New York Produce Show Veteran Speaker And Cornell Professor, Miguel Gómez, To Give Insights And Analysis On International Trade At Global Trade Symposium
Jim Prevor’s Perishable Pundit, December 8, 2018
Miguel Gómez has been wowing the produce industry since the very launch of The New York Produce Show and Conference. He has been on stage with us in New York, London and Amsterdam, with topics we chronicled in pieces such as these:
Cornell Professor Miguel Gómez Reveals How Omni-Channel Retailing Creates Challenges And Opportunities For The Produce Supply Chain. Exclusive Presentation At The Amsterdam Produce Summit This November
Veteran Speaker At The New York Produce Show, Cornell’s Professor Miguel Gómez Speaks On The Promise Of Cold-Climate/Controlled Environment Agriculture
Cornell’s Miguel Gómez Goes Double Duty At New York Produce Show: Gives Micro-Session On Northeast Greenhouse Potential And Teaches Foundational Excellence ‘Students’ About Global Trade
How New Trade Agreements May Set The Stage For A Produce Industry Boom, But Will The People And The Politicians Let It Happen?
Miguel Gómez Of Cornell To Present The Facts And Moderate The Discussion At The London Produce Show And Conference
How To Capitalize On An Age Of Global Trade: Miguel Gómez Of Cornell University At The Foundational Excellence Program
UNIVERSITY HEAVYWEIGHT PUTS SCIENCE BEHIND OPTIMIZED GLEANING SCHEDULES: Cornell’s Miguel Gómez Talks About How The Produce Industry Can Put Itself On The Side Of The Angels By Reducing Food Waste While Helping The Hungry
The Renaissance Of The Wholesale Sector — Why Those Who Support 'Locally Grown' Should Support Investment In Market Intermediaries. Cornell University Professor Miguel Gómez Reveals Research Findings At The London Produce Show And Conference
A New Hypothesis On Local: To Boost Sales, Sell It Through Supermarkets … Cornell’s Miguel Gómez Previews His Upcoming Talk At The New York Produce Show And Conference
Cornell Professors To Present At The New York Produce Show And Conference: New Ways of Thinking About Local: Can The East Coast Develop A Broccoli Industry?
Cornell Professor Miguel Gómez To Speak At New York Produce Show And Conference On Fruit & Vegetable Dispute Resolution Corporation
Professor Miguel Gómez Returns To The New York Produce Show And Conference To Unveil A New Study That Points Out A Path For Getting More Produce Into Hospitals
We asked Pundit Investigator and Special Projects Editor Mira Slott to find out what he has in store for the Global Trade Symposium this year:
Charles H. Dyson School of Applied Economics and Management
Ithaca, New York
David R. Atkinson Center for a Sustainable Future
Cornell University Affiliate Faculty
School of Management Universidad de Los Andes, Bogota
Q: Coming off your powerful, thought-provoking talk about Omni-Channel Retailing at the Amsterdam Produce Summit, what do you have in store for us at the New York Produce Show’s Global Trade Symposium?
A: I’m planning to discuss key drivers and trends of international trade of fruits and vegetables and how these affect the U.S produce industry, present and future. I’ll focus on the role of future global demand, import and export flows, trade agreements, as well as tariffs and non-tariff trade regulations, in shaping an increasingly globalized industry. In addition, I’ll discuss actions that businesses should consider to benefit from participation in the global produce industry.
Q: So, you’ll be tackling some volatile, controversial trade agreements and tariffs, such as the U.S. China trade war impacts. That should be challenging considering developments are in flux and creating uncertainty as we speak.
A: I’ll be spending a portion of my presentation talking about the U.S. China trade situation, from the U.S. produce industry perspective, what are some of our strengths and weaknesses, our opportunities and challenges.
Q: Where should be we begin? Since you’ll be covering such a wide scope of issues, perhaps the best approach is to walk us through the presentation segments...
