Now we’re going to talk to someone who will feel the impact of these new tariffs. Jim Zion is a managing partner at Meridian Growers in Fresno, Calif. His company distributes almonds and pistachios and pecans from growers across California’s Central Valley. And Jim Zion was planning to spend today celebrating his wife’s birthday. That changed when he heard the tariff news. So now we have caught him at the office at Meridian Growers. Hey there, Jim.
JIM ZION: Hi. How are you?
KELLY: I am well. Thank you. Sounds like you had very different plans for today until this tariff news broke.
ZION: Yeah, today was going to be a normal day – spend a little time with my wife and come into work, get caught up from being gone for a little bit. And things have definitely changed.
KELLY: And how big a change is it? I mean, how big a deal will this be for your business?
ZION: This will be a very large impact. We do quite a bit of business into China and Hong Kong. And these tariffs that were announced will definitely change the dynamics in that marketplace.
KELLY: When you say you do quite a bit of business with China, how much? I mean, how many nuts does California sell to China?
ZION: In any given year, California exports anywhere between 60 to 70 percent of its almonds, pistachios and walnuts. China has been one of the largest markets for the last few years. At one time, 1 out of every 4 pistachios grown in California was destined for China.
KELLY: And the tariffs announced today – 15 percent – what will the impact be on your bottom line?
ZION: Well, for us, we will have to – for anything that we were shipping that is what we called on the water – in transit to China – we’ll have to ask our buyers how they would like to handle those additional costs because obviously this wasn’t factored in when we made the original contract. So either – we’re going to have to give them a discount to cover this additional cost they hadn’t planned on. If we can’t come up with an agreement then, we will either divert those containers to another destination that doesn’t have a tariff. Or if we can’t do that, we’ll have to bring it back. But regardless, this will definitely cost us some money.
KELLY: Do you have any sense of how much? Can you give me any kind of estimate?
ZION: Well, typically pistachios, for instance, today are selling for around $3.50 a pound on a wholesale basis. So 15 percent of that would be around 50 cents a pound, which in a container of 44,000 pounds is about $22,000. If we have to divert that load to another destination, that could cost us anywhere from $2,000 to $4,000. And if we have to bring it back – any time we bring a container back to the United States, by the time we bring it back and go through customs and everything, that additional cost could be $10,000.
KELLY: To what extent, in your view, Jim, are politics part of this? There’s been a lot of talk that perhaps these tariffs are designed to hit at areas of the country that have been home to a lot of Trump supporters.
ZION: Politics play a huge part in it. If you look at the Central Valley – tends to vote Republican. And a lot of the congressmen are in leadership positions – Kevin McCarthy, for instance, down in Bakersfield. Bakersfield and his district is home to some of the largest production of almonds, pistachios in the United States. So it’s no coincidence that they hit dried fruits and nuts.
KELLY: I wonder what message you might have if you could lean down and whisper in President Trump’s ear right now.
ZION: (Laughter) Well, I would say this is our business. So much of what we do goes overseas. We need a coherent trade policy that allows us to do business, that allows our customers to buy the product that we have. That’s what we need, and that’s what we’re looking forward to.
KELLY: Jim Zion, if China doesn’t get almonds and pistachios and pecans from California or from the U.S., where would they get them from?
ZION: Well, pistachios are grown in Iran. The bottom line is our customers, our consumers do have alternatives. They would prefer buying from California. But if the costs are too high or too restrictive, they can switch to another producing country.
KELLY: I understand you’re also working the phone to China today. What are you hearing from your contacts there?
ZION: They knew it was coming. They were hoping it wasn’t going to happen. And at this point, we’re trying to wait and find out, is this really going to stick, or is it going to be 24, 48, 72 hours and they go, OK, we’re – we’ve negotiated a settlement? Honestly, the next 24 hours is going to be critical. We actually have containers arriving within the next seven days I’ve got to make some decisions on. So we’re in contact with them on a constant basis as we get closer to that drop-off date that they actually arrive there in China and Hong Kong in those ports there – what is going to be the final decision.
KELLY: Jim Zion, thank you.
ZION: You’re welcome. Thank you so much.
KELLY: That’s Jim Zion, managing partner at Meridian Growers in Fresno, Calif.