Nuts: tariffs to hit US industry hard

China and Canda respond swiftly

A full-blown trade war will cost the US tree nut industry dearly as analyses clearly highlight in the wake of the retaliatory measures adopted by Canada and China. On 3 March Trump announced that a tariff of 25% for all imports from Canada and Mexico would come into effect on 4 March along with raising the tariff for imports from China from 10% to 20%. Although Trump pushed the pause button for some tariffs under the US-Mexico-Canada agreement (USMCA) until 2 April after speaking with Canada’s Prime Minister Justin Trudeau and Mexico’s President Claudia Sheinbaum, the US tree nut industry is still bracing for retaliatory measures.

Different reactions in China, Canada and Mexico

China swiftly reacted with retaliatory measures coming into effect on 10 March, which comprise additional 10% tariffs against US fruits, vegetables and basically all tree nut imports. Products shipped before 10 March and imported by China between 10 March and 12 April will not be affected by these additional tariffs.

Canada also immediately responded with a first set of countermeasures slashing 25% tariffs on USD 30 billion in goods imported from the US as of 4 March, which impact several food products including peanut butter. On top of this, Canada will impose another round of tariffs of 25% on USD 125 billion in imports from the US. This second list will affect a whole range of fruit and vegetables including all nuts. These tariffs will come into effect after a 21-day period if the US maintains its tariffs.

Although intending to respond in kind to all US tariffs, Mexico has not announced any retaliatory measures so far. The country has rather adopted a more diplomatic approach towards Trump with Sheinbaum highlighting an “excellent and respectful” conversation with Trump on Sunday.

New trade war to cost US tree nut industry a fortune

As media reports highlight the tariffs will cost the nut industry a fortune. According to research issued by UC Davis’ A.P. Giannini Foundation in December a new trade war would cost California an estimated US 6 billion per year and diminish the state’s agricultural exports by 25% with pistachios being the most hard-hit nut. In 2020, the retaliatory tariffs adopted by major US trading partners after Trump’s first round of tariffs in 2018 cost the tree nut industry USD 239 million.

All three countries are important trading partners for the USA. According to the USDA’s Foreign Agricultural Service the US exported tree nuts worth USD 1.19 billion to China, to Canada worth USD 642 million and to Mexico worth USD 329 million in 2023. China certainly is the most important trading partner for several tree nuts.

Dependency on China

China is the leading export destination for US pistachios, pecans and macadamia nuts as data presented by the USDA’s Economic Research Service shows. In addition, the country ranks among the top five destinations for almonds and hazelnuts. As the People’s Republic is the leading producing country for walnuts it is not listed as an export destination for this nut. Curiously, China is spending much less than last year on US tree nuts. Although this is partly explained by shortfalls in production, which is the case for pecans and pistachios being in an off year in terms of production, tariffs are also an underlying cause.

For almonds it should, in addition, be noted that high tariffs already apply for US imports. US shipments to other destinations in Asia, such as Vietnam, have also surged this year with China actively sourcing US almonds in these countries. While China used to be the most important trading partner for US almonds, Almond Board of California President and CEO Clarice Turner has recently emphasised that the US has become less reliant on the country.

Canada and Mexico also crucial

Canda is the most important export destinations for US hazelnuts and has increased spending by an impressive 79% this year as compared with 2023/2024. The country has also increased spending for US walnuts, almonds and most notably for macadamia nuts.

Mexico also features prominently as an important trading partner, especially for pecans. Yet, the export value for this nut has slumped by 75% in 2024/2024 as compared with last year. Opinions are divided as to the impact of Trump’s tariffs on the industry. While growers emphasise that tariffs will protect them from cheap arrivals from Mexico at the start of the harvest season, exporters are convinced that Mexico will be able to more easily compete in the international market.

Chaos for US farmers

As US farmers will ultimately bear the brunt of Trump’s tariffs their loyalty will once again be tested. Media reports highlight that more than 75% of the votes were cast for Trump in rural communities. Conviction is that Trump has their interests at heart in, for instance, ensuring access to water supplies in California and due to prospective tax cuts. Yet, together with Elon Musk, Trump has frozen USDA support, costs for fertilisers and fuel are rising and commodity prices are falling. The situation is different than during Trump's first term in office with his delays adding to chaos and uncertainty. In 2018, 80% of the tariffs earned form Chinese imports covered subsidies paid to farmers to mitigate the effects of the trade war. Industry leaders uniformly state that tariffs are a bad idea and consensus is that subsidies will once again need to be paid to farmers.