Coronavirus and trade in Asia
The coronavirus is affecting beef trade in Asia. That is certainly not what farmers and ranchers want to hear.
The coronavirus epidemic has forced USDA to cancel a trade mission to China that was scheduled for the coming weeks, McKinney said at the conference. But USDA intends to go when conditions are better, and hopes to make repeated visits this year, he added.
Other USDA trade missions are also planned in 2020 for North Africa, the Philippines, Spain and Portugal, the United Kingdom and Ireland, Australia and New Zealand, Peru and the United Arab Emirates, McKinney said. That’s an uptick from previous years.
While China is a looming trade partner, how Covig-19 affects other countries in the region could be a bigger issue for U.S. beef exports. As American beef’s largest export customer, what happens in Japan is important.
Unfortunately, Japan had already shot itself in the foot before the coronavirus came on the scene. Taking a page opposite our government’s tax policy, Japan implemented a consumption tax increase from 8% to 10% last October. That hammered domestic GDP.
Fourth quarter GDP was negative more than 6% compared to the prior quarter. The drop was the biggest in five years, since the last time they raised the consumption tax. Damage and disruption from a major typhoon also contributed.
Japanese consumer spending dropped over 11%. January and February are estimated at a small positive 0.5% GDP. The government passed a $120 billion stimulus package last December as part of its Keynesian effort to counter effects of the tax increase. They are hoping to limit the damage to a few tenths of GDP points.