Metal tariffs could have big impact on Yakima Valley

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YAKIMA HERALD – MIA HOAG – YAKIMA, Wash. — A number of products made and grown in the Yakima Valley could be affected by the Trump administration’s decision to implement steel and aluminum tariffs on Canada, Mexico and the European Union starting Friday.

In response, those countries say they plan to impose a number of tariffs on U.S. products. That potentially could hurt Yakima Valley exports.

Mexico’s tariffs list, for example, includes apples. Mexico — and Canada — are major importers of Washington-grown apples, making up about 40 percent of all of the state’s apple exports.

The EU said it would impose duties “on a number of imports from the United States,” referring to a 10-page list of targets for retaliation it published in March, which included bourbon and Harley-Davidson motorcycles. European leaders also vowed to proceed with a complaint to the World Trade Organization.

“This is protectionism, pure and simple,” said Jean-Claude Juncker, president of the European Commission.

The Mexican government said it would levy import taxes on U.S. exports of pork bellies, apples, cranberries, grapes, certain cheeses, and various types of steel.

And Canada slapped a surtax on $16.6 billion of American steel, aluminum, coffee, candy, pizza and quiche, as Prime Minister Justin Trudeau pronounced Trump’s claim to be protecting national security an “affront” to Canadians who fought alongside American GIs from World War II to Afghanistan.

In an interview with the Yakima Herald-Republic last month, Mark Powers of the Northwest Horticultural Council expressed concerns about the Trump administration imposing steel and aluminum tariffs on Mexico and Canada, saying it could lead to a number of retaliatory tariffs imposed on apples, pears and cherries.

When reached Thursday, Powers said he was waiting to get official word on the exact tariff rate on apples exported to Mexico. Past disputes indicate the tariff could be high, around 20 percent. But that is a guess, he said.

“It’s hard to know what the impact will be,” said Powers, whose agency works on policy issues on behalf of the tree fruit industry.

Powers is relieved that Canada has left tree fruit off its list for now. “That is good news,” he said.

Blueberries also are included on Mexico’s list of retaliatory tariffs, but the action won’t have much of an impact locally or nationwide, as Mexico only imports about 2 percent of all U.S.-grown blueberries. And only a small percentage of that amount is grown in Washington state, said Alan Schreiber of the Washington Blueberry Commission.

However, roughly 40 percent of the Washington state blueberry crop — about 138 million pounds of berries are expected in the upcoming harvest — is exported to Canada, Schreiber noted.

“It would have been catastrophic” had Canada included U.S. blueberries on its tariffs list, he said.

In general, such disputes are frustrating amid Schreiber’s ongoing efforts to gain new export markets. Canada is by far the biggest importer of Washington-grown blueberries, with another 10 percent of the crop going to Japan, South Korea, Taiwan and Hong Kong. He’s been working on getting blueberries into several other Asian countries — including China. Those efforts came to a halt with the ongoing U.S. trade dispute with China.

“These kinds of actions run counter to what our industry is trying to do,” Schreiber said.

Meanwhile, local manufacturers are watching the impact of tariffs on their steel and aluminum supply.

Kevin Griggs, owner of Magic Metals in Union Gap, noted that Canada is a big supplier of steel to U.S. manufacturers. Prices were already starting to go up prior to any tariffs going into effect.

Griggs said he isn’t in a panic yet; he believes the tariffs are temporary and hopes for a quick resolution.

“I think it’s negotiation tactics,” he said. “I hope it doesn’t hurt anyone. The economy is booming and I don’t want to see that hurt.”

John Gehlsen, president and owner of Yakima Steel, said he saw prices of raw steel increase from around 45 to 50 cents a pound at the end of the year to around 60 to 65 cents a pound now. He expects to hear about further increases from distributors Friday.

Gehlsen was prepared to bear those higher costs, but was caught a bit off guard when the Trump administration followed through on planned tariffs.

“Today was a surprise, especially with Mexico and Canada,” he said Thursday. “(Tariffs to) Mexico and Canada didn’t make a whole lot of sense to me.”

  • Material from The Washington Post was included in this report.

Posted By: Mai Hoang, Yakima Herald, May 31, 2018

Photo: (AP Photo/Martin Meissner, file) Steel coils are stored at the Thyssenkrupp steel factory in Duisburg, Germany, in late April.