Trade expert Leonardo Gonzalez Dellan says that the United States may extend its protectionism to include US producers against Latin American competitors. This could lead to yet another round of trade wars, he adds.
Within the span of 15 years, the United States witnessed a decline in the consumption of orange juice. In 2001, the United States consumed up to 5 billion liters of orange juice, but it went down to as low as 2.8 billion liters two years ago, in 2016.
Together with the decline in the demand and consumption for orange juice, producers in the United States also worry about the competition from other countries. Brazil is notably one of the producers of cheaper oranges— a fact that poses danger to US producers and, according do Leonardo Gonzalez Dellan, could put Latin American producers at risk. Brazil has come so far in dominating the supply chain for the product that producers in Florida and California are starting to feel its negative effects on their businesses.
Even More Tariff
The European Union recently imposed a 25% tariffs on orange juice imports coming from the United States as well. This puts additional strain to US producers who are already worried about the declining consumption of their product and cheaper competition from abroad.
Predicted Move from Trump
Because of these challenges looming over US producers, trade experts predict that President Trump will make a move to protect the local producers in the United States against Latin American competitors. This could very well be a start of another round of trade wars.
A Word of Advice
Because of the potential action that the United States may put forward in order to protect its local producers, Mr. Dellan explains that the United States may see two reasons to intensify its protectionism for local producers. One is the development of the medium sized producers all over Brazil, and the other one is the expanding supply source in Mexico. These two are instrumental in expanding Latin America’s influence in the production, which could decrease the demand for oranges from California and Florida. Europe and Latin America, therefore, should look into working together especially if the United States finally decides to open up another round of trade wars.