Academic journal article Current Politics and Economics of Northern and Western Asia

China's Retaliatory Tariffs on Selected U.S. Agricultural Products *

Academic journal article Current Politics and Economics of Northern and Western Asia

China's Retaliatory Tariffs on Selected U.S. Agricultural Products *

Article excerpt

On April 2, 2018, the Chinese government implemented retaliatory tariffs on 128 product lines, including 93 U.S. agricultural products, in response to recent U.S. Section 232 tariff actions on certain imports of steel and aluminum products. China is the second largest market for U.S. agricultural exports by value, worth about $19.6 billion in 2017, according to the U.S. Department of Agriculture (USDA). China estimates the targeted U.S. imports are worth roughly $3 billion across all product categories, of which about two-thirds of the value is agricultural products.

China imposed an additional 25% tariff on U.S. pork products and an additional 15% tariff on certain varieties of U.S. fresh and dried fruit, nuts, wine, and ginseng, according to an unofficial translation of the list issued by the USDA Foreign Agricultural Service (FAS). Generally, U.S. exports to China are subject to the same import tariffs-known as most favored nation (MFN) tariffs-as other World Trade Organization member countries. Countries that have a free trade agreement with China may be subject to lower import tariffs. The retaliatory tariffs on U.S. agricultural products are in addition to the MFN rate, which for these items ranges from 7% to 30%.

U.S. farmers express concern that China's retaliatory tariffs could put them at a disadvantage compared with export competitors. Agriculture groups warn that the imposition of higher tariffs could curb sales to this key export market for U.S. farmers at a time of growing uncertainty about the continuity of other U.S. trading relationships. Additional tariffs could be imposed by China against the United States if commercial disputes escalate further.

U.S. PORK EXPORTS TO CHINA

China was the fifth largest export market by value for U.S. pork and the second largest export market by value for frozen U.S. pork offal in 2017. According to USDA data, which does not include transshipments from Hong Kong to China, the United States exported about $237 million worth of pork meat directly to China in 2017. Of that amount, about $166 million was frozen pork and $69 million was frozen bone-in ham and shoulder cuts. U.S. exports of frozen pork offal to China were valued at roughly $251 million in 2017. Almost a third of all U.S. frozen pork offal exports went to China in 2017.

As of April 2, 2018, the tariff to be applied on these pork products increased from 12% to 37%. According to analysis from Purdue University, these increased tariffs on U.S. pork exports to China could result in lost exports. U.S. pork producers could also see prices fall by as much as $7 per hog due to the new tariffs, according to the Purdue analysis. Table 1 shows the tariff increases for the top U.S. pork, fruit, nut, wine, and ginseng exports to China by value.

The U.S. Meat Export Federation (USMEF) estimates that U.S. pork product exports to China in 2017 were higher than the USDA data show, exceeding $1 billion. The discrepancy with USDA data reflects the inclusion by USMEF of exports to Hong Kong, which transships a significant volume of U. …

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