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5 reasons California jobs are vulnerable to the China tariffs

While China claims that they did not "fire the first shot," their tariffs have been a topic of concern for experts and analysts.
Credit: Image Source Pink
People working on a farm

Agricultural and manufacturing jobs are in the spotlight due to the China tariffs. China claims they responded with tariffs to counter the 25-percent tariff President Donald Trump imposed earlier in the year on Chinese goods.

While China claims that they did not “fire the first shot,” their tariffs have been a topic of concern for experts and analysts.

1. The China tariffs are more concerning than the Trump tariffs to California

According to a May California Budget and Policy Center analysis, California companies, as a whole, are not heavily dependent on the tariffs Trump implemented. No strong positive or negative direct impact on the aluminum or steel tariffs to the state are expected, even though individual companies and projects may be affected.

However, the same conclusion was not found for the retaliatory tariffs proposed by China. Their analysis found that these tariffs have “significant negative effect” on California companies and workers because of China’s designation as a key export market.

The study reasoned that the effects will be felt locally by the companies and the workers they employ.

2. More California jobs may be on the line than any other state

In April, Brookings Institution updated a breakdown on the number of jobs that could be threatened by the trade issues with China. This list specifically analyzed the agricultural and manufacturing jobs targeted by the China tariffs.

According to the Brookings Institution study, California’s Central Valley is heavily affected by the tariffs because it impacts crops like wine, vegetables, fruit, and berry growers. Other regions like those in Los Angeles could potentially see impact to plastics.

In total, the number of California jobs potentially at risk is 287,418, higher than any other state in the Brookings study.

While the study aggregates manufacturing and agricultural jobs potentially at risk, strong agricultural counties like Kern County have 15,685 jobs at risk. Regional areas also have thousands of jobs at risk like Stanislaus County at 10,824, San Joaquin County at 7,637, Solano County at 5,343, and Sacramento County at 1,878.

3. China’s significance to California agriculture

China accounts for $2 billion in exports for California’s agricultural industry, according to the California Farm Bureau Federation. Items like almonds, dairy, wine, cherries, and walnuts were notable exports that were impacted by the tariffs.

Almonds are a top crop for California agriculture. Their export value to China alone was $518.1 million in 2016. Regionally, some of the big providers in the area are counties like Stanislaus County and San Joaquin County, where almonds are listed as a top-ranking commodity in their crop reports. Twelve percent of the almond crop in California was exported to China in 2016.

Pistachios are the fifth top exported crop for California, and, in 2016, their export value to China was $530.5 million. According to the California Department of Food and Agriculture, 46 percent of pistachio exports went to China in 2016.

According to California Farm Bureau Federation trade expert Josh Rolph, these are markets that are not easily replaceable.

4. Unskilled jobs and farm related jobs could be impacted

According to Gokce Soydemir, a Business Economics Professor at Stanislaus State University, and Rolph, the jobs extend beyond just people working on a farm. The jobs at risk include part-time jobs and jobs being filled by unskilled workers. Additional concern is shared for jobs along the supply line that send products overseas.

Other kinds of jobs that could be at risk includes areas like packaging and quality sorting. The impact may not be felt as much by larger farms, but there is concern that smaller farms may not be able to absorb the shock.

In contrast, UC Davis Agricultural and Resource Economics Professor Daniel Sumner reasons that most jobs in farming are low wage and many others are seasonal.

“Farm employment may fall slightly, but the crops are in the ground and being harvested so for this year labor impacts are smaller,” said Sumner in an email. “The longer it lasts it will begin to have significant impacts as economic growth is reduced. But farm employment effects overall will be moderate at most.”

5. Uncertainty, disruption, and turmoil in trade has a real impact on farms

Even though the tariffs impact Chinese consumers and their purchase of American goods, there is a ripple effect that could impact jobs in California and the Central Valley.

Soydemir reasoned that increased price means that the consumer demand is likely to go down and less product is sold. There is then a decline in the exported commodities to that country. Chinese consumers who previously bought almonds might switch to commodities like peanuts, Soydemir added.

Impacts on California jobs also come about through lost income in processing plants and worker layoffs. Following that, these plants could buy less product from the farmers, and the farmers could cut costs by not harvesting as much product. Since not as much is harvested, additional job loss may come about.

As the trade issues continue between the U.S. and China, Sumner posited that those ongoing issues could have real impact on farms and crop production.

“The uncertainty and disruption and turmoil has real impact so that farms do not plant new crops if exports are questionable,” Sumner said in an email, “and livestock farms do not milk or produce as much. These all hurt employment and economic activity in farming processing, marketing, trucking and at the ports.”

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