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China to exempt US pork from additional tariffs

China will exempt some agricultural products from additional tariffs on US goods, including pork and soybeans. It is currently not clear if some or all of the additional tariffs would be suspended.

US farm groups have cheered the reports by China’s official Xinhua News Agency on additional tariffs being exempted. “If media reports are accurate, this is a most welcome development,” said National Pork Producers Council (NPPC) president and pork producer David Herring.

China imposed 3 rounds of additional tariffs on US pork, including 25% increases in April and July 2018 and a 10% bump this month, raising the total duty from 12% to 72%, reports Reuters. “Most of our competitors face only a 12% tariff on their pork exports to China,” Herring added.

Pork supply hit by ASF

In China, consumers eat, on average, 54kg of pork annually, reports The Washington Post, adding that official statistics show that the country produced 54 million tonnes of pork in 2018, but is expected to produce only 40 million tonnes this year. Rabobank further estimates that Chinese pork production will fall further to 34 million tonnes next year.

A recent outbreak of African Swine Fever (ASF) was responsible for China’s pig herd being cut by a third since mid-2018. This has resulted in a need to replace pork supplies from overseas. Chinese pork prices have also surged. Data recently published by China’s National Bureau of Statistics show that the price of pork in China is nearly 50% higher than in 2018.

“When you consider that China is the largest producer and consumer of pork in the world, the importance of this market to US pork producers is clear. US pork exports could single-handedly make a huge dent in the trade imbalance with China. We are hopeful that this apparent gesture of goodwill by China leads not only to more sales of US pork, but that it contributes to a resolution of US-China trade restrictions,” said Herring.

Trade potential for US pork

Some of the questions now have to do with how much trade potential is available for US pork, according to Nick Giordano, NPPC vice president and counsel, global government affairs. “China’s obviously got to import more pork and more meat protein,” he said, noting that the upward price pressure will encourage other countries to ramp up production.

“Brazil, Australia and Europe will likely increase their production. Then, presumably, we’ll have to compete more with them over the long haul,” Giordano said, adding, “We’re in a unique position where we can help both countries and somewhat diffuse the problem.”