Pork a target for China import tariffs

Irish and EU pigmeat exports to China could become subject to retaliatory tariffs if the EU targets imports of cars from China. That country has become the global leader in the production of electric vehicles, or EVs, and is exporting these to the EU and US markets at prices which undercut traditional manufacturers there.

China enjoys a competitive advantage compared with legacy manufacturers in Europe and the UK, whose auto businesses have been built on petrol or diesel-powered vehicles. China has relatively little global presence in traditional motor manufacture, but is at the leading edge of manufacturing the battery and other components used in non-fossil fuel-powered vehicles.

The US has just announced that it is imposing a 100% tariff on electric vehicle (EV) imports from China, a four-fold increase to discourage imports. The issue is also under consideration by the EU Commission, which has set the 4 July as the date by which it will announce the EU response to EV imports from China.

This is all very interesting from a motorist or indeed motor industry perspective, but what is the relevance to farmers or the agrifood industry?

This could come into play depending on how China responds to the US tariff hike and potential EU hike to follow a few weeks from now. It has indicated a likelihood of a response, with the luxury car market an obvious target, as Europe is a major exporter of these to an ever-increasing market in China.

Retaliatory tariffs prospect

While that target may be obvious, what will concern farmers and the agrifood industry is reports in Global Times – China’s government-controlled English language newspaper about targeting pork imports. A recent edition reported that it had learned “exclusively from a business insider that relevant Chinese industries are preparing evidence, as they plan to apply to competent authorities to launch an anti-dumping investigation into imports of certain pork from the EU”. (Source: China customs).

China is the world’s largest importer of pork, and as Figure 1 shows, in 2023 EU countries had a significant share of this market. Spain competes with Brazil for the top supplier slot, with Spain in second place for 2023, having been in first place the previous year. For Denmark and the Netherlands, it is a 100,000t plus market every year and France supplied almost 61,000t of pork in 2023.

Ireland completes China’s top-10 of pigmeat suppliers on 32,973t in 2023. This has fallen significantly from over 68,000t in 2021, though China’s overall imports were 3.5m tonnes that year, as there was a continued supply deficit caused by African Swine Fever (ASF).

With the UK now outside the EU trading block, it will have a separate policy in relation to EV cars, so its export of pork to China may remain unaffected, while we can expect that the US will be subject to retaliatory tariffs, as it has already announced the increase on tariffs on EV imports from China.

Opportunity for Brazil

Brazil is China’s top supplier of beef and pigmeat and while this business would continue to grow irrespective of trading relations between China and the US/EU, any further tariffs imposed by China on the US and EU will hasten the speed of this growth. In March this year, China approved an extra 24 cattle abattoirs to join the 41 already approved. As well as the extra factories approved for supplying beef, of additional eight Brazilian poultry processors and three coldstore warehouses were approved, bringing the total number to 47 – and 17 pigmeat processors are approved. At an agriculture committee meeting in Brazil last week, the agriculture minister announced that he was confident that the number of approved factories would increase further.

If China is looking to put tariffs on pigmeat supplies from the US and or EU, it will be anxious to ensure that alternative supply sources are in place. It wouldn’t be any great surprise if a significant number of Brazilian factories were approved to supply China with pigmeat in the near future.

A further dimension in the Brazil-China trade is that political relations have grown closer, as China’s relations with the EU and US have cooled. This year, Brazil will have had diplomatic relations with China for 50 years and they are each other’s largest trading partners for meat. China will also have its eye on Brazil for other manufactured products and bearing in mind that a big win for the EU in the Mercosur deal was access to the South American market for cars. That market will be equally attractive to China, especially if exports to the US and EU are made more difficult by tariffs.

Impact on Ireland

If China imposes tariffs on imports from the EU, then these will apply to Irish exports. In the case of pork, it is a substantial market, taking almost 33,000t in 2023 out of the total exports of 188,000t. Over the past decade, export volumes to China have fluctuated and are likely to continue in a similar pattern for the foreseeable future. Ireland is not approved to export sheepmeat to China and beef exports have been on a stop start basis since the original approval was secured, and quantities have remained low since resumption at the start of this year.

As is the case with pigmeat, it is an important if volatile market for Irish dairy exports, taking almost 70,000t of dairy product in 2023 out of a 1.6m tonnes total dairy exports.

In brief