WASHINGTON — For the National Pork Producers Council, the ongoing trade war with China means lost opportunities — and lost dollars.
“Given the uncertainties surrounding the U.S.-China trade dispute, we just don’t know — and nobody knows,” said Nick Giordano, NPPC vice president and counsel for global governmental affairs.
Giordano spoke during a NPPC media briefing following its Legislative Action Conference, a two-day, fly-in event that brought over 100 producers to the nation’s capital.
One of the first questions for the panel of NPPC board members and staff was on trade and how much U.S. pork producers are losing due to the ongoing U.S.-China trade war.
Giordano said U.S. producers are losing $8 per animal, which amounts to $1 billion annually.
“That number could grow, depending on the extent to which the U.S. is able to serve the Chinese market,” he said.
African swine fever has decimated the herd of the world’s largest pork-producing country. Estimates have put the losses as high as half of the total swine herd in China, which also is the world’s largest consumer of pork.
Those factors create an opportunity for other countries to fill the gap in China.
“The question going forward is to what extent will the United States benefit from this unprecedented opportunity in China,” Giordano said.
In 2018, the Trump administration announced the first of a series of tariffs on Chinese goods entering the United States. In retaliation, China placed tariffs on a list of U.S. goods, including pork and soybeans.
Tariffs on U.S. pork include a 25% tariff in April 2018, a 25% tariff in June 2019 and another 10% earlier this month. With the existing 12% tariff rate on pork, the tariff rate on U.S. pork going into China currently stands at 72%. Without the trade war tariffs, the tariff on U.S. pork entering China is 12%.
China exempted some U.S. products, including pork and soybeans, from further tariff rate increases after the U.S. postponed some tariffs that were scheduled to take effect from the first to the middle of October.
Giordano said that prior to the trade war, the first supplier of choice to fill China’s protein and pork gap would have been obvious.
“Going back two years ago, or further than that, under those economic conditions, without trade restrictions, unequivocally it would be the United States who would be the principal beneficiary. But given the uncertainties surrounding the U.S.-China trade dispute, we just don’t know,” he said.
The deficit of the Chinese production is pushing pork prices and meat prices higher around the globe as other countries seek to fill the hole left by that loss.
“Clearly, there’s upward pressure on global pork and beef prices because if you pull that much meat protein out of the global meat complex, it creates upward pressure on prices, but who’s going to benefit and how much, we don’t know,” Giordano said.
As with the feared long-term impacts of the trade war on the demand for U.S. grain, the fear that other countries will ramp up their pork production to become larger pork suppliers to China is real.
“Our great concern is the longer this goes on, the less we benefit. The more places like Brazil, Europe and competing areas, they expand their production, they get more of the Chinese market and that’s competition that we have to deal with presumably over the long haul,” Giordano said.