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California stands to suffer if US-China trade war worsens

AFP  |  Los Angeles 

Churning out everything from cars and to nuts and wine, California's mighty will suffer big time if the US-trade war worsens.

Billions of dollars and many jobs are at risk in the richest and most populous US state -- a world-class and bastion of opposition to

"If there's one region in the US that will be most impacted by the trade war, it's going to be LA," said Stephen Cheung, former at the and now of an NGO called

Last year in Los Angeles-area ports, two-way trade with totalled more than USD 170 billion, Cheung said.

"is our number one trading partner," he told AFP.

The world's two largest economies have squared off in a tit for tat trade war that threatens to disrupt international commerce.

"Our fear is that the cycle will keep growing to the point where it's going to depress the economy," said Cheung.

boasts the world's fifth largest economy, with annual output of $2.7 billion, more than that of Britain.

The state of 40 million people is home to the powerful tech companies of Silicon Valley and the Hollywood movie and TV industry.

The state exports electric cars, engines, auto parts and aluminum, besides being the nation's bread basket.

Pistachios, almonds, oranges, walnuts, plums, lemons and strawberries are among the targeted in Chinese tariffs imposed in retaliation for US levies ordered by Trump.

"Although we don't know the exact ramifications these tariffs will have on our crops, we do understand the loss of the Chinese market will result in other foreign suppliers moving into the marketplace, causing long-term lost sales opportunities for our farmers," said of the Farm Bureau Federation.

China was the third largest market in 2016 for farm goods, after and the European Union, with imports to the tune of USD 2 billion.

"We as growers are very concerned," said Holly King, of the The sector exported USD 518 million worth of almonds in 2016. Now, the nut has been hit with a 50 per cent in China.

For pistachios -- USD 530 million in exports that year -- the levy is 45 per cent.

Casey Creamer, executive vice of the California Citrus Mutual, which represents 2,500 growers, said the organization's focus for now is on supporting the in the face of Chinese trade practices which "have been very bad for our industry."

Trump, who says he wants to reduce the US trade deficit with China, has accused other countries of taking advantage of the US when it comes to bilateral trade.

Many producers agree that China has engaged in unfair practices but "instead of using trade tariffs as a tactic" the better approach is to negotiate toward an accord that benefits both sides, said Cheung.

Wine was slapped with a 35 per cent in China, which hurts Michael Honig, who owns a winery in north of

"We started exporting to China over 10 years ago and built up a good market," he told AFP. "And what we've seen now is everything just stopped." His Asian buyer has put orders on hold to see what happens before resuming purchases. "It's kind of frustrating," Honig said.

Mario Cordero, of the Port of Long Beach, which along with that of moved 7.5 million containers last year, said that for now he is not aware of any stranded shipments but he will have a better idea of the fallout from the tariffs in six months.

The has warned that there are more than 285,000 jobs in California at stake in industries affected by the trade war. Cheung said prices at the consumer level should start going up in a matter of weeks, making importers more wary of buying products.

What's more, the war could scare away Chinese investment in California.

"The has already been impacted" and even if the war subsides "it's going to take a while to get back to operating normally," Cheung said.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, July 11 2018. 20:50 IST