Washington and Beijing newspapers are ablaze with warnings that Trump’s ‘America First’ tariffs could ignite a trade war. To assess the effects on the meat industry we spoke to Dr Filippaios, University of Kent, and asked him to explain how the rising tensions could entangle two-way meat trade.
Why are we talking about a trade war between China the US?
“After the US administration decided in favour of introducing trade barriers on imports of washing machines and solar panels, China and South Korea said they would resolve the issue through the mechanisms of the World Trade Organization (WTO). However, it is still not certain that they might not decide to impose trade barriers on products originating from the US. This could lead to a domino effect, with bilateral attempts to retaliate.”
What history do the US and China have when it comes to trade spats?
“In recent history China has raised 10 WTO disputes against the US, including one specifically on imports of poultry meat from China. The US has directly raised 21 disputes against China, including ones on agricultural animal products.
“While the WTO offers a framework for countries to resolve disputes, it is a complex process involving multiple parties with outcomes that are not always enforceable.”
Who benefits most from meat trade – the US or China?
“The US is running a deficit close to US$4bn and China is one of the key export markets for the US, attracting almost 6% of US exports annually, with a growth rate of around 50% since 2011. China is exporting meat products to the US, but at the same time is importing livestock. This livestock is processed and the meat is exported back to the US.”
So who would be worse off in a trade war?
“There is significant probability that both parties would be much worse off during a trade war. A trade war – via bilateral barriers like tariffs, quotas and other administrative mechanisms – would make meat more expensive for US consumers and hurt the profitability of Chinese companies.
“The meat and livestock industries are a very clear example of how international trade barriers based on political arguments are not always supported by an economic rationale.”