A: Let’s start with Part I, and what I’m planning to emphasize. The agenda is to talk about three topics: 1) Drivers and trends of international trade of fresh fruits and vegetables, 2) then looking at the U.S. trade situation, what do we import and export the most, and from where, and 3) an update on trade agreements, and then other factors affecting U.S produce trade. And a big one will be that China situation. Another will be Brexit.
Q: Essentially, on those two, you could be changing your presentation analysis by the minute.
A: Exactly. It’s crazy. There is a lot of uncertainty. China and the UK are huge trade partners with the U.S., not only for fresh produce but for many things, so with the uncertainty, it’s difficult to make predictions.
I’ll guide you through the presentation and highlight what’s important.
In my review of the economics, you’ll see factors influencing trade involve supply, demand and institutions, but in looking at global drivers and trends, more important is understanding world population. I chart growth by region in 2017 and projections for 2050.
For example, the African nation is where demand is going to be growing fast. If you look at Europe, Latin America and North America, they are only a very small share of the total world population, and also growth is very slow. Even in Europe, the population is expected to decrease (742 million down to 716 million), Latin America to increase a tiny bit (646 million to 780 million), and North America a little bit (361 million to 435 million).
In Africa, we are going to add around 1.3 billion new people between 2017 and 2050 (from 1.256 billion to 2.528 billion). That’s like adding one complete China to the world.
Q: That puts things in perspective...
A: Yes. It will be a very important driver of demand for produce. Not only that the African nation is growing, but also there are going to be increases in income. So, people in Africa are likely to have more purchasing power and will consume more things such as fruits and vegetables. I think that will be a continent the U.S. produce industry has to focus on, not only as a potential export market, but many companies are procuring from Africa, and there is going to be more and more competition because of more domestic demand.
Q: What about Asia?
A: Asia will also be an important market. Asia is expected to add around 800 million more people, which is not a small amount. It is estimated to grow from 4.504 billion people in 2017 to 5.257 billion in 2050. It is already the largest, more than half the world population lives in Asia today, and it will still add more; 800 million people is almost the whole population of Latin America, and more than two times the North American population.
We need to think about that — there is going to be a bigger source of demand in those two areas.
Q: You mentioned purchasing power, how does that play out?
A: If you look at per capital GDP growth by region, pretty much everywhere per capita GDP will grow, but very fast in South Asia, and East Asia, so most of the growth is happening in Asia. We can see also that Africa, North Africa and sub-Saharan Africa will grow, albeit slower, but they will be growing. So, these two regions, Asia and Africa, are not only growing very fast in terms of the population but also, particularly Asia, in terms of per capita GDP is growing very fast. I will show a chart to demonstrate this in more detail.
By the way, do you know how much 20 cherries are paid in retail in China?
Q: I do not, but I imagine it’s quite high...
A: $22 dollars, or 168 yen! Isn’t that amazing.
Q: I hope at least they were special cherries, maybe larger, a unique variety, fancy packaging...
A: Not at all.
Q: Where are these growing populations with increased purchasing power concentrated?
A: What I can say is most of the growth is going to happen in cities. Statistics from a study done by McKinsey Global Institute are revealing. This is the age of urbanization, cities are adding 65 million people every year. Countries are just becoming more urban everywhere, with emerging markets taking the lead — 440 cities in emerging markets will account for nearly half of global GDP growth by 2025. An estimated 2.5 billion people will live in Asian cities by 2025 — that’s half of all urbanites in the world.
Q: How does this compare to developed countries?
A: Emerging economies are becoming major forces. By 2025, emerging economies are predicted to grow 75 percent faster than developed nations. In addition, we see growth of the urban consumer class with 150 percent increase in annual consumption in emerging markets estimated between 2010 to 2030 (from $12 trillion to $30 trillion). Another interesting statistic… 620 million people exited poverty in the last 20 years.
