Maine’s blueberry industry would take a hit from higher taxes if the Trump administration makes good on a threat to withdraw from a trade deal with South Korea, a major market for the industry.
The president hasn’t acted yet, but he recently told his advisers to prepare to withdraw from the pact. Each year the United States now imports from South Korea goods worth nearly $28 billion more than what it exports to that country. That imbalance is more than double what it was when the agreement went into effect in 2012. U.S. negotiators had intended the pact to have the opposite effect.
In April, Trump called the agreement “a horrible deal” that has “destroyed” the United States, The Washington Post reported.
But withdrawing from the 2012 U.S.-Korea Free Trade Agreement, known as KORUS, could cause the current low taxes to revert back to those of five years ago — 40 percent for blueberries. And that would make Maine goods more expensive and less competitive than those of Canada, which has a similar deal with South Korea.
Frozen wild blueberry sales to South Korea have been robust, rising 65 percent from 2014 to 2016, the Wild Blueberry Commission of Maine estimated. That translates into 2.5 million pounds of frozen wild blueberries worth $2.5 million, according to U.S. Census Bureau trade data. Without KORUS, those sales also would be at risk.
“This will eliminate the trade tariff advantage that Maine currently has for exports of [frozen] wild blueberries and it is likely that export sales to South Korea will decrease significantly and favor cultivated blueberry producers in South America and Canada,” said Patricia Kontur, director of programs at the commission.
If the full tax on blueberries is reinstated, it could top 40 percent, said Chad Bown, senior fellow at the Peterson Institute for International Economics in Washington, D.C.
The numbers may be startling, especially for smaller exporting states like Maine, but Bown said what worries him worse is picking a fight now with South Korea, in the wake of nuclear threats from North Korea.
“This is beyond an issue of international trade,” he said. “South Korea is an important strategic partner.”
