Ag Policy Blog

Pork Could Put a Dent in China Trade Deficit

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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U.S. pork production could go from $20 billion annually in value to $48 billion if China were to allow U.S. pork into the country duty free. (DTN file photo)

The U.S. trade deficit with China could be cut by nearly 6% if the U.S. could ship pork into the country with no tariffs, according to National Pork Producers Council.

NPPC highlights that the U.S. trade deficit with China for the first 10 months of 2019 was $266 billion, with China accounting for roughly 42% of the global trade deficit the U.S. faces. But China's consumption of pork far outstrips every other country in the world. That pork consumption is now facing challenges because of African swine fever.

It's estimated China has lost roughly half of its swine herd because of ASF and that has dramatically driven up pork prices in the country since mid-spring. Pork prices have doubled since then.

Due to the U.S.-China trade dispute, tariffs on U.S. pork increased another 10% on Sept. 1, making the retaliatory tariff 60%, tacked on to a traditional 12% duty already in place. That puts the full Chinese tariff on U.S. pork now at 72%.

Those tariffs, however, have not stopped higher export demand in China for U.S. pork. Through September, U.S. pork exports to China and Hong Kong are up 111% in volume to more than 210,776 metric tons. In value, pork exports have gone from $201.7 million in 2018 to $447.3 million for the first nine months of the year, according to USMEF. That's a 122% growth in value.

NPPC highlights that if China dropped all tariffs, including the standard 12% duty, the value of the U.S. pork industry would more than double over the next decade, going from $20 billion to $48 billion in pork production. Overall, sales to China alone would then lower the trade deficit by nearly 6%. Such an expansion in pork production and sales would generate 184,000 new jobs over the next decade as well, NPPC states.

Iowa State University economist Dermot Hayes conducted the analysis for NPPC. "Were it not for China's tariffs that are severely limiting access to American goods and other restrictions, including customs clearance delays, U.S. pork could be an economic powerhouse, creating thousands of new jobs, expanding sales and dramatically slashing our nation's trade deficit. China's actions would unleash tremendous benefits to U.S. pork producers, our nation and Chinese consumers who rely on this essential protein," Hayes said.

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