With Chinese officials in Washington to discuss trade relations, the National Pork Producers Council today urged the United States and China to quickly resolve their trade differences and asked the Asian nation to make a minimum $3.5 billion purchase of U.S. pork over the next five years.
China is the largest consumer of pork in the world, making it a top market for U.S. pork exports over the past several years. (The U.S. pork industry in 2017 shipped $1.1 billion of product there, making it the No. 3 export destination for U.S. pork.) Pork is said to represent about 15 percent of the Consumer Price Index in China and could single-handedly make a huge dent in the U.S.-China trade imbalance.
“China has been a tremendous market for U.S. pork and, absent numerous trade barriers, probably would be our No. 1 export market,” said NPPC President Jim Heimerl, a pork producer from Ohio. “But, never mind China’s preexisting barriers on U.S. pork, the 50 percent punitive tariffs on U.S. pork have slowed our exports to a trickle. We call on the Chinese to begin immediate purchases of U.S. pork of at least 350,000 tons each year from the United States for the next five years.”
U.S. pork producers now face tariffs of 62 percent on exports to China, which in early April 2018 imposed a 25 percent tariff in response to U.S. tariffs on Chinese steel and aluminum and in June added another 25 percent duty in retaliation for the U.S. tariffs levied on a host of Chinese goods because of China’s treatment of U.S. intellectual property and forced transfers of American technology. China already had a 12 percent tariff on U.S. pork, and the country has a 13 percent value-added tax on most agricultural imports. In addition, a collection of other non-tariff barriers has chronically suppressed U.S. pork exports to China over the years.
Iowa State University economist Dermot Hayes calculates that because of the 50 percent punitive tariffs, U.S. pork producers have lost $8 per hog, or more than $1 billion on an annualized basis. (Producers have lost an additional $12 per hog, collectively $1.5 billion in the industry, because of Mexico’s punitive 20 percent tariffs in retaliation for U.S. metals tariffs.) Hayes says that if China purchases at least 350,000 tons of U.S. pork each year for five years, the total deal would be worth approximately $3.5 billion in sales. According to Hayes, that would put a significant dent in the U.S.-China trade imbalance and create 5,250 new jobs in the United States. He notes that the timing for the purchases is good since China needs to import more pork to mitigate the impact of African Swine Fever on the Chinese pig herd.
The news media has reported that in an effort to end the trade dispute, China has offered to buy $1 trillion of U.S. goods over the next six years.