WENATCHEE — Repeal of the 20 percent tariff on apples shipped to Mexico is welcome news to Washington growers who have been on a roller coaster this past year with multiple trade conflicts in top export markets.
“It is definitely a feeling of relief to know that there is hope for resolutions to trade issues and that growers will have some reprieve with this agreement,” said Toni Lynn Adams, Washington Apple Commission’s communications outreach coordinator. “Mexico has demand for Washington apples year-round and there are a few months left in the export season, so the impact will be immediate.”
That translates into dollars in the pockets of growers, said Kate Tynan of the Northwest Horticultural Council, which handles federal and trade policy for the region’s fruit industry.
“With Mexico being the top export market for apples, the removal of this tariff is big, positive news for the Washington apple industry,” she said. “Mexico is such a significant market that the tariffs certainly resulted in a financial hit to many apple growers.”
Mexico is the destination of roughly one in 10 apples in the state, adding up to about 13 million boxes shipped each year.
Mexico announced this week it was lifting the retaliatory tariffs placed last June following President Donald Trump’s May 17 declaration that U.S. tariffs placed on steel and aluminum from Mexico and Canada were no longer necessary. The tariffs — 25 percent on steel and 10 percent on aluminum — had been put on goods essential to national security.
Washington Apple Commission stats show apple exports overall are down by 32 percent for the season to date, with Mexico accounting for a 29.3 percent reduction in shipment volume compared to the previous season. At the same time, the state produced 118 million boxes of apples this year, down from 133 million boxes.
“It’s difficult to pinpoint how much of the reduction is caused by tariffs and how much is caused by less production, but we do know there has been a significant impact on the industry,” Adams said. “Having our No. 1 export market open will make a big difference in the coming months and the next season.”
At Wenatchee-based Stemilt Growers, the drop in tariffs is expected to boost sales.
“Tariffs are always recognized in the price of goods for the consumer,” said Stemilt Marketing Director Roger Pepperl. “Higher prices can result in lower demand and place pressure on grower returns. A reduction in tariffs in markets we serve is always a positive in sales and return to the grower prices.”
Tynan said the apple export business was due for some good news.
“It has been a challenging year when it comes to barriers to trade that are completely outside our growers’ control,” she said.
The step away from the tariffs raises hopes for the ratification of the U.S.-Mexico-Canada Agreement (USMCA) to replace the 1994 North American Free Trade Agreement.
“Our industry is watching the movement of the USMCA in Congress closely,” Tynan said. “The agreement would maintain the duty-free status that our apples, pears and cherries currently enjoy in the Mexican and Canadian markets, while adding some new protections to ensure that the rules of trade are science-based.”
The agreement reached last week includes a note that future disputes over steel and aluminum will leave agricultural goods out of fight.
“This will shield the growers of apples, pears and cherries from being pulled into — and harmed by — these disagreements in the future,” Tynan said.
Despite the good news about the Mexico tariffs, other apple export industry challenges remain.
“Apples are still facing a 40 percent retaliatory tariff — on top of the 10-percent existing tariff — in China, which has been in place since last spring,” Tynan said. “China is traditionally our fifth- or sixth-largest market, and the tariffs have contributed to a 30-percent reduction in the number of shipments compared to last year.”
That reduction would be substantially higher, except China had a much smaller-than-normal apple crop this past year, she said.
India also has been threatening since August to impose an additional 25 percent tariff on apples, in addition to the current 50 percent tariff.
“Because India keeps announcing a delay to the implementation date within the 30-day window that it normally takes a container of apples leaving a West Coast port to reach India, the uncertainty has certainly impacted shipments,” she said. “We are down nearly 63 percent from where we were last year at this time. India was our second-largest export market in the 2017/2018 season.”