Caught in the Cross Hairs, Farmers Brace for a Trade War

Farmers across California’s agriculture industry are worried over the escalating trade conflict between the United States and China, with steep new tariffs specifically targeting some of the state’s most lucrative exports.

The Chinese finance ministry announced over the weekend that it would impose tariffs on more than 100 American products, including many of California’s staples like wine and pistachios, in retaliation against tariffs imposed on steel and aluminum by President Donald Trump.

“We have heard a lot of concerns from our wine grape growers and our pistachio and almond growers. Those markets are definitely going to take the largest hit,” Sara Neagu-Reed, of the California Farm Bureau Federation, said. “Putting us in the middle of this issue is just not fair for our farmers.”

That could mean trouble for the state’s farmers in the Central Valley and elsewhere. China is California’s third most valuable destination for agriculture products, according to the California Farm Bureau Federation, just behind the European Union and Canada. The state’s exports to China totaled more than $2 billion in 2016. Three products alone, all facing tariffs, accounted for most of those exports: $530 million in pistachios, $518 million in almonds and $161 million in wine.

The tariffs add another layer of uncertainty for growers in California, and in particular those in the wine industry, which already faces growing production costs. The full impact of the tariffs is not yet clear, but experts are warning of significant decreases in exports of those products. Fluctuating prices in steel could also affect the price of farm equipment.

John Aguirre, president of the California Association of Winegrape Growers, said that the trade war with China threatened to derail long-running efforts by winemakers to expand into the Chinese market. That could carry repercussions well into the future.

“We not only face the prospect of short term harm to wine grape prices, but really missing out on the longer term opportunity,” he said. “Once you lose market share, other countries have filled that void and it’s very difficult to reclaim lost ground.”