Recently China has imposed tariffs onUS imports ofChinese products including Chinese pork. This indeed is a blow to many US pork food manufacturing companies including Virginia based Smith field foods China. The company is a leading producer of pork. The US based Smith field foods China was purchased by China’s WH group for around $5 billion. At that time it was one of the biggest takeovers of a US company by a foreign business. Post the new tariff regime WH Group seems concerned about the business profitability. The Hong Kong listed shares of WH Group have dropped significantly (more than 11%) since Beijing imposed sanctions onUS imports of pork as well astariff restrictions on other US imports.
Chinese Imposition of Tariffs on Pork Imports from US Affects US Companies
China is the largest producer of pork and this makes the country a valuable market for the US pork processors and producers. Annually the country used to import half a million tons of hog meat. Undoubtedly, the country is the biggest supplier of pork to the US. Predictions are such that Chinese imposition of tariff on US imports of pork meat could reduce the WH Group’s Smithfield Foods China’s profit significantly. Though the company exports pork to about 40 countries, however, US is an important buyer of the product from the company, therefore, Beijing’s stance on the imports of the product can adversely affect the business of the company.
Trade War between China and the US
Not just WH Group, there are other US producers of pork who can get adversely affected by the tariffs and they include Tyson Foods. It is understood that there exist tensions between the US and the China. A further escalation of tension can worsen things for US pork manufacturers and suppliers. Many believe that such move on the part of China happened because of US’s increase of tariffs on the imports of aluminium and steel by China and other countries. It is learnt that the US is planning to hike the tariffs (around $ 50 billion) on Chinese goods following alleged theft of US intellectual property.