Singapore: China struck back at US import tariffs with its own set of reciprocal ones targeting, among other products, pork.
The world’s biggest pork producer, consumer and importer is planning a 25% tax on US pork imports, the Ministry of Commerce said in a statement on Friday. The tariffs would be in addition to current duties.
China’s retaliation came just hours after US President Donald Trump ordered tariffs on a range of products from aerospace to machinery. Agricultural commodities could be a feature of any ongoing tit-for-tat trade war. China is already investigating sorghum imports from the US and people familiar with the matter said last month that the country was studying the impact of restrictions on US soybeans, used to feed the Asian country’s more than 400 million pigs.
“China is showing its capacity to fight back," said Monica Tu, an analyst at Shanghai JC Intelligence Co. The measures aren’t expected to “impact fundamentals a lot," she said, as imports from the US only account for about 14% of China’s purchases.
Still, China and Hong Kong combined is the second-biggest market for US pork, according to the US Meat Export Federation. Analysts at Vertical Group said this week that US pork was an “easy target" for China, citing a decline in its domestic pork and hog prices.
WH Group Ltd., the world’s largest pork company, tumbled 8%. The company acquired US pork and hog producer Smithfield Foods Inc. in 2013. Shares of Muyuan Foodstuff Co., the country’s third-biggest pig breeder, rose 3.1%. Guangdong Wens Foodstuffs Group Co., the largest pig breeder, advanced 3.2%. New Hope Liuhe Co., China’s top animal-feed producer, added 2.8%. Jiangxi Zhengbang Technology Co., a feed producer, increased 3.9%.
Soybean meal on Dalian Commodity Exchange climbed as much as 4.3% to ¥3,128 ($494) a metric ton. Chinese soybean futures rose as much as 1.8%.
The surge in soybean meal futures reflects concerns that an expansion in tariffs could impact the supply of US soybeans to China, according to Tu.
A consolidation of China’s pig industry has seen small farms shut due to environmental concerns, while large-scale operations are expanding. The country’s pork imports are forecast to decline in 2018 as an increase in domestic production reduces the need to buy meat from overseas, according to the US Department of Agriculture. Bloomberg