Thanksgiving, Apple Pie, and Tariffs
Jock O’Connell
It’s November, and what could be more appetizing at this time of year than a nice piece of freshly baked apple pie, perhaps with a slice of aged cheddar cheese melting on top? Other than Adam and Eve, it’s hard to think of anyone who may dislike apples.
We’re also bearing down on Thanksgiving Day, a holiday when apple confections, not to mention apple cider, play an outsized role. So, even though I’m writing this commentary in Istanbul where it may not be easy to find a proper turkey dinner for the occasion, I’m still obsessing about apple pie…and stuffing. (More on the Turkish apple connection a few paragraphs down.)
Because they have a much longer shelf-life than other fruits (see cherries), apples travel well. The U.S. Department of Agriculture estimates that one of every three apples grown in the U.S. is exported. The biggest export market is Mexico followed by Canada. As Exhibit A displays, our two North American trading partners have greatly increased their combined slice of the fresh apple export trade to 59.4% last year from 49.9% in 2013. China, incidentally, is not a big market for apples grown in the U.S. chiefly because China is itself the world’s largest grower and exporter of apples. Its share of U.S. apple exports has never much exceeded two percent and more normally lingered around or under one percent.
Washington State (and not the home state of the Big Apple) is America’s top apple producer. After storms and spells of very hot weather in 2022 led to a shortfall in that year’s crop, growers in the Northwestern state are now looking to see a reversion to normal levels of production in 2023. In an August report, the Washington State Tree Fruit Association anticipated this year’s fresh apple crop would be just over 134 million 40-pound boxes. That represents a 29% increase from only 104.3 million boxes in 2022 and 5% above the six-year average yield.
What started as a single orchard in Washington State in the 1820s is now over 175,000 acres of family-run apple farms throughout the state. Even with a lower-volume yield, the 2022 apple crop still had a value of nearly $2 billion, according to figures from the U.S. Department of Agriculture’s National Agricultural Statistics Service.
Washington grows more than 60% of all commercially-grown apples in the U.S. and accounts for by far the largest share of U.S. exports of fresh apples. In 2022, Washington State growers shipped 72.6% of the $884,290,073 in U.S. fresh apple exports. Second place California held a 9.7% share, while New York State held a meager 1.9% share of the export trade.
In this century, higher disposable incomes in several developing markets have led to a growing demand for fresh produce, including apples from the USA. Today, Vietnam and the Dominican Republic have joined Mexico and Canada among the leading export markets for fresh American apples.
Although most of the apple export trade moves overland to Mexico and Canada, a significant volume is also shipped overseas in maritime containers. However, it has not lately been a burgeoning trade, as Exhibit B attests.
Not surprisingly, as Exhibit C shows, the Northwest Seaport Alliance Ports of Tacoma and Seattle handle the preponderance of the nation’s seaborne fresh apple export trade.
A plague, bad weather, and currency fluctuations have affected U.S. apple exports, but tariffs have also played a major role in the decline in exports in recent years. Indeed, as a non-essential food product, apples became a popular target for retaliatory duties imposed by U.S. trading partners in response to the tariffs imposed under the Trump administration. One of the clearest examples of how these tariffs affected U.S. apple exports involved India.
India had been a sizable market for Washington State apples. In 2013, it had absorbed 6.3% of U.S. exports of fresh apples. That share grew to 15.5% in 2018. But then, in March 2018, the Trump administration imposed higher tariffs on Indian steel and aluminum shipments to the U.S. The Indian government countered with heightened duties of as high as 70% on some two dozen U.S. products, including apples. After those retaliatory tariffs went into effect, Washington State apple exports to India plunged, as Exhibit D demonstrates.
President Trump contended the tariffs were required to protect U.S. national security, which he claimed had been degraded by a steady decline of the domestic steel and aluminum industries. Trade economists generally disagreed, arguing that the tariffs would not substantially benefit domestic steel and aluminum producers but would instead raise costs on businesses that bought steel and aluminum. That, more notably, included the automobile industry, which vigorously opposed the new tariffs. In the event, the practice of targeting American farm exports by U.S. trading partners led to a $14.5 billion Market Facilitation Program that helped bail out agricultural exporters for foreign markets lost as a result of the Trump administration’s tariffs.
India, it should be emphasized, is no minor player in the global economy. It features the world’s third highest gross domestic product, and United Nations estimates show that India’s population edged past China’s this April. The most recent figures reveal that India now has a population of 1.428 billion as opposed to China’s 1.425 million. More importantly, India’s population is forecast to continue growing, albeit at a much slower pace than in recent decades, while China has been in population decline for several years as a result of the now abandoned one-child policy promoted in the 1980s. By 2050, India’s population should reach 1.668 billion, while China is expected to have 1.317 billion people. Worse, by century’s end, China’s population is forecast at 771 million, half the size of India’s anticipated 1.533 billion.
During the G-20 conference in Washington, D.C. this June, Indian Prime Minister Modi announced that his country’s tariff increase on apples would be withdrawn effective September 5. It was a welcomed move in the Pacific Northwest but not a painless move on India’s part. Because the tariff reduction would take effect just as apple harvests in Kashmir were due to begin, Modi’s gesture was intensely resisted by India’s domestic growers. (Kashmir produces more than 70% of India’s apples and is, in effect, India’s Washington State.)
Regaining the U.S. share of India’s market could prove difficult. In the past four years, Turkey has emerged as India’s leading supplier of fresh apples, with 84% share of total apple imports, followed by Italy, Chile, and Iran. Although Washington State’s marketing agents are sounding optimistic about resuming large-scale shipments to India, that market’s apple import supply chains have been restructured to accommodate new suppliers. Business connections have withered. Domestic production has also been ramped up, expanding the political leverage of India’s fruit growing industry.
Perhaps most challenging to their effort to regain market share is that Washington State growers will need to persuade Indian exporters that they will be reliable, long- term suppliers of premium quality fruit. A November 5 article in The New York Times reporting that “President Biden is trailing Donald J. Trump in five of the six most important battleground states one year before the 2024 election” cannot have escaped the attention of India’s economic policymakers and agricultural interests.
That kind of news should not instill confidence on the part of India’s fresh produce importers. After all, it was Trump’s “America First” brand of economic nationalism that prompted the tariff disputes in 2018 that effectively dealt Washington State apple growers out of India’s market.
But, in business as in politics, you often get what you pay for (or vote for). Washington State’s principal apple-growing regions are east of the Cascades, where the state’s more conservative voters reside and where support for the former president remains strong. Trump won both Yakama, the state’s largest apple growing county, and Spokane County in the 2020 election.
But let me end on a cheerier note. Yes, Virginia, there indeed was a Johnny Appleseed, although the popular stories about him are almost all wrong. His name was John Chapman, and was a horticulturist and nurseryman born in Massachusetts two years before the Declaration of Independence. He died at age 70 in Fort Wayne, Indiana. In the intervening years, he did not wander the American landscape randomly tossing apple seeds here and there. Instead, he nurtured trees raised in nurseries that would then be sold, usually at a profit in which Chapman shared. Although not a stranger to unwise investments, the image of John Appleseed as a poor wanderer was not true. But in the end, he never made it as far west as Washington State.
So best wishes to all for a happy, healthy Thanksgiving. I’ll let you know next month if I manage to find a proper turkey dinner in Istanbul.
Disclaimer: The views expressed in Jock’s commentaries are his own and may not reflect the positions of the Pacific Merchant Shipping Association.
