Agriculture

Here's what trade tariffs could mean in Merced County, where nuts are big business

Almond tree flower petals cover the ground on farm along South Bear Creek Drive in Merced, Calif., on Wednesday, March 8, 2017.
Almond tree flower petals cover the ground on farm along South Bear Creek Drive in Merced, Calif., on Wednesday, March 8, 2017. akuhn@mercedsunstar.com

Merced County farmers and area experts say a potential trade war would be likely to have a chilling effect on the agricultural industry if the U.S. and China go through with matching tariffs on exports.

China has threatened retaliatory tariffs on a select group of exports from the U.S. following President Donald Trump's plan to impose tariffs on steel and aluminum imports.

China's tariffs would first hit U.S. products such as avocados and nuts, with 15 percent duties. Beijing, if officials deemed it worthwhile, could also place 25 percent tariffs on American-made goods such as pork and aluminum.

Merced County area growers like Bob Weimer, owner of Weimer Farms in Atwater, are cautious to speculate about what tariffs would do to the market.

"I'm not sure that that's settled," he said. "Are they going to negotiate that out? But, yes the impact could be somewhat substantial."

Weimer stressed that China isn't the only player in the global market, noting the European Union buys agricultural commodities.

But, adding expenses to any marketplace is bound to have an effect.

"It doesn't really matter which one it is, whether it's alfalfa, almonds or wherever it may go," said David Doll, a farm adviser with the Merced County UC Cooperative Extension. "They're as much political as they are anything else."

Nuts are big business in Merced County, where almonds are the second largest commodity at $578.5 million, according to the 2016 Merced County Crop Report, the most recent available. Almonds, pecans and pistachios bring in tens of millions of dollars more.

Out of every dollar made on a farm in the Central San Joaquin Valley, half pays for salaries and 40 cents goes to pay for supplies, Doll said, citing UC cooperative studies.

"Farms are businesses, and if they aren't profitable they're not going to stay in business," Doll said.

China has become a bigger player in recent years in importing almonds and walnuts, both of which are grown in Merced County. The nation imports roughly $2 billion in U.S. food and agriculture.

In 2016, the value of pistachios sold to China was $530 million, and $518 million in almonds, according to figures from the California Department of Food Agriculture.

The U.S. stock market took a hit late last week as speculation over a potential trade war on up to $60 billion on Chinese products grew, but fears in financial markets eased somewhat after China's government said it is open to negotiating with Washington this week.

"Naturally, the prospect of a trade war between the world's two largest economies has weighed heavily on risk appetite over the last couple of weeks with U.S. equity markets posting significant losses on Thursday and Friday as things heated up," said Craig Erlam, senior market analyst at OANDA. "The message over the weekend, though, was far less confrontational and suggested the U.S. would be open to scrapping the tariffs in exchange for certain other concessions such as reduced tariffs on imported cars."

The Associated Press contributed to this story.

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