July 1 (UPI) — Retaliatory tariffs imposed by India against the United State are causing deep concern among California nut growers, who worry where they will sell a significant portion of this year’s harvest.
The United States is the largest producer of almonds — and the second-largest producer of walnuts — in the world. Both markets depend highly on exports, but over the last year, they have lost major trading partners to tariff escalations.
“There are a lot of effects happening simultaneously,” said Goekce Soydemir, a professor of business economics at the University of California. “Everyone thought it would be resolved by now But it’s not. It’s escalating.”
Before India joined the fray, the greatest blow to California nuts came from China. That country imposed high retaliatory tariffs on both nuts — along with many other agricultural products — last spring in response to similar taxes levied by the Trump administration.
“With China, we were basically out of the market last year,” said Dave Phippen, an owner of Travaille & Phippen, an almond orchard and processing company in California.
With that market gone, almond exporters turned to India, which began buying U.S. almonds almost immediately, and in amounts that essentially counteracted the loss of China, Phippen said.
“India stepped up,” he said. “This year is going to be really challenging with India and China, and who knows who else is going to jump into the disagreement.”
India announced June 15 it would impose a 20 percent tariff on U.S. almonds and walnuts — along with 26 other products including apples and lentils.
The move came in retaliation for the Trump administration revoking India’s preferential trade privileges. But India had been threatening to impose the tariffs since August, when the United States began taxing imports of steel and aluminum from that nation — and others.
India had delayed implementing the retaliatory tariffs several times as negotiations continued.
The almond tariff amounts to about 20 cents a pound for shelled almonds and 4 cents a pound for unshelled almonds.
California produces 80 percent of the almonds in the world, and 70 percent of the almonds grown in California are exported.
That number is even higher for Phippen’s company, which exports more than 90 percent of its crop.
“We are highly dependent on foreign markets,” Phippen said. “It’s a big deal.”
Phippen quickly added he doesn’t think the United States will lose complete access to the India market because, while the tariff on unshelled almonds is high, the tax on the shelled almonds is much lower.
“We don’t ship many kernels [unshelled almonds],” Phippen said. “India demands in-shell almonds to allow their people to have work shelling. So, yes, it is very, very serious if we were to lose the India market, but I’m not sure 4 cents will make the difference.”
American walnuts, on the other hand, will likely be completely shut out of the India market under the tariff.
India already had a 100 percent tariff on imported walnuts from all countries.
“Now, we have a 120 percent tariff, whereas everyone else is just 100 percent,” said Brock Middleton, a manager at Alpine Pacific Nut Company, a California walnut processor. “India is a huge market, it has a massive population, and they like walnuts. So, that one hurts.”
Before the trade disputes began, about 25 percent of California’s walnut crop went to China. Europe and Turkey also were major importers, but both of those countries now tax American walnuts.
“There’s a 5 percent tariff in Europe now,” Middleton said. “That might not seem like a lot, but Europe is an amazingly price-competitive market.”
With roughly 65 percent of American walnuts being exported each year, prices have dropped. Payments to growers have hit their lowest in 30 years, adjusting for inflation, Middleton said.
The longer these trade disputes last, the more painful it will become, he said.
But both he and Phippen noted that their industries have dealt with tariffs — albeit less severe ones — for decades. And they hope these trade disputes end with more open and free trade around the globe.
“Farmers want a level playing field,” Phippen said. “No administration hears us, but now Trump is taking on the challenge. From my perspective, if this pain levels the playing field, it will be worth it.
“But the question is, how long will it take? I was talking to reporters about this a year ago. It has taken longer than I had hoped and it is more painful than I had hoped.”