A Rabobank analysis says the proposed Chinese tariff on United States pork imports could cost American producers $6 to $8 per head.
The Rabobank Pork Quarterly Q2 report says the China-U.S. tension exemplifies what could be a challenging year ahead for the pork industry in 2018. African swine fever in Europe could be another challenge in the global pork trade.
The report says agility will be key in navigating what could be an uncertain global market. The wildcard is whether or not China opts to crack down on U.S. pork exports shipped via Hong Kong.
January U.S. pork shipments grew five-percent year on year, but U.S. pork exports are slowing due to the uncertainty over Chinese tariffs. The report says South Korea, the third-largest U.S. export market, might be a bright spot.
Renegotiation of the KORUS trade pact should spur demand into Korea, as well as neighboring Asian countries. Rabobank says the most critical piece of the puzzle is successfully renegotiating the North American Free Trade Agreement (NAFTA), as 40% of all U.S. pork exports go to Mexico and Canada.