California Wine, Nuts and Fruit Stand to Lose in a Trump Trade War With China

On Friday, China’s Commerce Ministry announced plans to impose a 15 percent tariff on U.S. exports of wine, nut products and dried and fresh fruit in retaliation for U.S. tariffs on Chinese steel and aluminum, which the Trump administration formally began the process of initiating last week.

According to the California Farm Bureau Federation, China is the third-highest-valued destination for California agricultural products after the European Union and Canada.

One industry that stands to lose the most: California’s wineries and wine grape growers.

The U.S. sold over $180 million in wine products to China and Hong Kong in 2016, with the vast majority coming from California. If California wine becomes more expensive for Chinese consumers, the industry could be edged out of a market it worked for years to cultivate.

“Growers are very anxious about losing market share in what has been the fastest-growing market for U.S. wine exports,” said John Aguirre, president of the California Association of Winegrape Growers.

“Once Chinese buyers replace U.S. wine, California wine, with other wine products, it’s very difficult to claw back that market share,” said Aguirre.

With the U.S. and California out of the ring, other countries would have the opportunity to move in. California’s wineries and wine grape growers would also have to identify new markets in which to sell their products.

Another player that could stand to lose: California nut growers and processors. In 2016 alone, the state exported over $1 billion in pistachios and almonds to China.

Richard Matoian, executive director of American Pistachio Growers, said it’s too soon to know whether China’s tariffs will hurt California’s nut industry, and that some are waiting to see if the U.S. backtracks in the face of retaliation.

“There seems to be some suggestion from the administration that they may rescind or greatly reduce the tariffs that are proposed on aluminum and steel if the Chinese government were to have some sort of concessions,” Matoian said.

On Tuesday, the U.S. stock market rose as fears of a possible trade war with China eased. The two countries have begun talks aimed at avoiding tit-for-tat sanctions that could damage both sides.

In a statement, the Almond Board of California said that it is “monitoring for developments” and hopes “this issue may be resolved swiftly.”

“Nothing is perhaps predictable, as it has been in the past, with the Trump administration,” said Aguirre. “There may still be opportunity perhaps to back away or mitigate some of the worst consequences.”