Experts Say Chinese Tariffs Won’t Affect the US Hemp Industry

While many prospective and current hemp farmers in the U.S. may have entered panic mode when China announced that hemp and its products would be hit with added tariffs in the ongoing trade war between China and the U.S., experts are of the opinion that there is currently no need for hemp farmers and processors to worry.

One of the reasons that economic experts cite to reassure hemp farmers is that currently, it is hard to trace how much hemp is being sold to China from the U.S. This means that while hemp was included among the agricultural products to be affected by the new tariffs, farmers shouldn’t worry because China isn’t a market for hemp from the U.S.

In fact, China’s hemp industry may be the one to suffer because records show that in 2017 alone, China exported hemp to the U.S. worth approximately $3.3 million. Most imported hemp comes from Canada, with receipts totaling about $58 million in 2017 alone.

Farmers of other products, such as soybean and corn, will be more affected by the stiffer tariffs imposed on agricultural products from the U.S. by China.

While hemp farmers in the U.S. may not have much to worry about during this ongoing trade war with China, the story is different for hemp processors.

This is because it will be harder and more expensive for them to procure hemp processing equipment from China as the new tariffs bite. For example, one processor in Kentucky has already had to pay a 25 percent tariff on processing equipment imported into the U.S. from China.

Bob Hoban, the founder of Hoban Law (a Denver-based cannabis law firm) advises that U.S. hemp processors should look into sourcing their equipment from the EU if Chinese products become very expensive.

He explains that the processing equipment made in Europe is of very high quality but the manufacturers there haven’t had a chance to access the U.S. market. This means that hemp processors who look to Europe for their equipment may secure very good deals that can give them access to equipment that is competitively priced when compared to what they would have obtained from China.

Hoban points out that processors will still feel the pinch of the tariff war with China since there may be no shortcut to other Chinese products, such as cigarette paper and other packaging materials that the hemp industry needs from China.

Analysts believe that now may be the time for hemp industry players like VPR Brands LP (OTCQB: VPRB) and Wildflower Brands Inc. (CSE: SUN) (OTCQB: WLDFF) to get creative and find alternatives to the Chinese inputs that may make finished hemp products more expensive for buyers.

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