Australian farmers reap benefits in China as Beijing strikes America, Canada in trade war

Beijing’s strikes on America and Canada have created opportunities for Australian farmers, which could further widen as China targets US agricultural exporters in its trade war with Donald Trump.

Chinese President Xi Jinping and Anthony Albanese at the G20 in 2024. Picture: Getty Images

You can now listen to The Australian's articles. Give us your feedback.

You can now listen to The Australian's articles.

Australia farmers are benefiting from increasingly favourable trading terms in China that could improve further as Beijing targets US agricultural exporters to hit back at Donald Trump’s sweeping tariffs on Chinese goods.

Beijing’s simultaneous trade hits on Canada, an American ally and agricultural exporting giant, have created opportunities for a growing array of Australian goods, including beef, lobster, cotton, timber, wheat and dairy.

In a striking reversal of fortune, all Australian industries benefiting from China’s North American trade offensive – aside from dairy – were among those targeted by Beijing in the trade coercion campaign that began in 2020 and only finished in December with the return of live Australian lobsters.

American and Canadian producers, along with fellow agricultural exporters Brazil, Argentina, Chile, France, New Zealand and Russia, were the main beneficiaries as Beijing meted out punishment on Australian exports previously worth $20bn a year. This time, Australia – whose Prime Minister, Anthony Albanese, has been held up as a model for other world leaders by Chinese state media – is quietly making the most of new market opportunities.

“(Australian) exporters are rubbing their hands together,” one Australian trade official said.

Increasingly preferential access in China, the world’s second biggest economy, is a rare bit of good news for Australian exporters as they navigate the volatility of the second Trump administration. Washington on Thursday rebuffed the Albanese government’s lobbying and imposed 25 per cent tariffs on Australian steel and aluminium as part of its “no exemptions” protectionist policy that the Trump administration argues will increase domestic production.

Both the Albanese government and the opposition continue to ­advocate for free trade and for ­respect of international trade rules that they argue have benefited Australia since the economy was liberalised in the late 1980s.

Australian government officials and exporters are also quick to point out that any benefits in China right now may be outweighed by knock-on effects.

“It’s hard to find positives in trade barriers because of the impact on the global economy,” said Andrew Cox, the Singapore-based general manager for international markets at Meat & Livestock ­Australia. Ultimately, tariffs raised consumer prices, Mr Cox said, which was bad for demand. “We advocate for free and fair trade,” he said.

For now, the beef industry finds itself in an even more favourable position in China’s market where it competes with US exporters at the top end of the market. It is not a situation the industry, which counts America as its biggest overseas market, wants to draw attention to as Mr Trump threatens to impose reciprocal tariffs and more in the coming weeks.

Australian exporters already had more favourable access than their North American competition because of Australia’s free trade agreement with China which by 2024 removed all tariffs on the first 200,000 tonnes of beef imported in the Chinese market. Other beef exporters, including America and Canada, have to pay a 12 per cent tariff.

The margins for Australian producers have blown out further after Beijing added a 10 per cent tariff on American beef as part of a suite of counter tariffs imposed after the Trump administration last week ratcheted up its tariffs on Chinese goods by another 10 per cent. Beijing’s tariffs also hit ­American cotton and wheat with a 15 per cent tariff and dairy with a 10 per cent tariff. Reprising a move it used on Australia in late 2020, Chinese customs officials also separately declared they had found pests in log imports from the US and declared a suspension of the trade from America. That looks set to benefit Australian timber exporters, one of the worst hit by China’s trade punishment.

Simultaneously, China has rolled out tariffs on Canadian agricultural products in response to Ottawa’s decision last year to whack a 100 per cent tariff on Chinese electric vehicles and 25 per cent duties on Chinese-made steel and aluminium. Australia is now one of the few rich world countries which has no tariffs on Chinese made electric vehicles. China’s new tariffs include a 25 per cent tariff on Canadian lobsters, which will shrink the price gap between it and more expensive lobster from Australia and New Zealand.

“There is an opportunity for Australia,” said Fan Xubin, head of Beijing-based seafood consultancy Seabridge Marketing. However he added that the benefit would be marginal because Australian lobsters were already sold at such a premium in China.

A worker at a lobster wholesale shop in Beijing, handling a fresh lobster that arrived from Australia. Picture: Will Glasgow

Beijing’s new 100 per cent tariff on Canadian canola oil and canola meal could also raise opportunities for Australian growers, but it would require China to lift a ban on Australian canola imposed ­because of concerns about blackleg disease, a fungus.

Bendigo Bank agribusiness market analyst Rod Baker said canola growers could soon get hit by knock-on effects from the Trump administration’s threatened 25 per cent tariff on canola imports from Canada. “Unlike certain other agricultural commodities, there are substitutes for canola products, and US customers could switch to soybean-based products instead of canola oil and meal,” Mr Baker said.

Knock-on effects and cross-currents lurk everywhere as Mr Trump up-ends generations of free trade orthodoxy and spurns even longstanding allies.

China’s new 15 per cent tariff on US cotton, for example, makes Australian cotton more attractive. But America’s creeping level of tariffs on Chinese goods (up 20 per cent already since Mr Trump’s return) means exports of the finished clothes and other goods they go in will likely fall in America, the world’s biggest economy.

This week, Chinese officials summoned Walmart representatives after complaints were raised by Chinese suppliers that the American retail giant had pressured them to absorb Mr Trump’s latest 10 per cent tariffs.

Chinese media said such “shady practices” would “inevitably face consequences”.

Beijing’s proclivity for imposing tariffs on agricultural products could see China impose still more on American exports in response to further trade protection from Washington, which Mr Trump has signalled is coming.

But similarly, Australian businesses know that a trade deal between Beijing and Washington, which Mr Trump has speculated about, could also sharply hurt Australian exporters in the months and years ahead.