The latest developments in the U.S.-China trade relationship are set to pose new challenges for Australian food and agriculture exports. President Donald Trump has escalated tariffs on Chinese imports from 54 percent to 145 percent, intensifying an ongoing trade conflict. In a retaliatory move, China has raised tariffs on U.S. agricultural goods from 34 percent to 84 percent.
Michael Whitehead, Executive Director of Food, Beverage, and Agribusiness Insights at ANZ, predicts these changes could have significant effects on Australian food and agribusiness companies. While consumers in Australia may initially remain unaffected, these shifts in trade patterns could introduce opportunities as well as increased competition and pricing pressures.
According to Whitehead, "These moves are forcing rapid shifts in global trade patterns – and while they present opportunities for Australia in some markets, they’ll also bring increased competition and pricing pressure elsewhere."
Chinese consumers might encounter lower prices for certain food products if Australian imports continue to flow into their market at current levels. Conversely, new Chinese tariffs targeting U.S. exports like soybeans, pork, and cotton could make these products less competitive globally.
Australia might see increased demand for beef, sorghum, cotton, and niche processed goods in China, benefiting from the tariff-free status provided by the China-Australia Free Trade Agreement. However, as the U.S. redirects its surplus to markets such as Japan and Southeast Asia, Australian exporters could face challenges due to increased competition and pricing pressures, particularly in oilseeds, grains, pork, and cotton.
Whitehead emphasizes the potential for increased supply chain strain, saying, "With the Australian dollar weakening and fertiliser prices rising, margin management will be critical."
In the U.S., the raised tariffs on Chinese foods and agricultural goods could lead to higher prices for foods, particularly pork, seafood, and processed items. Chinese consumers may also experience higher costs for soy-based and U.S. cotton products. On the other hand, Australian beef and dairy exports could see increased demand in China while current tariffs are in place.
Whitehead concludes, "Trade policy can change fast – and this isn’t just about farms and freight. It’s about how Australia competes in a reshuffled global market."