The US tariff war against Brazil takes its toll on China
In a move that was foreseeable, President Donald Trump’s announcement last week to raise tariffs by 50% on all Brazilian products from Aug 1st has impacted price dynamics in China, the world’s largest beef importer. With Brazil virtually out of the US market (if Trumps’ announcement is confirmed) Chinese importers took advantage of the situation this week to submit lower bids to close deals with their main supplier. Brazilian industry sources acknowledged that prices may drop by US$/t 100-200 this week. In fact, for the mix of round cuts, which was around US$/t 6,600 CFR, import offers were now coming in at US$/t 6,300. “It’s more profitable to supply Chile or the domestic market,” the source explained.
Meanwhile, a Chinese market agent reported a drop of about US$/t 150 for forequarter 8 cuts from Brazil. Last week this product was trading around US$/t 6,000. However, for now, these are just purchase intentions from Chinese importers, and a broader wave of deals at lower prices has not yet materialized.
In Uruguay, despite continued complaints about the “high prices” asked by the industry, deals were closed at US$/t 6,200 for shin & shank, US$/t 4,300 for navel plate and brisket bone-in, and US$/t 5,700 for chuck & blade, a broker reported.
In Argentina, a regional trader reported cow sales in 6 cuts at US$/t 5,600 CFR and 80 VL trimming at US$/t 4,100-4,200. Another intermediary reported feedlot cut deals such as oyster blade at US$/t 7,900 CFR, chuck at US$/t 6,300, intercostals at US$/t 8,500, boneless navel plate at US$/t 5,500, and boneless brisket at US$/t 4,800.
An Australian market operator commented that by mid-August, Australia is expected to fulfill its duty-free quota with China (208,300 tons) for 2025, after which it will start paying 12% tariffs. Last year, the quota was exhausted in November, but shipments continued and the surplus was counted toward the 2025 quota. “That also explains why the quota will run out much earlier this year,” he noted. The volume Australia effectively had to enter duty-free this year was about 191,000 tons. In theory, this should push Chinese purchase prices higher in South America. “It seems that, for now, this is not happening,” he added.
According to the weekly survey by OIG+X, the beef market stabilized overall, with some fluctuations of around US$/t 100 per cut. “Commercial activity remained limited, and importers showed persistently weak buying interest. This was mainly due to the lack of improvement in domestic demand in China and the persistent inversion between spot and future prices,” OIG+X indicated. In addition, the increase in US tariffs on Brazilian products has further heightened uncertainty in the global market.