Q: You mentioned the willingness of consumers to pay high prices for cherries in China. Does all this global growth in emerging economies translate to increased produce purchases?
A: When you look at per capita consumption globally, it’s not only in the U.S., but around the world; we see people are not consuming more vegetables or fruits on a per capita basis -- it’s rather flat and sometimes decreasing. If you look at our estimates, they’re not perfect, but it’s the best we can do, per capital vegetable consumption in kilograms per year, you see that no country has been experiencing very fast growth. You see that South Korea per capital consumption is higher than the rest, but you see most of the other countries, Canada, the U.S., Hong Kong, Japan and China is pretty much flat, and not growing. Even in Mexico, you see it’s flat but also lower.
Q: Why is that?
A: It’s a conundrum. I’m afraid we don’t have a good answer to that, because even though the produce industry is making lots of efforts to promote produce, and even governments to promote consumption of fresh fruits and vegetables to improve health outcomes, we see per capita consumption is flat.
I don’t know exactly why this has been the case. These are the most recent figures we were able to get, from 2000 to 2013 which is a little outdated. We tried to update numbers, and I checked about six months ago, but they were not available. However, we don’t believe things have changed that much with recent data.
The other thing I want to talk about is the state of the organic fresh produce industry. Organic is growing very, very fast in many countries. It outperformed conventional counterparts in every core market in 2016, according to Euromonitor. Developed regions experienced steady growth and developing regions fast growth. China increased by 30 percent in 2016, South Africa increased by 16 percent in 2016. There is more and more demand for organic.
Q: Still as a percentage of total produce sales, could you provide some perspective?
A: It’s interesting to look at the breakdown by different produce categories. Organic Produce Network/Nielsen did a 2017 Organic Fresh Produce Sales Recap of different produce categories. It looked at the category, the 2017 dollar share of organic produce compared to the 2016 dollar share of organic; and what the percentage change was in dollars and in volume. I’ll provide more detail during my talk. But to give you an idea, for packaged salads, organic was about 18.6 percent in terms of dollar share in 2017, but it varied. In berries it was 12.1 percent, in apples 6.1 percent, bananas 5.4 percent, so it’s still not very big. Tomatoes were 3.1 percent. But the category is important.
Q: To clarify, these numbers are just for the U.S.
A: Yes. That’s right, but what happens in the U.S. usually follows in other countries. The U.S. is always at the forefront of these trends in different consumer segments.
So, in the U.S. in 2017, share of organic fresh produce was $5 billion, up 8 percent in sales and up 10 percent in volume. It’s much more in fruits than in vegetables; in fresh vegetables it was $2.4 billion, up 4 percent in sales and up 6 percent in volume. The number one produce item in organic is packaged salads with $1 billion in sales, up 2.3 percent (lower than average). In fresh fruits, organic accounted for $1.6 billion, up 12.6 percent in sales and volume. Organic berries were up 23 percent, apples up 11 percent and bananas up 17.5 percent. Potatoes, grapes and citrus exhibit lowest growth in organic sales.
One of the things I want to emphasize… I’m trying to go through the main areas and condense all my information, because there is so much to cover for one presentation...
Q: This is quite a substantial endeavor you’re undertaking. The good news there will be ample time throughout the Show to connect with attendees to discuss these topics in more depth... What area would you like to broach next?
A: I want to talk about the remarkable growth of global exports. Between 2001 and 2016, global exports have jumped from $35 billion to more than $110 billion. That’s almost triple in a period of 15 years. This is an indication that the industry is becoming more global and is going to continue to become a more globalized industry. I can chart those numbers for fruits and vegetables by countries. I also have data for imports, but let’s skip over that.
More important, I want to point out what ‘s happening in growth of regional trade agreements (RTAs), and how many agreements the U.S. is participating in. Trade agreements are growing around the world, but the U.S. lags. It has been slow to develop regional trade agreements to expand the reach of the produce industry. U.S. trade agreements have been flat for the past 7 years. In the meantime, other countries are rushing to sign regional trade agreements.
