April 3, 2018 / 10:46 PM / in 18 days

California wine and nut growers call China tariffs a blow

LOS ANGELES/SAN FRANCISCO (Reuters) - California farmers, many of whom voted for President Donald Trump and his tough talk on trade, say China’s increased tariffs on products like almonds, pistachios and wine are a competitive blow, but some are hopeful they will lead to a better deal down the road.

Carmelo Morillo closes a shipping container filled with almonds at Capay Canyon Ranch in Esparto, California, U.S. April 2, 2018. "Everything in shell that comes out of this plant, half of it goes to China. So it would affect our bottom line," said Todd Barth, Plant Operations manager for Capay Canyon Ranch. "With farming and processing we don't feel the effects immediately, [but] we'd feel them four to six months down the road." REUTERS/Elijah Nouvelage

China said at the weekend that it was imposing retaliatory tariffs of between 15 and 25 percent on $2.75 billion worth of U.S. imports, including frozen pork, nuts and wine, in response to steep duties on aluminum and steel announced by the Trump administration.

While California overall voted decisively for Democratic candidate Hillary Clinton in the 2016 U.S. presidential election, many of the state’s farmers supported Trump, who said he wanted to make international trade deals more fair.

All but one of the state’s top-five pistachio-producing counties went for Trump, as did the state’s top almond-producing county, Kern.

California almond farmer David Phippen says he has talked to a number of fellow almond farmers who continue to support Trump’s efforts on trade even though they are disappointed to be hit by new tariffs that make their products more expensive in China.

“Is the administration going to get us a better deal? How long will it take to get that better deal?” Phippen said. “We have sustainability, but it’s limited.”

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Pistachios are California’s biggest agricultural export to China, which bought $531 million worth of the nuts in 2016. Prior to the new tariffs, China had existing duties of 5 percent on raw pistachios and 10 percent on roasted pistachios from the United States, said Richard Matoian, executive director of the American Pistachio Growers.

The additional 15 percent tariff “impacts our ability to compete with our competitors from Iran,” said Matoian. California and Iran over the years have traded the title of world’s top pistachio producer, he added.

Almonds are China’s second-biggest import from California farms. In 2016, China took 12 percent of California’s almond crop, which was valued at about $518 million.

The Chinese levy on U.S. almonds goes up from 10 percent to 25 percent, said Richard Waycott, president and chief executive of the Almond Board of California.

    Nut producers and sellers including Blue Diamond Growers, the Wonderful Co and Emerald Nuts owner Campbell Soup Co (CPB.N) declined comment.

    California wine is also taking a hit.

    The latest import levy on wine will increase the total tariff and tax paid on a bottle of U.S. wine imported into China from 48.2 percent to 67.7 percent, according to the Wine Institute, which represents 1,000 wineries and affiliated businesses in California.

    The United States, predominantly California, exported wine valued at nearly $79 million to China last year, according to the Wine Institute.

    Australia could be set to benefit. As well as being geographically closer to China, in 2019 it will begin exporting almonds, wine and other products to China tariff-free.

    Chile and New Zealand wines also enter China tariff-free and only pay a 30 percent combined tax rate, the Wine Institute said.

    “U.S. producers were already at a disadvantage to many foreign competitors, and this will only exacerbate that problem,” said Robert Koch, president and CEO of Wine Institute.

    Reporting by Lisa Baertlein in Los Angeles and Ann Saphir in San Francisco, Editing by Rosalba O'Brien

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