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The Pits: How China's US Tariff Jab Choked a Cherry Import Boom

Reuters

   BEIJING - For public relations officer Rachel Li, paying top dollar for
   "beautiful" cherries imported from the United States was a no-brainer.

   "I heard they are full of iron," said the Guangzhou-based 33-year-old,
   "eating them makes me feel healthy, luxurious." Or it did, until
   Beijing imposed sky-high tariffs on U.S. cherries and importers took
   fright, leaving store shelves bereft and consumers like Li needing a
   different fruit fix.

   Across China's metropolises, the appetite of a burgeoning middle class
   for expensively fresh U.S. cherries has become a symbolic casualty of
   China's festering, tit-for-tat trade battle with the United States. A
   business that grew to nearly $200 million in 2017 from zero in 2000 has
   now withered to little more than a tenth of its volume peak, customs
   data shows.

   With import tariffs for U.S. cherries set at 50%, Beijing has relaxed
   regulations allowing imports from Central Asia - a region that just
   happens to be central to President Xi Jinping's epic 'Belt and Road'
   infrastructure project, an intercontinental initiative worth hundreds
   of billions of dollars.

   "It's an opportune time for China to fiddle with the knobs and to do so
   in a way that builds economic ties and offers a new market for 'Belt
   and Road' partners," said Even Pay, senior agriculture analyst at
   Beijing-based advisory firm China Policy.

   China's Ministry of Commerce didn't immediately respond to a fax
   requesting comment.

   May was the last month for which figures were available at the time of
   writing, typically the first big month in China's cherry import season.
   Supplies from Uzbekistan leapt to nearly half of the May total,
   Reuters' calculations show, from zero a year earlier, while the U.S.
   share of the cherry import pie shrank to 38% from nearly 80% in May
   2018 - and a near monopoly in May 2017.

   But total cherry imports into China by volume have plummeted because of
   the collapse of U.S. shipments: 187 tons in May 2019, versus 337 tons
   in May 2018 and 1,505 tons in May 2017.

   Uzbek cherries sell at about 70-80 yuan per kilogram (kg) at retail
   level, according to four fruit traders, no more than half the 160 yuan
   ($23.28) per kg that Rachel Li said she happily remembers stumping up
   for her sweet U.S. cherries.

   No matter the price, though, the volumes now being shipped in are so
   small that Li said she hasn't seen imported cherries for weeks. A
   search by Reuters for U.S. cherries at a supermarket and smaller
   groceries in downtown Shanghai on a recent weekday came up
   empty-handed.

   'Impossible to Develop'

   For Victor Wang, the China representative of U.S. Northwest Cherry
   Growers, it's now a case of trying keep head above water.

   Wang said it took 17 years of marketing and government lobbying to help
   make U.S. cherries some of the most coveted fruits in China - at one
   stage his suppliers were even exporting more to China than across the
   border to Canada. But that all changed in 2018, when two rounds of
   Chinese tariff hikes added 40 percentage points to import charges.

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