Q: And this is problematic for the U.S.?
A: I strongly believe that. My conclusion is that trade agreements are good for the produce industry, for both exporters and importers. We have been a little slow in signing agreements as a country compared to other countries. The economy is telling us more trade is good for business, and good for people.
Q: Is this slowdown in trade agreements mainly due to (or perpetuated by) President Trump, and things will change with another election or is it more complicated than that, with other factors involved... Could you address the argument that certain trade agreements must be cancelled or renegotiated to be balanced and fair?
A: These trade agreements depend on the administration mostly, the current administration. and Congress as well. I think different trade agreements have their own context to consider. Trade agreements are very successful when the countries have different competitive advantages; they can import things they are not good at producing, and export products they’re very good at producing and that other countries aren’t and that consumers want.
Now I’ll dive into the U.S. fruit and vegetable trade situation.
Q: Is this where NAFTA comes in?
A: I want to talk about U.S. ag exports to Canada, Mexico and China, as an example of how good it has been for the U.S. to participate in trade agreements, in particular NAFTA. I look at the data from 1990 to 2017.
When NAFTA was signed in 1995, exports to Canada and exports to Mexico takeoff. Before 1995, exports were very small and not growing very fast. Just after signing NAFTA, and especially in the 2000’s trade grew, exports increased fourfold from $5 billion to more than $20 billion to Canada, and similar to Mexico. With China and the WTO trade accession in the early 2000’s, right away exports of our ag products to China went up. This is just to show that trade agreements help exports to grow.
I’ll show how U.S. exports have grown when we have preferential free trade agreements, documenting the changes with Peru, with Chile, with Colombia, with Australia, with Central America and Dominican Republic, and with South Korea. Pre-NAFTA trade was much slower.
Basically, the message is trade agreements allow us to export much more. At the same time, very briefly I want to mention this: in U.S. produce trade, we are exporting much less than we are importing. Our trade deficit in 2017 was minus almost $20 billion dollars in fruit and vegetable trade.
Q: What should we make of that? What is your analysis?
A: My analysis is we are going to continue having trade deficits. But I don’t think this should be a problem for the fresh produce industry because this sector is globalized, so U.S. businesses have investments elsewhere, and these businesses outside of the country export products to the U.S., so this shouldn’t be viewed as a negative sign.
At the end of the day, we import more than we export because consumers want the imports, which is the main message of this part of my presentation — when we have more trade, the main benefit is for consumers. Consumers have more variety, better prices, availability year-round, especially in fresh produce, better quality whenever they want it. So, I think this is an interesting graph to show.
Q: It’s interesting that many people look at these deficits as problematic, but in fact, according to your assessment, this is not a negative at all...
A: Exactly, in general people see these deficits and think there is something wrong. There is not. Another note… if we separate fresh fruits from fresh vegetables, we see the net trade trends are similar.
I have data on our main partners in terms of imports. Most of our imports are from Mexico, not a surprise, but the trade is growing, 33 percent over the last five years (from $7.84 billion in 2013 to $11.66 billion in 2017).
Peru is another country to watch. U.S. imports from Peru are growing very fast and will continue to grow — a 51 percent rise in the past five years (from $.54 billion in 2013, to $1.10 billion in 2017).
Because of seasonality and production variances, there will always be the possibility of bringing in fresh fruits and vegetables. These trends will continue.
Q: Could you talk more about potential impacts of a renegotiated NAFTA?
A: A trade renegotiation of NAFTA is an important issue. We think if nothing changes, we will continue to see the trends continue, but if NAFTA is renegotiated, it’s hard to predict.
Mexico is our Number One supplier of fruits and vegetables; imports from Mexico account for 40 percent of the total, a sevenfold increase from 1993 to 2017. It is important for many products. Main items are fresh tomato, peppers, cucumbers, avocados, guava and mangoes.
