China Is A Lucrative Market For U.S. Beef Producers, But Tariffs Are Getting In The Way

Sep 13, 2019

Wrens chirp and butterflies fly between clover blossoms in a pasture in northeast Nebraska. It’s a serene scene until Dave Wright calls his cows and calves with a sharp, bellowing “Come boss!”

This is the beginning of the beef production chain. Nebraska’s a major link with 6.8 million cows (compared to its 1.9 million people), and its neighbors also lie squarely in cattle country; Kansas has 6.3 million cattle and Colorado 2.8 million. Nebraska also exports a great deal, too: $1.4 billion of the United States’ $8.33 billion yearly. 

China is seen as a market ripe for major growth in beef exports, considering it consumes more beef than any country in the world but per capita eats much less than other countries. In 2018, it exported just $61 million of American beef. But the ongoing trade dispute and other economic decisions that President Donald Trump has made is keeping U.S. ranchers and meatpackers from expanding a market they’ve only been back in since 2017. 

American beef is subject to a 47% tariff in China, which is much more than other countries. Ten percent of that went into effect on Sept. 1, in retaliation for new tariffs that President Donald Trump announced this summer. China’s first plans for retaliatory tariffs on beef were announced in April 2018.

Before they went into effect in July 2018, the U.S. Meat Export Federation, a trade group, said the tax would “stifle emerging U.S. beef exports to China.” 

Wright, however, is glad the president is taking on the Chinese. 

“All the administrations have tried to be nice. ... This guy stepping in and he says “I’m (going to) use a different form of diplomacy. He's going to use the old Teddy Roosevelt: ‘Speak softly and carry a big stick!’” 

Ear tags are used to keep track of who owns the cattle, and sometimes, the animal's origin. China has special requirements for tracking an animal through slaughter, and it prevents many U.S. ranchers from producing beef that can be exported there.
Credit Erica Hunzinger / Harvest Public Media

Wright isn’t the only one giving Trump the benefit of the doubt. Doug Korth, whose feedlot near Randolph, Nebraska, houses 4,500 cattle, said “Trump is trying to fix about four generations of screw-up in one swoop.” 

“And as tough as he is,” Korth continued, “he might get it done, but ag is paying the price in the meantime … he’s hurting the hell out of us.”

It’s not just China that beef producers are having to worry about. One the third day of Trump’s presidency, he withdrew from the Trans-Pacific Partnership, which would have led to America’s biggest beef customers in Asia lowering their tariffs. 

And in December 2018, the U.S. government shutdown meant that a majority of the staff from the Office of the United States Trade Representative couldn’t come into work at a time when the USTR was to negotiate deals with the European Union to change duty-free quotas on U.S. beef. That said, the U.S. announced in August that it had a deal to increase the amount of beef it can export to the EU, and Japan and the U.S. have a tentative deal to lower Japanese tariffs on beef to 9%.

American meat companies had been waiting a long time for the Chinese market to reopen after it was closed due to the 2003 mad cow disease scare. And in 2017, it happened. The news was so important that Dawn Caldwell, a rancher and board member of the Nebraska Cattlemen, an industry group, even remembers where she was. 

“I was walking up the sidewalk in my backyard, I got a phone call that said there's gonna be a press announcement come out shortly,” she said. “Be ready and be excited ... all those years of not being able to export beef to China were coming to an end.”

The first shipment of U.S. beef since 2003 arrived in China in June 2017. The Chinese put special restrictions on what kind of beef could be imported, and required special documentation.  It didn’t deter producers and meatpackers. 

Jordan Beeman is the president of HeartBrand Beef, a Texas company that had long been exporting gourmet beef to East Asia, mostly South Korea. In May 2018, he finally sent a container full of beef carcasses to China. 

Feeding cattle grain helps them quickly obtain a profitable slaughter weight. Industry groups say more than $300 of a fattened animal's value comes from export, as whole parts of the animal are valued more overseas than they are in the United States.
Credit Jahd Khalil / Harvest Public Media

The next month, China imposed a 25% tariff on U.S. beef. HeartBrand had to stop, Beeman said, even though “product was was well received … we weren't able to keep going forward with that.” 

The unpredictability of the trade situation is tough for ranchers, who are raising an animal that typically takes at least a year to go to slaughter. Caldwell said it’s a risk that can’t be managed for an extended period of time, especially given the flooding that happened across much of cattle country this year. 

Korth, for his part, just wants consumers to understand what beef producers go through. 

“Maybe I am pouting a little bit but it just it kind of irks a guy when, like the last couple of years, when you fight Mother Nature, you fight the economy, you fight the profitability, and people don't get it,” he said.

In Nebraska alone, the state Farm Bureau said retaliatory tariffs could cost the state $943 million dollars this year. While the organization didn’t count beef losses, it did note that export losses from beef could push that number over $1 billion. 

Jahd Khalil is a freelance reporter based in Richmond, Virginia. Follow him on Twitter: @jahdkhalil.