United States / China
The trade war between the two global giants resumed with the return of Donald Trump to power. The United States decided to impose tariffs on Chinese goods, after which various statements were made. China has already responded by introducing additional tariffs on top of existing tariffs. As a result, American pork will be subject to punitive sanctions in China, and general duties will be applied depending on the type of pork...
In 2024, the United States was China's second largest supplier, behind only Spain, with exports of approximately 438,000 tonnes worth €921 million. The share of American products in the Chinese market reached almost 20% in terms of volume. Among the products exported to China, about two-thirds were by-products, and the rest were frozen carcasses. The increase in import duties on the Chinese market will lead to a decrease in the volume of American products and a fall in their prices.
A direct consequence will be a loss of market share for the US, which will mean the need to find new markets. In 2024, China imported 55% of US exports of by-products, significantly ahead of Mexico (27%) and the Philippines (7%). Given China's importance and the limited number of alternative markets, it is likely that the US will lose only about 30% of the offal currently exported to China. This volume is likely to be redistributed mainly between Mexico and the Philippines. The loss of US exports of by-products will amount to around 90,000 tonnes.
China accounts for only 6% of US exports of frozen carcass parts. There are many more alternative markets (Mexico, Japan, South Korea, Latin America, Canada, etc.). It is likely that China's retaliatory measures against US products will lead to a reduction in pork exports of around 75%, i.e. more than 330,000 tonnes, as exports to China will become too expensive for US slaughterhouses, reducing their profitability. In order to remain competitive with European and Brazilian prices, the unit cost of American products sold on this market will have to fall. This loss in value is estimated at over €250 million.
European and Brazilian producers could take advantage of the volumes lost by the United States on the Chinese market as a result of the tariff increases. In addition, diplomatic relations with other countries are becoming strained: China recently confirmed its intention to impose an additional 25% tariff on Canadian pork, removing Canada's ability to position itself as an alternative to US pork on this market. A temporary reduction in supply in China will lead to higher pork prices. The impact of this trade war on other sectors of the economy makes it difficult to predict the recovery of consumption or economic growth in China. Pork imports to China are likely to remain at 2024 levels. However, China has announced its intention to strengthen trade partnerships with the BRICS countries (particularly Brazil and Russia). As a result, European producers will face competition from Brazil and, to a lesser extent, Russia.
United States / East Asia
Other Asian markets are no exception. They are experiencing tariff changes depending on the country. These markets (Japan, South Korea, Singapore, the Philippines, Taiwan, Thailand, etc.) have not taken measures in response to American products due to the expected economic impact on other sectors. In practice, American pork will not be penalised by prices in these markets. However, even if East Asian markets have not raised their tariffs, they may be less inclined to buy American pork, favouring other suppliers such as the EU-27, Brazil, Canada and, to a lesser extent, Russia.
United States / European Union
The EU-27 has also not escaped the trade war launched by Donald Trump. European goods will be subject to an additional 20% tax. This will affect around 100,000 tonnes of pork and pork products, mainly semi-finished meat products and processed products. There is a hypothesis that the EU will maintain its export volumes to the US for several reasons:
- Export licences to the US are difficult to obtain and relatively expensive.
- A significant part of the products exported by the EU-27 are high value-added products, such as Italian and Polish sausages, which have few alternatives on the market due to the presence of ASF.
- These products are difficult to replace and meet specific US demand. Exporters are unlikely to want to lose their place in this market.
However, in order to remain competitive, the price per unit may fall, as may the margins of European processors. The increase in duties on pork and processed products is expected to result in margin losses of more than €115 million for European exporters, two-thirds of which will come from high value-added processed products, mainly affecting Italian exporters (20,000 tonnes of processed products in 2024), Polish exporters (8,000 tonnes) and Danish exporters (7,000 tonnes). In addition to lost margins, some of the volume may remain on the European market, increasing import pressure.
What opportunities are there for Europe and Brazil?
On the Chinese market, European and Brazilian pork products (trimmings and offal) have been the most competitive compared to North American products for the past three years. These two major producers and exporters are expected to compensate for the reduction in US volumes on this market (around 450,000 tonnes of pork and offal).
The numerous and contradictory statements made by the US president call for great caution in assessing their impact. For this reason, IFIP is considering several scenarios for the redistribution of the volumes that will become available after the US withdrawal between Brazil and the EU-27.
- Current distribution: 15% for Brazil and 50% for the EU-27, 35% for others;
- Equal distribution between exporters: 50% - 50% between Brazil and the EU-27;
- Increase for Brazil: 50% for Brazil and 30% for the EU, 20% for other countries.
The volumes in question will range from 125,000 to 225,000 tonnes for the EU and from 65,000 to 225,000 tonnes for Brazil. These volumes may be supplemented by opportunities in other East Asian markets that have not taken retaliatory measures against the US but may become less inclined to continue purchasing US pork. This will depend on trade relations between suppliers and Asian buyers, and especially on the availability of pork in producing regions. Growth prospects for Brazil in 2025 are somewhat positive (+1.2% production compared to 2024, or +54,000 tonnes in slaughter weight), while for the EU-27 they remain stable. Limited additional supply will lead to a redistribution of trade flows (a reduction in intra-European trade in order to redirect exports outside the EU) and an increase in pork prices in both markets.
On the European market, with supply stabilising, an increase in demand for pork of 125,000 tonnes will lead to an increase in annual production prices of approximately 1.1%. An increase in export demand of 225,000 tonnes would lead to an average annual increase in pork prices on the French market of approximately 2.7%. These prospects are promising for pig farmers and exporters, especially in the context of falling raw material prices. The meat processing sector may be more negatively affected by reduced market supply and expected increases in meat prices. In the case of Brazil, soybean prices are expected to rise, and Brazilian farmers may prioritise soybean production over pork production in the medium term. This could lead to a reduction in pork supply if the conflict continues.
In addition to the direct economic impact on the pork value chain, the trade war initiated by President Trump may have other significant consequences. Expected price increases for consumers in both the US and China, as well as uncertainty about the sustainability of demand, could slow global economic growth. This war marks the beginning of a global crisis. Such a context will be detrimental to international trade, producers, businesses and consumers. Although there may be short-term opportunities for growth, most countries and economic actors will ultimately suffer losses. The volatility of President Trump's statements makes these forecasts uncertain; the economic consequences will vary in scale and duration depending on the statements that are made.
PigUA.info based on materials from pig333.com