Q: And if nothing materially changes with NAFTA what is the outlook?
A: Fresh produce imports from Mexico will continue growing at historic rates, contributing to widen the trade gap due to a comparative and/or seasonal advantage.
With NAFTA renegotiations, it’s interesting to look at the Mexican perspective and potential impacts. Mexican farmers face uncertainty, not just for produce, and are seeking other markets — Argentina, Brazil, the EU, and New Zealand. Soybean, corn, chicken exports dropped for the first time in 2017 since NAFTA was signed. And there are unstable exchange rates with respect to the U.S. dollar and concerns about seasonal tariffs in NAFTA 2.0. There is so much uncertainty about what will happen.
Q: If you were an advisor in the room during NAFTA talks, what guidance would you provide?
A: To continue NAFTA and even make it even more free. The U.S. and Canada are completely integrated, and Mexico has wonderful integration with its supply chains from farm to retailer, and NAFTA has been just fantastic for firms in produce. The market is bigger and there is more opportunity for doing business, to expand where and what to produce and have a large consumer base. The NAFTA agreement, in particular for fresh produce has been a poster child of success in regional trade agreements.
I also want to focus on Peru, which is becoming a very important supplier to the U.S. market. This is facilitated through our trade agreement with Peru, since the U.S.-Peru Trade Promotion Agreement (TPA) was signed in 2009. We’ve seen 17.6 percent annual growth rate in the past decade. We predict it will triple its fresh fruit and vegetable production in the next five years. In 2017, production expanded 2.6 percent for avocados, 3.4 percent for asparagus, 4.5 percent for bananas, and 2.9 percent for tangerines.
Q: Should we turn to the export side now, and how trade deals could be affected here... especially in relation to China?
A: That’s a good idea. When we examine leading fresh fruit and vegetable export destinations, we see approximately one-half of U.S. exports go to Canada, 10 percent go to Mexico, and we have other main partners in Asia. Here we see a mixed bag of trends: Exports to Canada and Mexico are slowing down a bit; yet exports are growing very fast to South Korea and China. That’s why I want to talk about China-U.S. relations in detail.
The fluctuation in part relates to population declining in Japan, and in Canada and Mexico because of the exchange rate appreciation to the U.S. dollar. And South Korea and China love U.S. produce.
Hong Kong is somewhat of an anomaly when analyzing these numbers, somewhat like the Netherlands, because they don’t produce for consumption — they export to other countries...
Let’s focus on China now, a fast-growing export destination.
China and Hong Kong represent 18 percent of U.S. agricultural exports to the world. The U.S. is China’s leading fruit supplier. U.S. fruit has 7 percent market share of the total Chinese fruit market.
Q: That’s fascinating. What are the reasons for that?
A: The U.S. produce has very good branding and recognition. It’s very strong. It adds value to have the U.S. brand. Chinese consumers prefer U.S. produce.
As I mentioned before, there are challenges and opportunities. The challenges include potential new trade policies on ag products, China’s slowing economy, and other competing countries (e.g., Canada). The opportunities are China’s growing demand, and constraints to increase its own production.
China is a growing outlet for U.S. fresh produce via ecommerce. What’s happening there with the use of information technology and the fresh produce trade is unbelievable, as we discussed in Amsterdam.
To give you an example: There is a promotion partnership between the USDA/FAS Office in Shanghai and Tmall.com. In 2014, sales of U.S. cherries reached 168 metric tons to 84,000 individual shoppers through Tmall.com in just two weeks.
Q: Help us understand the magnitude of that number...
A: This is equivalent to nine years’ worth of cherry sales at a medium-sized supermarket.
The most important point here… if you look before 2012, there were very minimum U.S. exports of cherries to China. In 2017, U.S. cherry exports reached $121 million, triple the amount from 2012.
