EFFECTS OF CHINA'S ANTIDUMPING TARIFFS ON U.S–CHINA BILATERAL POULTRY TRADE

Summary

In recent years, the United States has taken the lion's share of the Chinese broiler meat import market. Under the threat of rising poultry imports from the United States, Chinese producers, reportedly, asked for an investigation into chicken prices, accusing U.S. poultry firms of dumping. The investigation led to antidumping duties on U.S. chicken imports. This study is designed to evaluate U.S.-China poultry bilateral trade relations under the new tariff using an excess-supply-excess-demand model. The analysis focuses on chicken wings and legs. Monthly data for 2005 to 2009 are used in the analysis and reflect recent events.

Situation

China began imposing antidumping duties ranging from 43.1% to 105.4% on U.S. chicken imports in February 2010, accusing U.S. poultry firms of exporting at unfairly low prices. China began an investigation of U.S. chicken imports in September 2009, two weeks after the Obama administration announced tariffs of up to 35% on tire imports from China. This apparent counter measure is an indication of a new round of trade conflicts, possibly leading to a deepening trade rift.

Response

This study seeks to estimate the impacts of the new Chinese tariffs on poultry exports from the U.S. to mainland China and Hong Kong. For our analysis we combine the China and Hong Kong markets because Hong Kong is a major transshipment port for poultry imports into China. Hong Kong re-exports of broiler meat into China accounted for nearly 25% of total Chinese broiler imports in 2008.

Impact

Tariffs create a wedge between seller and buyer prices with the buyer price exceeding the seller price by the amount of the unit tariff. The distribution of the tax between the higher buyer price and lower seller price depends on characteristics of both the seller's (US exporters) and buyer's (Chinese consumers) markets. Within the framework of an international trade model it is possible to estimate excess supply and excess demand price elasticities for these markets, and these can be used to estimate the distribution of the tariff. In the U.S.-China poultry dispute, the Chinese consumers are predicted to bear approximately 40% of the tariff on U.S. chicken wings and almost 80% on U.S. chicken legs. Attempts to estimate the needed elasticities for feet exports were unsuccessful but with the lack of alternative markets for feet, and the joint nature of production for chicken parts, the tariff on feet will likely be almost completely reflected in lower US producer prices while consumer prices in China are little affected.

State Issue

Agricultural Profitability and Sustainability

Details

• Year: 2011
• Geographic Scope: International
• County: Clarke
• Program Areas:
  • Agriculture & Natural Resources