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 the Chinese New Service as “dead against” tariffs on tea.

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Peter Goggi (Photo by Dan Bolton)

“There are very small terroirs or micro climate areas in China that produce very, very high quality teas and very unique teas that you cannot get anywhere else in the world,” said Goggi, adding “If the tariffs go through, ultimately the consumer will pay the price. It’s the consumer that gets hurt.”

The June hearings spanned seven days and were attended by a broad range of industry leaders concerned that import taxes of up to 25% on Chinese made goods and agricultural products would harm consumers. Conducting the hearing were representatives of the State Department, the Commerce Department, the Treasury Department, the Labor Department and the U.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 to less than 1% of China’s total tea production, Goggi explained. Commercial tea growers in America do not need to be protected by tariffs. “Tea has been tax free for many, many, many years and it should remain that way,” he said.

Jason Walker (Photo courtesy of Jason Walker)

Walker said committee members listened attentively and asked follow-up questions regarding the testimony. “Questions posed by committee members indicated they had familiarized themselves with the testimonies prepared,” he said.

Transcripts of the hearings are posted on the USTR.gov website.

Read testimony .

Walker explained that individuals providing testimony were organized into panels of five. “The panel that included Firsd Tea also heard testimony from the leader of an international business council and a university-level economics instructor. All members of our panel opposed the tariffs,” said Walker.

“Speaking with others who had attended hearings from the previous day(s), the overwhelming majority of witnesses opposed the tariffs,” he said. 

Once hearings are concluded, there will be a period ending this week in which the Committee will await written materials related to witness testimony and deliberate before announcing their recommendations.

In July 2018 the U.S. imposed a 25% tax on 818 Chinese goods valued at $34 billion in the first round of actions designed to halt Chinese trade practices that the U.S. considers unfair. In August 2018 an additional 279 goods (List 2) valued at $16 billion were listed. On May 10 President Trump announced a 25% levy on 5,769 Chinese imports valued at $200 billion (List 3) and threatened to impose a 25% tax on the 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, ,

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