Q: Can you clarify the reason for that...
A: I think because Northwest cherries are really good quality, and the Chinese consumer really appreciates cherries. We have a window of opportunity at retail in China, which I’m going to show in Part 2 of my presentation. Cherries are by far the biggest produce commodity we export to China.
During my presentation, I’ll show examples of Chinese online promotion and strong U.S. branding.
Just to tell you how important ecommerce is in China, one only needs to compare Alibaba’s Single’s Day sale [Singles Day is a Chinese holiday popular with young people held on November 11] to U.S. ecommerce sales on Thanksgiving weekend. In 2017, Thanksgiving Day plus Black Friday ecommerce sales were $7.98 billion plus another $6.59 billion if you include Cyber Monday. In comparison, Alibaba’s Singles Day sales were $25.3 billion in just one day.
This highlights how big the market is in China and the tremendous opportunities because the Chinese consumer is very willing to buy on line, much more than the U.S. consumer.
Q: How can U.S. companies enter the Chinese market online?
A: I will discuss several examples. Tmall Global, launched in 2014, is looking at international brands to test the Chinese market. There is a Chinese government program that grants preferential status on certain goods without having a license to operate in the country. On Single’s Day in 2017, Tmall sold 1 million pounds of Mexican avocados, and 40,000 New Zealand kiwis in 10 hours, everything online.
Q: Incredible. How challenging is it to penetrate that system?
A: It’s not easy to get into the system. You have to make a deal with Tmall or Alibaba. There are some requirements and it entails effort, the right volume, the right branding, etc. It’s quite an opportunity but it’s not easy.
Alibaba’s Mr. Freshis an online platform that helps international produce companies to get into a B2C market. It provides consumer information, and after a brand becomes mature, it could launch a store at Tmall to operate.
I’ll show a graph of China total fresh fruit exports, which I think is important because we are exporting mostly cherries and oranges, and to some extent grapes, and apples and apricots. Apricots actually are a new category and it’s growing. This is just to give you an idea. Essentially there are no exports of vegetables; the only vegetable we export is onions and very little. I think it will continue to be mostly fruit.
I think the most important part of this presentation is China trade, and the U.S. China trade war impacts on fresh produce.
Q: What are the key aspects that attendees should know?
A: If you look at U.S. imports from China, tariffs already applied in 2018 were $53 billion. Tariffs that took effect on Sept. 24, 2018 were $200 billion, and threatened additional tariffs are $267 billion.
In 2017, total import of goods from China (the most recent annual figure) were $506 billion.
So, about half of our imports from China already had a tariff before.
On the other side, Chinese imports from the U.S., tariffs already applied in 2018 were $50 billion, with $60 billion in tariffs that took effect on Sept. 24, 2018. In 2017 total import of goods (the most recent annual figure) were $130 billion. Practically all our exports to China have tariffs now.
Q: This is in general for all products. Can you pinpoint where fresh produce is impacted?
A: Yes. This is a summary. I’m going to provide a timeline of events because everything is so recent. For example, on April 2, 2018, impacting the fresh produce industry, China imposed tariffs (ranging 15-25 percent) on 128 products including fruit, wine, seamless steel pipes, pork and recycled aluminum in retaliation.
On May 20, 2018, the U.S. and China agreed to put the trade war on hold after China reportedly agreed to buy more U.S. goods.
On July 6, the U.S. implemented the first China-specific tariffs, and things began to escalate...
By August 3, China announced a second round of tariffs on U.S. products (25 percent of agricultural, food products).
On August 7, a second round of tariffs was finalized and released (25 percent tariff on $16 billion Chinese goods import)...
Aug. 23, U.S. and China implemented a second round of tariffs;
Sept. 17, U.S. finalized tariffs on U.S.$200 billion of Chinese goods:
Sept. 18, China announced retaliation for U.S. tariffs;
Sept. 24, U.S. and China implemented a third round of tariffs;
Nov. 9, U.S. and China resumed trade talks;
Dec. 2, U.S. and China agreed to halt new tariffs for a 90 days at the G-20 Buenos Aires Summit, but the uncertainty continues...It’s very difficult to predict.
