Chinese tariffs hit US food exporters, leaving other nations to make hay while the sun shines
· US food exports to China have been hit with higher tariffs on soybeans, pork, wheat and frozen seafood in retaliation to Donald Trump’s levies on Chinese goods
· Brazil and Argentina for soybeans, Canada for wheat and lobsters, Germany and Spain for pork are reaping the benefit
Finbarr Bermingham, South China Morning Post (China)
5 Sep, 2019
At the start of the summer, a group of officials from Maine wrote to US President Donald Trump, urging financial support for the state’s iconic lobster industry.
“One of the first victims of retaliation imposed by China after the initial round of tariffs was lobster shipped from Maine,” wrote Maine Senators Angus King and Susan Collins, along with state Representatives Chellie Pingree and Jared Golden.
China had become the second largest importer of Maine lobster, buying US$128.5 million in the second half of 2017, before increasing purchases by 169 per cent over the first half of 2018.
But then the tariffs hit, and last year, the market died and US lobster exports to China fell by 80 per cent in 2018...
... Soybeans, wheat and pork were also on the new tariff list, and the US’ loss will be other nations’ gain. With 1.4 billion mouths to feed, Chinese buyers are sourcing their food from nations with lower-tariff access to Chinese ports, a trend that will deepen as tariffs on the US rise.
According to Darin Friedrichs, a soybean analyst working for INTL FCStone in Shanghai, “yellow soybeans are the only ones that matter”, when it comes to US sales to China. The tariff on yellow beans has risen to 33 per cent, compared to just 3 per cent from Brazil and Argentina, China’s other major suppliers.
Unsurprisingly, US soybean farmers
have fairly negative views on the trade war, which has allowed Brazilian rivals to grow their market share in China to 77 per cent over the first nine months of the 2018/19 market year, while their share has fallen to just 10 per cent, according to the US Department of Agriculture (USDA).
A survey of 400 US farmers released on Tuesday found that 71 per cent are not expecting a trade war resolution soon. The survey, conducted by Purdue University in Indiana, also found that 71 per cent of farmers think that government subsidies have helped offset the effects of tariffs, while 58 per cent expect more help in 2020.
The subsidies may well be needed as a 30 per cent tariff differential on beans from Brazil and Argentina will not be attractive to Chinese buyers, who were touring Argentinian facilities in August, looking for cheaper substitutes for US exports and competition for those from Brazil.
The situation with Argentina is complex, but the country’s traders are hoping that political machinations do not stop it from becoming a rival to Brazil in the US’ absence having returned with a bumper crop this year after drought destroyed the nation’s soybean crop in 2018...