When it comes to trade and U.S. pork, China is incredibly unique, says Brett Stuart of Global AgriTrends, which advises companies all over the world on agriculture trade.
“The only time we’ve ever sent whole muscle cut pork to China was during African Swine Fever, when they killed two-thirds of their swine herd,” he says. “However, China loves feet, tails, ears, offal and neck bones — all that stuff we don’t have a home for and the only alternative is rendering or a landfill, which is tragic.”
When the tariffs escalated to 150%, shipments to China stopped.
“When Trump pulled those tariffs back, our ports are paying 57% tariffs in China,” Stuart explains. “You would think nothing’s going to go, but if you’re sitting on hog feet that are going to go in a landfill, you can pay 57% to send them. Just two weeks ago, China booked 7,500 tons of U.S. pork. We’re starting to see it go, but the tariffs are still a problem because of the packer margins.”
Even in the midst of a trade war, Stuart is confident deals will get made and the U.S. will have better access. Negotiations will take time, though.
“I’m betting we have a China deal, probably by the end of the year,” he says. “You have to remember the Phase One deal was signed with purchase commitments. Trump said you will buy 200 billion in U.S. goods, and it worked out to be almost 39 billion a year in U.S. agriculture. Rather than negotiating over [sanitary and phytosanitary] issues or tariffs, he said, ‘you just figure out how to buy it.’”
Stuart sees evidence of a similar scenario unfolding today.
“If you look at the notes from the Switzerland meetings two weeks ago with China, the U.S. mentioned purchase commitments,” he explains. “If we do a Phase Two deal with China with purchase commitments, we could see a scenario where all of a sudden, China is canceling Brazilian corn orders and booking U.S. corn orders. The biggest ag exports we ever sent to China were on the back of Phase One.”
To learn how China’s current economy gives the U.S. leverage for making deals, hear what Stuart has to say on “AgriTalk.” He also talks about non-trade barriers to pork exports to Australia and possible deals with the European Union.
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