But what I can tell you is the impact of this trade war. I’ll provide a chart of the top fresh produce categories exported to China over the past five years; you can see the evolution from 2013 to 2017. And then you see specific changes from Jan-Sept 2017 compared to Jan-Sept 2018.
For cherries, the value in thousands of dollars from Jan-Sept. 2017 was $121,477, compared to a value of $80,600 in Jan-Sept. 2018, a period percentage change in value of negative 34 percent.
You see the drop because of the trade wars. You see the decline across almost all the produce categories exported to China in that time period just to show you the environment of trade conflict is affecting produce directly and indirectly, we don’t know the extent.
By comparing U.S. cherry exports to other countries during these same time periods, we are able to further demonstrate a direct correlation of the impacts of the U.S. China trade war.
China increased the cherry tariffs from 10 percent to 50 percent in April and July. What’s important to consider is cherry entry into China in different seasons. What’s happening is we are missing opportunities in the market. We have to take into account the seasonal production of cherries.
There is a huge demand and huge purchasing power. If you look at the pie chart, most of consumption of cherries is in November, December, January and February. They are coming mostly from Chile, but the U.S. is the second country of origin. The concern is the trade war will affect our share of the pie in the future.
Q: Can you elaborate on how the trade war could create longer term impacts, using cherries as an example? Could there be a domino effect of sorts?
A: These are the threats:
-Other cherry suppliers are eager to get into the Chinese market.
-Canada exports increased by 82 percent by volume, and 152 percent by value.
-Turkish exporters have exported 76,000 tons of products for an export revenue of $161 million USD so far in 2018.
-Chile is continuing increases in its Chinese focus.
-China’s domestic brand is becoming stronger, with technology upgrades, more acreage, and a focus on quality and targeting the high-end market.
Q: This sounds discouraging. Is there a silver lining anywhere?
A: The hope is other suppliers cannot meet the high demand of the China market. Canada does not have sufficient supply, and central Asia’s later season and unstable quality relative to the U.S.
The rising middle class in China demands more high-quality U.S. fruits and vegetables.
As far as the outlook, we’re in a period of uncertainty. The situation could be worse in 2019. In 2018, China importers still imported a sustainable amount of cherries from China as most purchase contracts had been signed before the trade war and temporary relief around May 20. However, if the trade war continues, I predict China will turn to Turkey and Central Asia for cherries, and France, New Zealand and Australia for apples.
The fear is that even if the tariff returns to pre-war levels, it might be difficult to regain the pre-war market share.
Discussing international trade makes me take pity on economists. Sure, some of the international trade issues are economic, but there is wide consensus that free markets lead to faster economic growth.
But, in many cases that is not the issue. Polls have shown that many Englishmen who support Brexit would do so even if they knew it would reduce economic growth. To them, the issue is about culture and sovereignty, not really things economists can put into an equation.
In other cases, people fear that China is going to use its newfound wealth to develop more weapons, which might lead to our spending more to defend our position in the world or, even, our being attacked. Again, this is hard to put into an equation.
And, of course, with a President whose most famous work is a book called, The Art of the Deal, who evaluates the situation whether a tariff is a tool to drive countries to negotiate.
Even the actual impact of a tariff can be hard to measure as sometimes tariffs redirect product movement rather than reduce it.
We had tried to wrestle with some of these issues in a piece titled, Understanding the Economics of Trump’s Trade War, which we wrote for the Weekly Standard.
Now Miguel Gómez has done a deep dive into these subjects, and we appreciate his willingness to share this scope of work with the industry.
We urge you, if at all possible, to be there for this presentation that speaks to the complexity of the world in which we trade.
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