The retaliatory tariffs imposed by China on imports of U.S. fruits and tree nuts will hurt American producers, but the pain will be eased by increased demand from a surging middle class in the world’s most populous country.

That’s a key finding from a new report, titled “A Trade War Story,” by Rabobank RaboResearch analysts David Magaña and Roland Fumasi, who note that China’s fast-growing middle class “propelled rapid U.S. export growth to that country over the past decade.” But, they argue, while this increased demand will partially offset the impacts of the tariffs, “reduced U.S. fruit and tree nut exports to China will follow,” with walnut, mandarin, grape, cherry and peach exports being hit the hardest.

The report points out that the U.S. exports over $13 billion in fruit and tree nuts annually, with about 15 percent of that going to China and Hong Kong combined. But most of those commodities, including almonds, walnuts, apples and grapes, are now facing tariffs between 50 and 60 percent to enter the Chinese market, following the U.S. imposition of levies on steel and aluminum.

“An increase in import tariffs by China raises prices of U.S. goods in China and, subsequently, lowers imports from the U.S.,” the report states, adding that the “mildest effects” are expected on almonds and pistachios, with the most severe effects on grapes and cherries.

Even with the Chinese tariffs, the authors say they expect “positive” change in total demand for the analyzed commodities from the rest of the world, particularly for almonds, walnuts, mandarins and lemons. They also note that their analysis takes into account increased tariffs imposed by India on almonds, walnuts and apples.

“However,” they say, “the growth in demand for U.S. products is lower than what it would otherwise have been if there had been no increased tariffs by China and India. Moreover, should recent consumption trends continue, we expect a slight decrease in the total demand for U.S. raisins, pears and peaches.”

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Additionally, the report says the effects on U.S. fruit and tree nut prices will depend on the magnitude of domestic supply changes and how strategic challenges are managed. “In general,” it says, “pricing pressure is expected.”

The report also includes suggestions for managing risks in the current world trade environment. Producers, the authors say, should be strengthening relations in the domestic market, diversifying their export partners while emphasizing reliability as a supplier. Exporters should consider making pricing concessions, when there is room, with trading partners to maintain business relationships while focusing their sales pitches on product uniqueness and quality.

“Finally,” they say, “as far as opportunities are concerned, non-U.S. exports that are not facing high tariffs may be diverted to China, India and other impacted markets, potentially opening up new, vacant markets for U.S. fruits and tree nuts.”Th

(The story was corrected at 5 p.m. with more precise export data for China and Hong Kong.)

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