China’s weekend decision to raise tariff concessions on more than 120 goods exported by the US, including wine, pork and other agricultural imports, and put additional tariffs on another eight products, is likely to have mixed outcomes for Australian farmers in the short-term.
In 2016, the US exported $21.6 billion of agricultural products to China – the largest being soybeans, coarse grains, hides and skins, pork and cotton.
New headline tariff increases on US exports include wine, fresh and dried fruits, nuts, apples, cherries, pears, berries, citrus, almonds and macadamias.
This could well result in a boost in trade opportunities for Australian horticulture and wine exporters, as Australia sits alongside South Africa and Chile as one of the US’s major competitors in the China market.
While the story is relatively straightforward for Australian products which already have market access to China, such as citrus, wine and grapes, the situation may also bode well for commodities struggling to achieve Chinese market access such as avocados, pears and apples.
Increased tariffs will lead to higher prices for US goods and may push China to seek alternative sources of supply, perhaps at a faster pace than previously demonstrated.
However, there would be various hurdles to overcome before shipments of Australian product would become a reality, such as local food safety regulations and producers’ abilities to supply large volumes.
Alternatively, China could choose to secure local supply and control retail prices.
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