Tariff Rates Reduce for Australian Beef in Japan

Tariff Rates Reduce for Australian Beef in Japan

The Japan-Australia Economic Partnership Agreement entered into force last week and provides the first round of tariff rate reductions for Australian beef. U.S. Meat Export Federation Economist Erin Borror shares more

Borror: "Australian beef will have an immediate tariff reduction on chilled product from 38.5 percent — what we all pay today — to 32.5 percent and for frozen a further decrease lower of another 2 percent initially. And the bad news about this being implemented in January is that it operates on a Japanese fiscal year, so they will get another round of cuts starting April one. That will take their tariff advantage to 10 percent for frozen product and about 8 percent for chilled product."

Borror explains this price advantage is even more pronounced due to the recent strengthening of U.S. dollar against both the Japanese yen and the Australian dollar.

Borror: "Now where we see the strong appreciate of the U.S. dollar — the Japanese yen is off 14 percent year-on-year and if we look at the Aussie dollar it is off about 10 percent. So when you add these factors it makes the U.S. beef price that much more expensive. That said, Australia has been in drought-induced elevated slaughter levels for over two years now. This is not sustainable. Cow slaughter has been up 20 percent year-on-year and the herd is at a more than two decade low. So at some point soon Australia is going to slow down on these kills and their prices are going to jump."

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