Tariff Truce Eases but Does Not Eliminate Tea Trade Worries

On Saturday President Donald Trump put a hold on placing tariffs on the most recent list of Chinese imports, which includes tea. Chinese President Xi Jinping announced negotiations would resume.

In response, the tea industry drew a collective breath of relief, yet remains wary of the outcome of talks. Last week the U.S. Trade Representative (USTR) heard testimony from two prominent tea industry leaders, Peter Goggi, president of the Tea Association of the USA and Jason Walker, marketing director at Firsd Tea, the New Jersey-based division of the world’s largest Chinese green tea exporter, Zhejiang Tea Group.

Goggi was quoted by theChinese New Service Xinhuaas “dead against” tariffs on tea.

Peter Goggi (Photo by Dan Bolton)

"There are very small terroirs or micro climate areas inChina that produce very, very high quality teas and very unique teas that youcannot get anywhere else in the world," said Goggi, adding "If thetariffs go through, ultimately the consumer will pay the price. It's theconsumer that gets hurt."

The June hearings spannedseven days and were attended by a broad range of industry leaders concernedthat import taxes of up to 25% on Chinese made goods and agricultural productswould harm consumers. Conducting the hearing were representatives of the State Department,the Commerce Department, the Treasury Department, the Labor Department and theU.S. Department of Agriculture.

Opposition was near unanimous for the proposed tariffs on $300 billion worth of goods. Tea was not included on the previous lists but is named among the 3,805 subheadings on List 4. Approval would have increased tariffs by up to 25% on tea and coffee from China. It was a busy week for USTR which also listed procedures for exclusion from tariffs on List 2 and List 3 goods.

An estimated 60,000 applications for exclusions are expected when the process opens June 30.

Goggi formally requested that green and black teas, instant tea, and extracts be excluded. Seventy percent of the green tea consumed in the U.S. originates in China. “There isn’t one section of the tea market that is not touched by Chinese tea,” he said.

U.S. consumption amounts toless than 1% of China’s total tea production, Goggi explained. Commercial teagrowers in America do not need to be protected by tariffs. “Tea has been taxfree for many, many, many years and it should remain that way,” he said.

Jason Walker (Photo courtesy of Jason Walker)

Walker said committee memberslistened attentively and asked follow-up questions regarding the testimony. “Questionsposed by committee members indicated they had familiarized themselves with thetestimonies prepared,” he said.

Transcripts of the hearingsare posted on the USTR.gov website.

Read testimony here.

Walker explained thatindividuals providing testimony were organized into panels of five. “The panelthat included Firsd Tea also heard testimony from the leader of aninternational business council and a university-level economics instructor. Allmembers of our panel opposed the tariffs,” said Walker.

“Speaking with others whohad attended hearings from the previous day(s), the overwhelming majority ofwitnesses opposed the tariffs,” he said. 

Once hearings areconcluded, there will be a period ending this week in which the Committeewill await written materials related to witness testimony and deliberate beforeannouncing their recommendations.

In July 2018 the U.S.imposed a 25% tax on 818 Chinese goods valued at $34 billion in the first roundof actions designed to halt Chinese trade practices that the U.S. considersunfair. In August 2018 an additional 279 goods (List 2) valued at $16 billionwere listed. On May 10 President Trump announced a 25% levy on 5,769 Chineseimports valued at $200 billion (List 3) and threatened to impose a 25% tax onthe remaining 3,805 in Chinese goods (List 4).

“Firsd Tea continues to monitor the situation carefully, and has provided a voice to the government on behalf of our customers and the U.S. tea-drinking public,” said Walker, who said that he attended the hearings optimistic “these two great nations can reach a satisfactory trade agreement that will benefit both sides.”

Source: USTR, National Law Review, Xinhua