U.S. food and beverage exporters could benefit mightily from China's recent reduction in tariffs on more than 1,400 imported goods, according to a recent analysis from Panjiva Research, a division of S&P Global Market Intelligence.
The Chinese Ministry of Finance announced May 31 that it would reduce tariffs on a bevy of globally imported goods, including many types of fish and shellfish, fruits and vegetables, apparel and appliances. According to a June 5 report from Panjiva, the value of 1,011 of those imported categories receiving duty reductions was $64.3 billion for the year ended Feb. 28.
U.S. exports through the year ended Feb. 28 represent 15.3% of the food and beverage products covered in China's tariff reduction. The U.S. was the largest supplier nation to China over that span.
Fruit juice exports, the largest U.S. food and beverage export category on the tariff reduction list, totaled $407.18 million to China in that one-year span and will see a tariff rate cut to 5% from 20%, while salmon, the second-largest export category, totaled $302.25 million and will see tariffs cut to 7% from 10%. Other top export categories to China include Yellowfin sole, with $184.24 million, and cod, with $148.44 million.
Other leading American export products that could see duty savings in China, according to Panjiva, are potatoes, at $91.60 million, and baby food, at $76.48 million.
Chris Rogers, Panjiva's research director, said in an interview that the tariff cuts largely target consumer staples rather than the more expensive goods that have been threatened in a tit-for-tat tariff trade dispute between the two countries.
"These products are very much outside of the ones discussed in trade talks with the U.S. before now," Rogers said. "Before it was big commodities like soybeans and sorghum, raw wheat and energy."
On a global scale, companies that export bakery doughs to China could see about $633 million in duty savings, Rogers said, while mineral water exporters could see a total savings of $282 million and shampoo exporters could see $191 million in duty savings.
Rogers said the savings from tariff cuts to food and beverage products overall will be worth $1.6 billion, followed by $927 million for apparel and footwear and $556 million for consumer appliances and electronics.
Jon Gold, vice president of supply chain and customs policy for the National Retail Federation, said that although the duty reductions may not directly benefit the group's member companies, he believes the move is a sign of goodwill during a time of economic uncertainty between the U.S. and China.
"For our guys, it's more about imports to the U.S. but as we're having discussions with China, anything that's going to move the dialogue forward to avoid a pending trade war is a positive," Gold said. "The move by China is certainly welcome."
The tariff reduction by the Chinese is the latest development in what has been an unpredictable string of trade actions between the U.S. and China, including billions of dollars' worth of tariffs threatened or imposed by both countries.
Trade tensions have cooled in recent weeks but companies are still on edge.
A framework agreement was reached in May, under which China agreed to buy 35% to 40% more U.S. agriculture and energy products by the end of the year and also opened its beef market to the U.S. In a separate move, China announced May 22 that it would reduce tariffs on imported cars to 15% from 25% beginning July 1.
However, the Trump administration is slated to release its list of the $50 billion worth of Chinese technology imports it plans to subject to a 25% tariff as a result of its Section 301 investigation by June 15. The tariffs will be imposed "shortly thereafter," according to the White House.
"There is no clarity if and when they take effect, but folks are trying to plan accordingly," Gold said. "That lack of clarity makes it hard to plan long-term as a business. How do you plan six to nine months ahead?"