Nutfruit Magazine

The official voice of the INC

21 November, 2018 Feature Articles

Additional Tariffs on Nuts and Dried Fruits

Additional Tariffs on Nuts and Dried Fruits


During the last few months, a new and uncertain trade environment is challenging the flow of trade.


This situation was triggered by the US additional tariffs established on steel and aluminum imports from certain origins and the subsequent countervailing measures adopted by the countries affected. Although the exact impact of these increased tariffs is difficult to predict, this situation has created market turbulence and uncertainty affecting both consumers and farmers.

This situation was triggered by the US additional tariffs established on steel and aluminum imports from certain origins and the subsequent countervailing measures adopted by the countries affected. Although the exact impact of these increased tariffs is difficult to predict, this situation has created market turbulence and uncertainty affecting both consumers and farmers.
 
International trade is significant in the economies of most countries, for some this has been so for centuries. Nowadays, goods and services are continuously moving across borders and international trade is expected to grow even more in the coming years. So, unimpeded market access around the globe is essential. However, it is continuously being challenged by barriers to the free and smooth flow of trade.
 
One of the most recent challenges started last March, when the United States Government announced the introduction of 25% additional tariffs on steel imports and 10% tariffs on aluminum imports from some origins, such as the EU, China, India and Turkey. The previous release on January 17, 2018, of the Section 232 Reports by the US Department of Commerce Bureau of Industry and Security Office of Technology Evaluation, entitled The Effect of Imports of Steel on the National Security and The Effect of Imports of Aluminum on the National Security, prompted the decision to place extra tariffs on steel and aluminum imports.
 
This announcement triggered countervailing duties from different countries, who notified tariff hikes on several products originating from the US, including tree nuts and dried fruits. China, the European Union, Mexico, India and Turkey reacted by imposing additional tariffs on tree nuts and dried fruits. Although this article only mentions five countries, many others could also be affected, directly or indirectly.
 
As nuts and dried fruits are widely employed in the manufacture of a vast range of products, such as snacks, cereal bars, baked goods and beverages, among others, these retaliatory measures would not only affect the nut and dried fruit sector, but also a great number of processing and manufacturing industries. Retaliation is also detrimental for consumers worldwide, especially the most vulnerable ones, who may not be able to purchase certain products. 
 
China:
 
China was one of the first countries to implement retaliatory tariffs against US products as a consequence of the extra duties on steel and aluminum imports. On March 23, 2018, US additional tariffs on steel and aluminum imports from China came into force. Just a few days afterwards, on April 2, 2018, an additional 15% tariff was applied to tree nuts and dried fruits as well as other US food and agricultural exports to China.
 
Since then, there have been many statements from both parties, whose effects have not been restricted to agricultural products. Another round of retaliatory tariffs were introduced on July 6, 2018, when the US government imposed an extra 25% tariff on several products. Consequently, China responded with a second wave of 25% tariffs to be applied the same day.  As a result, the tariffs for some nuts and dried fruits could be over 50%. To give an example, in order to export shelled or in-shell almonds to China from the US, the duty used to be 10%. After the 15% and the 25% increase, companies now face a 50% tariff.
 
On September 24, 2018, the US applied an additional 10% tariff to Chinese technology and consumer products and plans to increase the duties to 25% in January 2019 unless an agreement between the two countries is reached before then. In response, China applied 5% to 10% extra tariffs the same day, including US peanuts, roasted peanuts and peanut butter.
 
The European Union:
 
The EU responded to the tariff hike through the Regulation (EU) 2018/724 of May 16, 2018, on certain commercial policy measures concerning some products originating in the US.
 
This regulation lists the products that shall be subject to additional customs duties. At the first stage, an additional ad valorem duty of a maximum rate of 25% is applied on imports of products from June 20, 2018. Peanut butter is included in this group. At the second stage, a further additional ad valorem duty from 10% to 50% may be applied on imports of products listed from March 23, 2021. Dried cranberries are included among them, and their tariff increase would be 25%.
 
The US and European Commission presidents met on June 25, 2018. Since the meeting, both governments have agreed to start negotiations on lowering tariffs on industrial goods, although agricultural products would be excluded. The EU is willing to withdraw the retaliatory tariffs if the US abolishes the tariffs on steel and aluminum.
 
Mexico:
 
Mexico also reacted in response to measures imposed by the US and, as a consequence, on June 5, 2018, published a list of products subject to retaliatory tariffs. The list included cranberries, which were immediately affected by a 20% tariff increase.
 
India:
 
India notified the World Trade Organization, on June 14, 2018, of the additional duties on selected products originating in the US, as a reaction to the measures of the US Government. Among other goods, almonds (both in-shell and shelled) and walnuts in-shell are subject to an increase in tariff of 20%. The additional tariffs were expected to come into force on August 4, 2018. However, their application was postponed until September 18, 2018. The duties were delayed again 45 more days and, at the time of writing, extra tariffs are expected to take effect on November 2, 2018.
 
Turkey:
 
On June 21, 2018, Turkey brought into force the decision on the implementation of extra tariffs on the import of certain products from the US, including almonds, hazelnuts, walnuts, pistachios, macadamias and pine nuts, which were subject to a 10% increase.
 
On August 15, 2018, Turkey imposed an additional 20% tariff on the products mentioned above. The extra tariffs are double the additional levies implemented in June 2018. This decision came in response to the previous notice on August 10, 2018 of tariff increases on Turkey’s steel (50%) and aluminum (20%) exports to the US.
 
The United States:
 
Meanwhile, in order to mitigate the damage caused by retaliation to farmers and agricultural producers, the U.S. Department of Agriculture launched the Trade Mitigation Package, on September 4, 2018, with up to $12 billion in programs. This initiative could be seen as a dumping measure and could create a false alarm in the market.
 



The INC is fully aware of the importance of this issue and its consequences for the nut and dried fruit sector worldwide. For that reason, the INC sent position letters to the governments of the USA, Europe, India and China, to express its deep concern about the additional tariffs, to explain the possible consequences for the industry, and to ask to maintain the status quo of customs duties on tree nut and dried fruit products.
 
This article was last updated on September 25, 2018. Consequently, it overviews information published up to this date.

 
I WTO Press Release PRESS/820 April 12, 2018 https://www.wto.org/english/news_e/pres18_e/pr820_e.pdf.
II Announcement by the State Council Tariff Committee. http://gss.mof.gov.cn/zhengwuxinxi/zhengcefabu/201804/t20180401_2857769.html April 1, 2018.
III Announcement by the Ministry of Finance of the People’s Republic of China, http://gss.mof.gov.cn/zhengwuxinxi/zhengcefabu/201806/t20180616_2930325.html June 20, 2018.
IV Announcement on Levying Tariffs on Goods from US, http://www.gov.cn/xinwen/2018-09/18/content_5323189.htm, September 18, 2018.
V Joint EU-US Statement following President Juncker’s visit to the White House, June 25, 2018.
VI Committee on International Trade August 30, 2018,
http://www.europarl.europa.eu/ep-live/en/committees/video?event=20180830-0900-COMMITTEE-INTA.
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