US Pistachio Exports To China Grew 7% Despite Trade War

American pistachio growers like Jim Zion prepared for the worst last year when the nut was caught up in escalating U.S. trade tensions with China, with potential tariffs as high as 45%.

“We were concerned that with the trade war, we would see a drastic reduction in shipments,” said Zion, managing partner at Meridian Growers in Fresno, California. “China is one of our biggest markets.”

But that did not happen. US pistachio exports to China rose 7% to a record 108 million pounds in the crop year through August, according to the Pistachio Management Committee, and another 10% in the six months thereafter. It turns out that a bit of luck, the second largest producer, Iran, had a poor harvest, along with China’s big appetite for pistachios, sustained demand, price threats and all.

“Chinese consumers really want these nuts and the United States has them,” said Roland Fumasi, an analyst at RaboResearch. “They don’t have a lot of options. That’s what is driving this.”

The new tariffs on pistachios were announced in April as part of China’s retaliation against President Trump’s taxes on steel and aluminum, and additional taxes were announced in June that raised the potential tariff rate by as much as 45 percent, in compared to only 5% originally.

But with the nut a popular gift for the holidays like Chinese New Year, shoppers haven’t cut back their demand from the US, the world’s largest supplier. About two-thirds of U.S. pistachio shipments went to international markets last year, with China and Hong Kong the largest customers by far.

There could also be more at stake, including the lower-than-expected fees being charged. With China and the US still in talks about the possibility of ending their trade war, China has rolled back some US-specific agricultural tariffs. China may not be charging the full tariffs either as talks continue on a possible agreement. Chinese President Xi Jinping said Thursday that the two sides had “reached a new consensus” on issues such as the text of a trade agreement, according to Xinhua. Trump said a deal was likely weeks away.


There is also some confusion about how to classify some types of pistachios, giving exporters of roasted nuts an advantage. According to Richard Matoian, CEO of American Pistachio Growers, roasted pistachios were supposed to be among the highest tariffs, but due to a clerical error, they didn’t get the brunt.

Zion, the producer, said it also received reports that, in some cases, Chinese tariffs that buyers there would be responsible for paying have not been applied. The roundtrip rounds of tariffs and drawbacks have left exporters confused, but pleased that the full tariff does not appear to have been met in many cases.

“Either it has been a blessing, or we have been extremely fortunate that it all happened when it happened and how it happened,” Matoian said. However, “the future remains invisible.”

If Iran’s harvest recovers, or if China starts charging the same tariffs on all pistachio imports, U.S. farmers could have a bad awakening. If that happens, Chinese purchases are likely to decline this year as importers look to alternative sources.

Popular Protein

That could hold back an industry that has come a long way since the mid-1970s, when fewer than 5,000 acres in California produced the first crop. In the past four decades, pistachios and other nuts have been transformed from savory snacks into healthy protein-rich foods, and production has increased. Now America’s pistachios is a $ 1 billion industry with more than 330,000 acres.