Fears for Fruits

What’s Happening: The South African government has stated that it will begin to monitor for citrus greening disease, an insect-borne bacterial infection that effectively renders fruits inedible (but poses no threat to humans). The outbreak of the disease has generated significant concern over South Africa’s citrus market, which is worth $1.9 billion and represents roughly 12 percent of global citrus exports. While South Africa has been dealing with an outbreak of citrus growing disease since 2022, the issue has received renewed attention in the wake of a larger dispute with the European Union (EU). Spain, the world’s largest citrus exporter, is likely to call for stricter EU import restrictions if the disease spreads, although the Citrus Growers’ Association (CGA) of Southern Africa maintains that there is no threat.

Why It Matters: Restrictions on the export of South African fruits would have wide-ranging impacts on the global citrus market. The EU imports about 10 percent of all its citrus from South Africa, specifically 36 percent of lemons, 34 percent of grapefruits, 23 percent of small fruits, and 22 percent of oranges. Of European countries, the most impacted would be the Netherlands and the United Kingdom. Globally, South Africa provides 25 percent of oranges, 16 percent of tangerines/mandarins, 34 percent of grapefruits, and 23 percent of lemons/limes. If the United States were to restrict citrus imports from South Africa, it would lose access to roughly 7 percent of its total citrus imports.

Looking Ahead: The EU has in the past imposed measures to restrict the importation of South African citrus after the discovery of citrus black spot, a fungal disease, and other pests, so further EU restrictions are not out of the question. The South African government and CGA have argued against past restrictions, claiming the EU’s judgment has been both unscientific and discriminatory at the expense of South African growers’ livelihoods. Moreover, given Spain’s vested interest in protecting its domestic growers – and its potential to achieve greater pricing power over the EU market should South African citrus imports be restricted – any calls by the country to restrict such imports would certainly face scrutiny.

Brandy, You’re a Fine Tariff

What’s Happening: The EU recently voted 10–5 in favor of imposing tariffs of up to 35 percent on Chinese electric vehicles (EVs), which are scheduled to take effect on November 1, although the EU may continue negotiations with China going forward. As expected, China is responding in kind by requiring EU brandy importers to provide deposits of up to 39 percent of the sale value, essentially a temporary tariff that may be made permanent. China also increased duties on large-engine gasoline cars from Europe. In response, the EU has stated that it will look into supporting impacted producers and called China’s move an abuse of international trade rules.

Why It Matters: This initial retaliation by China appears to be directed at France, a major proponent of the EV tariffs and exporter of brandy. Yet countries such as Germany, which export large-engine gasoline vehicles and voted against EV tariffs, will similarly be impacted. (This is merely the latest episode in a long-running disagreement between France and Germany on the EU’s vision for trade policy.) China’s new tariffs would affect between $1.5–$1.8 billion in brandy imports from the EU, with about 99 percent coming from France, and approximately $18 billion worth of large-engine gasoline vehicles. A shift away from EU exports means that Chinese consumers will likely import brandy from Singapore, China’s second-largest provider, and potentially more Japanese or American cars. Of note, roughly 80 percent of Singapore’s brandy imports come from France, suggesting that French producers could use the country as a tariff-free pathway into China. French producers could use the country as a tariff-free pathway into China.

Looking Ahead: There is speculation over whether China will also institute tariffs on European pork and dairy products, an option the country has expressed interest in pursuing after its investigation into these goods earlier this year. China imports roughly $3.8 billion worth of pork and dairy from the EU, and any new tariff on their importation would represent a particular blow to Spain, which exports $1.5 billion worth of pork to China annually. As of now, EU tariffs will impact $11 billion worth of Chinese EV imports, while Chinese tariffs will impact up to $19.5 billion worth of EU goods. An imbalance by either side might encourage the current tit-for-tat trade war to escalate, further aligning the EU with the United States in opposition to China.

Data Last Pulled on October 2