Australian beef has surged in popularity in China, effectively replacing U.S. supply since the recent political shifts in the U.S. With President Donald Trump back in the White House, Australia has reaped substantial financial benefits, receiving hundreds of millions of dollars that in past years supported the U.S. cattle industry. U.S. beef shipments to China, previously valued at approximately $120 million monthly, have plummeted since March. This decline follows Beijing’s decision to let permits for numerous American meat facilities expire, coupled with the intensification of a tit-for-tat tariff war initiated by Trump.
The effects extend beyond beef; other U.S. agricultural exports to China, the world’s largest food importer, have also faced significant declines. Especially hard hit have been U.S. soybean farmers, who have lost billions in potential sales during the current harvest season.
Historically, the U.S. beef market has contracted due to severe droughts that have reduced the cattle herd, diminishing production capabilities and driving prices to record highs. However, the downturn in trade with China has been particularly drastic. In July, U.S. beef exports to China were valued at merely $8.1 million, escalating to $9.5 million in August, compared to $118 million and $125 million during the same months a year earlier.
In stark contrast, Australian beef exports to China have flourished. Monthly shipments surged from $140 million in previous years to $221 million in July and $226 million in August this year. In total, between April and August, U.S. beef exports to China were valued at $388 million lower than if trade had remained consistent with averages from the last two years, while Australia benefited by $313 million.
Brazil, as the primary beef supplier to China, has also increased exports, but Australia has gained the most due to its grain-fed beef being closely comparable to U.S. products. Analysts have noted that the increased demand has led to exceptionally strong prices for Australian cattle.
While trade negotiations are ongoing between Beijing and Washington, hopes remain that the impasse concerning U.S. beef could soon end. However, experts point out that this issue is deeply woven into broader U.S.-China relations. If progress can be achieved on various fronts, there might be optimism for a resolution.
U.S. beef exports saw a bright spot in 2020 and 2021, following a trade agreement struck by Trump during his first term. Exporting to China offers lucrative opportunities for U.S. beef processors, particularly for less popular cuts that garner higher prices in the Chinese market.
Despite the potential for improved relations and a trade agreement, analysts predict that reclaiming market share in China will still take several years. Meanwhile, Australia’s beef production is currently at record highs, and its pricing could deter U.S. competition in the near future. Additionally, an ongoing investigation by Beijing into beef imports may impose trade restrictions to address an excess supply within China, further complicating the landscape for global beef suppliers. The investigation is expected to continue until November 26.
