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U.S. agriculture is bracing itself to shoulder potentially costly tit-for-tat trade retaliation between Washington and Beijing that could hit everything from American pork to wine.
"The producers of the commodities that are being targeted will probably feel the effects of it," said Larry Karp, an agricultural economist at the University of California at Berkeley. "And there's no reason to think that the Chinese will stop at this."
On Friday, China's Ministry of Commerce said $3 billion in U.S. goods could face new tariffs following the Trump administration's imposition of duties on imported steel and aluminum. Among the goods listed for retaliatory tariffs were several agricultural products, including pork, wine, nuts, fresh fruit and dried fruit.
Overall, U.S. agricultural exports to China represent about $20 billion annually for American farmers.
"It just seems like any time there are trade disputes, food is top of the list just because it's an emotional issue," said Larry Sailer, an Iowa farmer who produces pork, soybeans and corn. "I wish these countries wouldn't use that as a weapon, but that's basically what they are doing."
Still, Sailer said he "totally supports the administration we have right now," adding that trade issues with other countries such as China have been ignored for too long.
Earlier this week, an editorial in China's Global Times, the ruling Communist Party's official newspaper, made a case for targeting "subsidized U.S. soybeans," charging the commodity is "dumped on China." That said, the Chinese ministry's announcement Friday didn't identify soybeans.
Some experts suggest the Chinese have looked to target U.S. pork initially and may strike next at American soybeans since it could impact some farm-belt states where President Donald Trump has enjoyed strong political support. The U.S. ships about $14 billion worth of soybeans to the world's second largest economy, according to the U.S. Department of Agriculture.
"China no doubt considered the parts of the U.S. that Trump relies on most heavily for political support," said Karp. "It would be very surprising if they didn't make their list with the view to how this play with his base."
Even so, the Chinese ministry's target list provided Friday also includes agricultural commodities such as wine, fruit and nuts — all products tied to California, a state Trump lost in the 2016 election.
The Chinese government proposed levying up to 25 percent tariffs on U.S. pork and some other agricultural exports but they haven't actually been implemented yet. Citrus would face a 15 percent tariff.
"Citrus is on the list and it does create some consternation," said Joel Nelsen, president of the California Citrus Mutual, a citrus producers trade group. "This thing could ratchet up and be just a negotiating step taken by both administrations. We're watching it closely."
Nelsen said China has been a growing market for the $3.3 billion California citrus industry and now ranks as the third-largest export market behind Canada and South Korea. He said the market is dominated by orange and lemon exports.
More than 80 percent of the wine produced in the U.S. comes from California and U.S. wine exports to China (including Hong Kong) were $197 million last year, according to the San Francisco-based Wine Institute.
"Chinese retaliation against U.S. wine would put our producers at a significant disadvantage in one of the most important markets in the world at a critical time," said Robert Koch, CEO of Wine Institute. "As a result of free trade agreements, a number of our foreign competitors will soon have tariff-free access to the Chinese market. This, combined with additional punitive tariffs on California wine, could result in lost market share for years to come."
California's $5 billion almond industry depends on exports despite strong domestic demand for the crop. Approximately two-thirds of the almonds produced in California go to the export market and China is one of the top buyers.
Similarly, the pork industry is seen as vulnerable since it relies heavily on exports to China. One in four hogs in the U.S. is exported overseas and the Chinese are the world's top consumers of pork.
"We sell a lot of pork to China, so higher tariffs on our exports going there will harm our producers and undermine the rural economy," Jim Heimerl, an Ohio pork producer and president of the National Pork Producers Council said in a statement. "No one wins in these tit-for-tat trade disputes, least of all the farmers and the consumers."
Last year, China was the second-largest volume market for American pork industry after Mexico. At about $1.1 billion, China and Hong Kong together are the third-largest market for pork based on value.
The U.S. pork industry has expanded in recent years due to increasing demand for the product, led by growing demand overseas.
One of the industry standouts in the pork industry is Smithfield Foods, the world's largest pork producer and a wholly-owned subsidiary of China's WH Group. The company acquired Virginia-based Smithfield Foods back in 2013.
UBS analyst Christine Peng said in a report Friday that China's WH Group is exposed to the tariff risk because it could increase the company's "earnings volatility if China/U.S. hog price disparity increases." Furthermore, the analyst sees a risk of higher soybean prices since soy is used as a livestock feed for the company's pigs and chickens.
"Tyson and Hormel have enjoyed several years of strong commodity margins in pork based on tight domestic processing capacity and strong commodity prices," Credit Suisse analyst Robert Moskow said Friday in a note. "They need export markets to remain strong in order for commodity pork prices to remain high."
Added Moskow, "With cold storage inventories of beef, pork, and turkey now at record levels and U.S. livestock producers planning to increase production significantly in 2018, even a small change to the export markets might have an outsized impact on price."
Tyson spokesperson Caroline Ahn said in a statement, "A healthy export industry benefits independent farmers like those who raise chicken, cattle and hogs for our company, as well as the communities where they live. Having good trading relationships builds certainty and stability in international trade, which is important to sustain a healthy domestic export industry and jobs."
Hormel didn't respond to a request for comment.
Shares of Tyson and Hormel were lower Friday amid a steeper sell-off in the broader market.