The U.S. Apple Association’s board of directors sat down with Biden administration officials last week to plead their case for their farmers. India’s crushing tariffs were a primary focus.
India imposed a new 20% tariff on U.S. apples in 2018 as retaliation for U.S. Section 232 tariffs on steel and aluminum, and U.S. apple exports to India immediately plunged by 80%. The new retaliatory measure pushed India’s overall tariffs up to 70%.
Five years later, U.S. apple farmers have lost more than $500 million in sales over a spat that did not involve apples in the first place, says USApple President and CEO Jim Bair.
U.S. farmers had been sending their Red Delicious and Gala apples on trucks, trains and oceangoing vessels for more than 8,000 miles to be sold in Indian grocery stores to compete with domestic fruit as well as imports from Turkey and Iran.
Indian consumers loved U.S. apples so much that the country overtook Canada in 2018 as the second largest export market for American farmers despite the logistics and distance. Mexico is still the largest foreign market for U.S. apples.
But now, the lost exports to India have left a sour taste in the mouths of U.S. farmers and exporters.
“We didn’t have a dog in the fight,” Bair said about the Trump administration tariffs that were meant to stem the flow of subsidized Chinese steel and aluminum into the U.S. through secondary markets like the European Union and the UK.
“If there’s pain and suffering in some other industry — to us it doesn’t make any sense to take that pain and suffering and dump it on the heads of U.S. apple growers who weren’t involved in the dispute that caused the tariffs,” he said.
Most of the apples going to India were from the state of Washington, so those farmers were affected first, but the damage is really being done to all growers, including those in Pennsylvania, New York and Michigan, said Steve Clement, CEO of the Yakima-based Sagefruit Company and vice chair of USApple.
“If you’re a New York apple grower and Washington state has 8 million boxes that used to be going to India and now have to go to different markets, a lot of those apples will have to stay in the U.S., and that affects (the New York) market and the price they can get for their apples,” he said. “The whole U.S. apple industry is united in our need to have viable export markets.”
The Biden administration has already brokered deals to suspend its steel and aluminum tariffs on the European Union and the UK, but it's unclear if the Office of the U.S. Trade Representative is prepared yet to enter into talks with India.
Indian Minister of Commerce and Industry Shri Piyush Goyal was in Washington in January and co-hosted the United States-India Trade Policy Forum together with U.S. Trade Representative Ambassador Katherine Tai. They announced the shared goal of “forging robust bilateral trade ties and enhancing the bilateral economic relationship to benefit working people in both countries” at the end of the meetings, but neither steel and aluminum nor apple tariffs were mentioned.
Still, the two countries have a recent history of bringing down trade barriers, such as India’s tariffs on U.S. pecans. And lawmakers have been pressuring Tai to convince India to lift its apple tariffs.
Washington Democratic Sens. Maria Cantwell and Patty Murray and 10 House members from the state penned a letter to Tai and Commerce Secretary Gina Raimondo, urging them to address the issue at the Trade Policy Forum.
“With retaliatory tariffs in place, Washington state apples growers have continuously lost market share in India,” they wrote. “Prior to the implementation of these tariffs, India was our number two export market, valued at $120 million annually. Last season, growers exported barely $3 million. As growers have watched hard-earned market share and sales evaporate, their competitors in other countries have gained more of the market share.”
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Bilateral trade in goods between the U.S. and India was worth $160 billion in 2021, according to the USTR. Data from USDA’s Foreign Agricultural Service shows very little of that is from apples.
India imported 10,390 metric tons of apples in the 2021-22 marketing year, down from 24,120 tons in 2020-21 and 37,859 tons in 2019-20, according to FAS. The U.S. went from India’s largest apple supplier to 10th place in just three years.
If the USTR were to negotiate a suspension of its steel and aluminum tariffs on India, and India lifted its apple tariffs in return, the U.S. apple sector could regain its trade leadership status once again, but it would take time and money, said Clement.
“Between industry and (USDA) with the Market Access Program, we spent millions of dollars on developing and growing this market and then with one swipe of a pen, the tariff comes along and essentially cut our feet from under us,” Clement said about the work put into making U.S. apples so popular in India.
American apple farmers also lost most of their Chinese market — again to retaliatory tariffs — but Bair says India is the priority.
The U.S. and China “are caught up in all of the political machinations that are going on in the news every day,” Bair said. “Sure, we’d love to get China back, because of the size of the market, and we can do a lot of business there. But we’re not holding our breath waiting for China to come back. We are holding our breath and turning blue waiting for India to come back.”
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