A new report funded by AgriFutures Australia reveals how Australian agricultural exports may be impacted by recent trade tensions between the US and China.
The analysis by consultancy firm ITS Global indicate that the unilateral renegotiation of trade deals by the Trump Administration is undermining the rules-based global trading system.
AgriFutures Australia managing director John Harvey summarised the report’s take home message as “trade wars breed uncertainty. Uncertainty is bad for business and leaves agricultural producers, traders and buyers struggling to manage a shifting policy landscape.”
This is especially problematic for a medium sized economy such as Australia, which benefits greatly from a predictable international trade regime.
However, the report identified both risks and opportunities for the Australian agricultural sector, although the extent of potential impacts are difficult to predict.
For example, as pointed out by AgriFutures Australia Senior Manager Jen Medway, Australia’s dairy industry could potentially benefit on the back of China placing additional tariffs on US dairy products, but Australia’s presence in Japan may come under pressure due to a prospective US-Japan free trade agreement.
An impending free trade deal between Japan and the US may also pose risks to the Australia’s fresh, chilled and frozen beef exports, as the US aims to expand its export reach of beef products into Japan. Also, in the wake of trade talks Brazil may expand its exports to the US at the expense of Australia.
Other industries are likely to benefit from changes in global trade policies, such as Wheat and Horticulture.
But the report concludes that while potentially Australian agriculture could see some short term opportunities to capitalise on the situation, it is likely to have longer term negative impacts as US trade is diverted and global trading conditions become less predictable.