Trade Update: U.S. China Trade War Gains New Traction as New Tariff Goes Into Effect

Courtesy of Texas Cattle Feeders Association

A 25% tariff on $200 billion of Chinese imports went into effect Friday, as trade tensions between China and the U.S. heated up once again. 
    On Sunday, President Trump threatened to increase the tariff rate from 10% to 25% citing China’s backpedaling on prior commitments during talks last week in Beijing, China. Over the weekend, China’s new draft of the trade agreement deleted commitments on core issues that the U.S. had considered closed, affectlvely negating any progress the two countries had made. 
    Trump also threatened to place the 25% tariff on the remaining $325 billion worth of Chinese imports “shortly.” 
    In other trade news, beef exports to Egypt could potentially be disrupted after the country’s government moved to recognize only one approved halal certifier rather than the six that were approved previously. Egypt is currently the second largest market for U.S. beef variety meat and the number one destination for U.S. beef livers. 
    According to Paul Clayton, U.S. Meat Export Federation (USMEF) senior vice president for export services, reducing approved certification bodies from six to one could disrupt exports, but USMEF and USDA are working to keep product moving as smoothly as possible. In the meantime, Clayton says USMEF continues to work to develop a wider range of markets for beef livers. One of those markets, Tunisia, recently opened to U.S. beef and is a potential market for U.S. beef livers. 
    Meanwhile, USDA Sec. Sonny Perdue will travel to Japan and South Korea next week as part of the G20 agriculture ministers’ meeting. As part of the trip, Perdue will attend a USMEF promotional event to underscore the importance of the Japanese market for U.S. meat. Japan is the top overseas market for U.S. beef and pork. Japan also lifted a nearly 15-year ban on U.S. goat and sheep meet imports in 2018. Despite being the top overseas market, U.S. beef exports to the country currently are subject to a 38.5% tariff rate, 1/3 higher than the tariff rate imposed on U.S. competitor markets including Australia, Canada, New Zealand and Mexico. 
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