FARE Blog

Food, Agriculture, and Resource Economics

The Impacts of China Trade Tariff on Georgia Livestock Industry

By Levi Russell

China implemented a 25 percent increase in import tariffs on United States pork and is expected to increase import tariffs on United States beef products by 25 percent. However, unlike many row crops and other agricultural products, China is not a primary destination for United States meat products. Beef exports to China only resumed recently and there is not yet a significant amount of beef being produced in the United States that is exported to China. In 2017, the United States was the second largest pork producer after China, and the largest pork exporting country (USDA FAS, 2018b). Twenty-two percent of pork produced in the United States enters the export market (USDA FAS, 2018b). From January 2013 to January 2018, the USDA ERS reports that mainland China made up 7.5% of total United States pork exports, coming behind Mexico (29.3%), Japan (25.1%), Canada (10.4%), and South Korea (8.1%). Pork production is mainly concentrated in the Midwest and North Carolina, and Georgia is not in the major pork producing regions. The impact of the tariffs on pork will be minimal on Georgia’s agricultural industry. However, the reductions in pork prices could hurt some of the pork producers in Georgia. For beef and pork (and other meats), the NAFTA trade discussions are a far bigger concern than Chinese tariffs.

Short-term market fluctuations this year in both cattle and hog markets will almost certainly depend much more on rising supplies, domestic consumption, and exports to other countries than on Chinese tariffs. A recent report by the USDA FAS indicates that the reductions in exports to China will mostly be offset by the increases in shipments to Japan, Mexico, and the Philippines. Exports of both pork and beef from the United States are expected to rise this year, in part due to relatively low United States prices (USDA FAS, 2018a).

In the long term, however, these increased tariffs on pork and beef products constitute a missed opportunity, as China is the number one pork-consuming nation in the world. New sources of demand for United States producers are hard to come by and higher tariffs on beef and pork will likely result in increased production in other countries to fulfill China’s growing demand. This will put the United States at a competitive disadvantage in the long term if the tariff increases are put in place on United States beef and pork products.

 

References

USDA FAS. (2018a). Livestock and poultry: world markets and trade. Washington, D.C. Retrieved from https://apps.fas.usda.gov/psdonline/circulars/livestock_poultry.pdf.

USDA FAS. (2018b). Production, Supply and Distribution Database.  Retrieved April 25, 2018 https://apps.fas.usda.gov/psdonline/app/index.html#/app/advQuery