U.S. beef is a popular product in China, and many ranchers are experiencing mass order cancellations from Chinese importers due to tariffs.
SUMMARY
Following the latest round of American tariffs on Chinese goods July 5, Beijing responded with retaliatory tariffs imposed on July 6, adding a 25% duty targeting American soybeans, meat, and vehicles. US farm produce, especially beef and high-end steaks, is expected to take a significant hit as exports to China becomes increasingly more expensive. The duty rate on US beef to China is being tripled from 12% to 37%, just as US beef was beginning to reemerge as a strong player in Chinese markets. The impact of this move has one of China’s biggest meat importers, Suzhou Huadong Foods, stating it will dramatically reduce purchases of US meat due to the added costs from the tariffs – equaling roughly US $75,000 per dozen crates of product. Suzhou Huadong general manager, Gong Peng, said they cannot afford to forward to costs to restaurants or supermarkets, and will just have to seek cheaper suppliers. Additionally, details have emerged that China also plans to reduce the 7.2% duty on Australian and New Zealand beef to zero in the next four to 11 years.
FAO GLOBAL ASSESSMENT
Assuming Chinese meat importers are not willing to transfer the new additional costs onto their consumers, American beef exporting volume is likely to decline, especially in states like Montana in which beef serves as a primary export. As a result, the US’s growth in the fastest growing beef markets may subside and beef exporters may lose business. This likely loss can be cushioned by investing in beef processing centers outside of the US for firms with the necessary resources to do so as this would be less costly than facing Chinese tariffs. Many American farmers have been considering changing what crops they grow and animals they raise because of the ongoing trade dispute. Rural areas in America’s bread basket have already taken major economic hits and investment is suffering, which, while unfortunate, may provide real estate investors on a budget a variety of interesting opportunities.
Related Links
- Bloomberg – German Cars and American Steak: Early Trade War Victims Emerge
- South China Morning Post – High steaks: Chinese importers stuck with Californian meat typifies firms in tariffs crossfire
- Beef Magazine – With import duty rate tripled, U.S. beef faces even tougher challenge in China
- CNBC – Here are the products China and the US are targeting in their trade war
About the Author
Dillon Billingham- International Business Associate
Dillon Billingham is currently studying at University of South Carolina’s Darla Moore School of Business, majoring in international business and finance while minoring in Chinese studies with a data analytics concentration. His focus is on the promotion of US-China business through mutually beneficial relationships.
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