The U.S.-Mexican preliminary trade agreement won’t erase the 20 percent retaliatory tariff Mexico put on dried cranberries in June, the director of an association of U.S. cranberry handlers said Aug. 28.
The tariff responded to U.S. tariffs on steel and aluminum, which remain in place. The deal announced Aug. 27 reworked the North American Free Trade Agreement, which imposed no tariffs on cranberries.
“The information we received yesterday was that the agreement (with Mexico) did not address the steel and aluminum issue, and our understanding is the tariff would remain the same,” said Terry Humfeld, executive director of the Massachusetts-based Cranberry Institute.
U.S. cranberries are frequently targeted for retaliatory tariffs. China, Canada and the European Union also have imposed new duties since June. The retaliation strikes at a major crop in House Speaker Paul Ryan’s home state of Wisconsin.
The U.S. exports about $300 million worth of cranberries and cranberry products a year. Roughly $30 million of that is in the form of dried cranberries bound for Mexico. The tariffs come as the cranberry industry is trying to reduce a price-depressing surplus.
The U.S. Census Bureau has yet to release export figures for July, the first full month that retaliatory duties were in place. Humfeld said it’s too early to judge the damage to the industry.
“We believe there is an impact, but don’t have any numbers to back that up, and probably won’t for a few months,” he said.
The European Union, the largest overseas market, imposed a 25 percent tariff on cranberry concentrate and held out the possibility that the tariff eventually will apply to dried cranberries. Canada put a 10 percent tariff on juice. China increased a tariff on dried cranberries to 40 percent from 15 percent.
Bumper crops and flat demand have led to a large surplus. The USDA ordered handlers to divert 15 percent of the 2017 crop from the marketplace to reduce the surplus. The order, however, didn’t apply to about 35 percent of the crop because handlers who took in fewer than 125,000 barrels were exempted, according to figures from the Cranberry Marketing Committee. Each barrel equals 100 pounds.
The committee calculated that the USDA mandate, granted at the industry’s request, diverted 792 barrels, or about 9 percent of the harvest.
The USDA had yet to make a final decision on whether to order a portion of the 2018 crop be diverted. The USDA proposed a 25 percent diversion, with small handlers again being exempted.
The USDA this month forecast that cranberry growers will rebound from a subpar 2017 harvest — not particularly good news for the industry. The USDA predicts the crop in the five top cranberry producing states, which include Oregon and Washington, will be up 3 percent to 8.6 million barrels.
Ilwaco farmer Malcolm McPhail said he’s continued to grow as many cranberries as he can. “I just do everything the way I always have. That’s the best philosophy,” he said. “You have to do the biggest crop you can. I don’t know how it’s going to sort out.”