheless, American soya bean exporters still heavily depend on China, which consumes half of their overseas sales of the commodity.
Renmin University researcher Xu Tianqi asserts that American agriculture will suffer yet again should Trump raise tariffs, potentially without the need for retaliatory actions.
Chinese procurers of agricultural goods—many aligned with state-owned enterprises—might simply opt to source their supplies from alternative suppliers, irrespective of counter-tariffs, remarked the associate research fellow at the university’s Chongyang Institute for Financial Studies.
Economist Mei Xinyu suggests that the agriculture sector remains a viable candidate for retaliatory tariffs, emphasizing that rural districts in the US have historically formed Trump’s most devoted support base.
However, he advised that it is prudent to avoid allowing the trade war to escalate to catastrophic levels, emphasizing the need for responsible conduct.
Dr. Mei further articulated that China is currently positioned with greater confidence and strategic advantage relative to the US compared to the climate when the initial trade war commenced in 2018.
In light of protracted competition with the US, the paramount countermeasures recommended for China involve domestic reforms to bolster its economy and efforts to win over other trading partners affected by American protectionist policies, he elaborated.
Within the agriculture community, stakeholders are emphasizing the importance of continued cooperation between the US and China.
“China being the world’s largest agriculture import market and the US being one of the largest global agriculture exporters – we need to work together,” asserted Jim Sutter, chief executive of the US Soybean Export Council, on Nov 6.
He suggested that a “strong path forward” could involve exploring the possibility of resuming the Phase One trade agreement, which had seen China commit to increasing purchases of US farm products and other goods and services by US$200 billion—a commitment that has not been fully realized, according to analysis by a US think tank.
At the Shanghai import expo, amidst the display of dried cherry samples, Mr. Garibay voiced his concerns, stating he is “not looking forward” to the prospect of trade war 2.0.
“It would be a bad deal for both countries… a lose-lose situation for China and the United States,” he concluded thoughtfully.
What challenges does Manuel Garibay foresee for Royal Ridge Fruits if tariffs are implemented in US-China trade?
**Interview with Manuel Garibay, Sales Manager at Royal Ridge Fruits**
**Editor:** Thank you for joining us, Mr. Garibay. You’re currently in Shanghai aiming to expand your business in the Chinese market. Can you share your experience at the import expo?
**Manuel Garibay:** Thank you for having me! The expo has been exhilarating, with a vast array of potential buyers eager to explore what we have to offer. However, the excitement is tempered by concerns over the looming trade tensions under the new Trump administration.
**Editor:** You mentioned apprehension about potential tariffs impacting your business. Can you elaborate on how that might affect your sales?
**Manuel Garibay:** Absolutely. Given that we derive a significant portion of our profits from selling dried cherries to China, any increase in tariffs could be devastating. It’s not just about the cherries; it sets a precedent for a broader trade tension that could blanket all US agricultural exports.
**Editor:** How do you think the Chinese market will react if tariffs are imposed?
**Manuel Garibay:** Historically, we’ve seen China respond with retaliatory measures. During the previous trade war, they targeted US agricultural products like soybeans and pork, significantly impacting sales. This time, we might witness something similar. I fear that if prices rise due to tariffs, Chinese importers may turn to alternative suppliers, which could diminish our market share permanently.
**Editor:** Considering the past losses American farmers have faced due to tariffs, how is your industry preparing for these uncertainties?
**Manuel Garibay:** Many in the agriculture sector are understandably cautious. Some Chinese importers are already stockpiling US agricultural goods in anticipation of potential tariffs. However, it’s tricky; while we want to maximize sales now, there’s a looming anxiety about future pricing and market access.
**Editor:** How do you see the dynamics of US-China agricultural trade evolving in response to these challenges?
**Manuel Garibay:** It’s a complicated landscape. China has reduced its dependence on US products by boosting domestic production and diversifying imports. That shift makes it all the more critical for us to find ways to maintain our competitive edge. If the tariffs rise significantly, I fear we could lose a valuable market share permanently.
**Editor:** Thank you, Mr. Garibay. Your insights shed light on the potential implications of the trade situation. We wish you the best in navigating these challenges.
**Manuel Garibay:** Thank you for the opportunity to discuss these important issues. I remain hopeful that a balanced resolution can be found that benefits both countries.
