Trump’s Tariffs Couldn’t Save the California Olive Industry

A cautionary tale on how protectionism can backfire—just as the US and EU consider new
subsidies in strategic industries.

Harvesting olives in Woodlake, California.

Photographer: Matt Black/Magnum Photos/Trunk Archive

By

Bryce Baschuk

March 17, 2023 at 1:00 a.m. PDT

Rod Burkett’s surrender came more from exasperation than defeat. After cultivating olive trees
in the heart of California’s farming belt for 30 years, he finally sold his groves in 2022.

“I just threw my hands up and said, ‘To hell with it,’” says Burkett, the former chairman of the
Olive Growers Council of California and an early supporter of former President Donald Trump’s
tariffs on olive imports from Spain. Burkett says high fertilizer prices, rising labor costs, water
shortages and steep taxes all factored into his decision. But his primary reason for walking away
is that farmers in other countries—Spain, in particular—can grow, ship and sell their table olives
in America at far cheaper prices. “It has been a great industry, but as far as long-term growth, I
just don’t see it,” he says.
Olive growers in Spain rely on mechanical harvesting methods to a greater degree than their
peers in the US.
Photographer: Bernat Armangue/AP Photo

The withering away of California’s olive industry is a case study in how protectionist policies
can backfire, creating losers on both sides—something to consider as the US and European
Union gear up for a new subsidies race centered on semiconductors and electric vehicles.

Olives have been growing in California since the 18th century, when Spanish missionaries
planted groves alongside the 21 Catholic missions stretching from San Diego to San Francisco.
Today, most of the cultivation is centered in the Central Valley, a 400-mile stretch of fertile land
between the Pacific coast and the Sierra Nevada mountain range that’s the source of almost half
of all fruits, vegetables and nuts grown in the US.

In recent years, it’s become clear that Golden State producers of table olives—the kind used as
toppings for pizzas and salads—can’t compete with low-priced imports from Spain, the world’s
largest olive producer.

US officials allege that the Spanish government offers trade-distorting subsidies to farmers, who
then sell olives in the US at below-market prices.

California producers also say Spanish growers have been able to tap state aid to finance a shift to
high-density groves, which can be quickly harvested with machines that shake olives from their
branches. It’s a capital-intensive switch that requires growers to uproot old trees and plant new
ones in tighter configurations that can take as long as seven years to reach commercial
production.

A decade ago, researchers at the University of California at Davis warned that if the state’s table
olive industry didn’t upgrade to machine harvesting, “it is only a matter of time before table
olives are no longer produced in California.”

Cost pressures on California growers are compounded by rising wages, decades of drought and
stiff water restrictions, which are forcing many family farms to uproot their trees and switch to
more lucrative crops like almonds and walnuts. “As the industry becomes more stressed and the
profit margins become tighter, you will see a departure from table olives to other crops or solar
farms,” says Bart Hill, a second-generation olive grower in Bakersfield. “I’d hate to think of
putting solar panels on such beautiful, fertile soil in the best climate in the world.”

About two-thirds of California’s table olive acreage has disappeared over the past 20 years,
falling to 12,000 acres in 2022 from 36,000 in 2003, according to the US Department of
Agriculture. In comparison, Spain boasts more than 6.7 million acres of olive groves, of which
500,000 are dedicated to growing table olives.

California Table Olive Bearing Acreage

Source: US Department of Agriculture

Relief for the California’s oil growers came in 2018 when Trump imposed an average 35.5%
tariff rate on US imports of Spanish table olives, which totaled almost $70 million annually at
the time. The effect of the duties—which Europe viewed as a slap in the face from a long-
standing ally—was immediate, with shipments from Spain plunging 72% in the first two months
the tariffs were in place, according to the European Commission.

“The olives dispute was small but very important for Spain,” says Cecilia Malmstrom, who was
EU trade commissioner at the time. “We always saw it as another example of policies that were
creating tensions in the US and EU trade relationship.”

The US tariffs came after the two remaining American processors of ripe olives—Bell-Carter
Foods Inc. and the Musco Family Olive Co.—lobbied the Trump administration, arguing that
Spain’s subsidized olives were irreparably harming US producers.

“The pricing was well below what we could offer in California,” says Tim Carter, the former
chief executive officer of Bell-Carter Foods.
While Trump’s tariffs initially helped California growers preserve some market share, the trade
conflict soon spiraled out of control and raised costs for table olive producers on both sides of
the Atlantic. It also created an opening for Greek exporters of table olives, who quickly filled the
market gap left by the falloff in Spanish imports.

First, farmers in Spain persuaded the EU to file a complaint at the Geneva-based World Trade
Organization, which largely ruled in the EU’s favor. Then Trump hiked Spanish olive tariffs by
an additional 25% again in 2019 as part of a transatlantic trade dispute over subsidies to aircraft
makers Boeing Co. and Airbus SE. In response, Europe struck back with its own tariffs on tens
of billions of dollars’ worth of American goods—including California table olives.

An olive grove in Córdoba, Spain.

Photographer: Angel Garcia/Bloomberg

When Joe Biden assumed the presidency in 2021, he shelved tariffs on transatlantic trade worth
$11.5 billion and paused the Boeing-Airbus dispute as part of a broader effort to normalize trade
relations with the EU. But the US duties on olives have remained in place, though they’ve been
lowered slightly, to 28.4%, because US officials say Spain is still subsidizing growers, who are
dumping olives on the US market.

“The attitude of the Biden government, which is the same as that of the Trump government, does
not help good relations with Spain or the EU at all,” says Antonio de Mora, the secretary general
of the Spanish Association of Table Olive Exporters & Industrialists.

The fracas over table olives, which covers less than 0.01% of total transatlantic trade flows, is
emblematic of the quandaries Biden faces: As his administration tries to “friend-shore” supply
chains away from China and Russia and toward US allies in Europe, it’s also attempting to halt
or even reverse the loss of American jobs caused by decades of trade liberalization.

“This case is not particularly helpful for Biden’s transatlantic reset,” says Malmstrom, who’s
now a senior fellow at the Washington-based Peterson Institute for International Economics.

Trump once said that “trade wars are good and easy to win,” but the real winners in the olives
dispute were lobbyists and trade lawyers on both sides of the Atlantic. Spanish growers
acknowledge they paid more than $8.5 million in legal fees to argue their case before regulators
in Washington and WTO panelists in Geneva.
Even Carter, who personally lobbied for the tariffs in 2017, questions whether the fight was
worth it in the end. “It was very expensive for the industry to go through the whole process,” he
says. “It’s millions and millions of dollars. I wonder if that money could have been spent in
another way.”

Last year, Carter agreed to sell his 100-year-old family business to a major Spanish olive
company, Aceitunas Guadalquivir SL, for an undisclosed sum. “As the tariffs unfolded and the
pandemic unfolded, it became clear to my family that it was probably time to pull our chips off
the table,” he says. “My dog is no longer in the fight.”