Posts Tagged “tariffs”
By Iyer Amruthur ALC San Antonio
You weren’t born yet; there’s no record you can follow back, the digital and paper trail buried deeper than your local fiber cables, allowing you to read this periodical! I’m, of course, talking about 1200 BCE, when historians theorize that the first ocean trade route began. Thankfully, dusty naval logs and old boxes of hardtack are not what we’re here for. We’re here to talk about something pretty topical in today’s economic world: tariffs. A tariff is critical to trade, as it is a tax or duty paid upon importing a certain good or product class from another country. They can range from small to cripplingly large in terms of fees. They’re almost as old as trade, but not quite. The United States issued its first tariff back on July 4, 1789, 286 years ago. It levied a charge per ton of goods brought into the USA towards the selling party, such as wine, beer, and coffee.
Fast-forwarding to modern times, tariffs are a common and omnipresent part of trade. Discussions about tariff policy have evolved into a raucous, entropic, and engrossing conversation. The effects are wide-ranging and sweeping. As you can imagine, the cost of goods and services has wild implications, almost a butterfly effect on a country’s economy and even its partners. Let’s take the example of a simple tariff on imported aluminum and steel. Every car frame, CNC-turned bolt, or screw, down to the cost of buying a new truck and trailer for transport, is affected. When the cost of goods and manufacturing starts to balloon, the implications and effects become pervasive.
A more expensive sheet of aluminum can lead to layoffs, higher purchasing costs, slower development times, cutting corners, and, in some cases, the collapse of a brand or product category. I’m sure you all remember when eggs became a bit “pricey”, and we saw quite an explosion of creative, if not tasty, substitutes for the traditional American breakfast. A tariff can also vary in terms of total cost, ranging from minor to major, and levying vastly different impacts on the respective industry.
To give an example, the USA recently placed a 25% tariff on Mexican Imports (for non-USMCA-compliant goods). In order for goods to avoid this, they must be compliant under standards requiring a large majority of the final “product” to be built within the USMCA region. The regional clause allows Mexico to avoid 87% of all tariffs on goods, including cars, machinery, electrical equipment, agricultural goods, beer, and spirits. Along with a base 10% tariff for all other countries, these policies were put into play in March of this year.
Tariffs can often be implemented as a trade tool, but are also used as a reactionary or punitive measure. For instance, the tariffs levied against Mexico were cited as a deterrent and countermeasure to an influx of drugs into the USA, where efforts perceived by Mexico were assessed as “lax”, as well as solving a growing trade imbalance between the USA and Mexico. This gives the USA an opportunity to “level” the playing field by encouraging outside companies to invest in USA-based production, pressure foreign competitors to “play ball”, and aid in job creation.
Tariffs are simple, effective, and potent measures to control global and domestic trade. However, they also have wide-ranging implications that extend across both macroeconomic and microeconomic conditions. Let us look forward to a future of balanced and healthy trade!
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Iyer Amruthur is a national sales manager in the ALC San Antonio office and has been with the company for three years. He attended The University of Georgia where he obtained a Bachelor’s Degree in Marketing, with a minor in Communications.
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ALLEN LUND COMPANY, TRANSPORTATION BROKERS, LOOKING FOR REEFER CARRIERS: 1-800-404-5863.
U.S. apple exports to Mexico could should increase this season even Mexico is expected to have a larger crop.
The USDA’ s fresh deciduous report for fresh deciduous fruit for Mexico said although Mexico’s apple production is up 24 percent the removal of the 20 percent tariff last May could boost U.S. exports there.
The tariff was in place for nearly a year, as a retaliatory measure against U.S. tariffs on Mexican steel and aluminum. Mexican imports of U.S. apples dropped nearly 16 percent during this period in comparison to marketing year 2017-18, the USDA re;ported.
Mexican consumers remain price sensitive purchasers of fruit, according to the report.
With lower apple prices for marketing year 2019-20, the USDA said apple consumption in Mexico is expected to rebound, resulting in a slight decrease to pear consumption.
Mexican grape exports are forecast at high levels for the 2019-20 season.
The state of Sonora accounts for 85 percent of total table grape production in Mexico, and and 77 percent of the total planted area. Sonora
has increased plantings over 20 percent in the last three years.
By the Washington Apple Commission
Wenatchee, Washington State, USA – In response to the Trump Administration’s tariffs on aluminum and steel, Mexico has announced effective immediately imports of apples from the U.S. would be subject to a retaliatory tariff of 20 percent. Under WTO rules, countries hit with unilateral tariffs are allowed to levy tariffs equivalent to the amount of injury. Apples are just one item on the list of U.S. products that Mexico is targeting.
Washington State, home to over 1,300 apple growers, is the source of almost all apple exports to Mexico. The state produces approximately 65 percent of all apples grown in the US and over 90 percent of U.S. fresh apple exports. Mexico is the top export market for Washington apples, and during the 2016-17 season Washington growers shipped 13.7 million 40 lb. bushel cartons valued at more than $215 million to the market. During the current season, shipments have been ahead of last season by 13 percent and were on track to exceed 15 million bushels, worth an estimated $241.8 million. This new tariff now puts that goal in doubt.
“Any tariff is clearly going to have economic impact to our industry – especially when you consider its cumulative effect along with the tariffs imposed by China and expected within the next few weeks from India, also major Washington apple export markets, in retaliation to U.S. steel and aluminum tariffs” stated Todd Fryhover, the President of the Washington Apple Commission. “The economic impact to individual growers will vary depending on the strategic importance of Mexico to their sales, but collectively Washington apple growers will see a decrease in what they are paid for their crop due to the 20 percent duty.”
The Washington Apple Commission is the international marketing arm of the Washington apple industry and conducts promotions in foreign markets to drive consumer demand for apples from Washington State, USA. Washington Apple Commission provides promotional support to international retailers, wholesalers and importers with innovative marketing programs and activities to grow consumer awareness and brand loyalty.