Brazilian beef may struggle to find a home in the US, following the imposition of an additional 50pc punitive tariff by Donald Trump from 1 August

IN the latest salvo in the ongoing Trump tariff campaign, the United States President has overnight announced that the US will impose a 50 percent tariff on all Brazilian imported goods – including much-needed beef supplies.

If it indeed goes ahead, the new tariff on Brazilian imports will take effect in a little over a fortnight’s time, from 1 August, with President Trump framing the move as a response to what he described as a “politically-motivated witch hunt” against former Brazilian president Jair Bolsonaro, who faces charges related to an alleged coup attempt.

Another gaping hole in US meat supply

An extra 50pc tariff on Brazilian beef would add another gaping hole in US beef supply the the back half of this year. There have been no reports yet out of the US over

The tariff war with Brazil has big implications for Australian exports, with our beef shipment volume into the US this year already looking like topping 400,000t – among the highest volumes ever recorded.

While US domestic beef production is down dramatically this year due to drought impact on the national herd – now at its lowest level since the 1950s – it has become increasingly reliant on imported product out of Australia, Brazil, New Zealand and other suppliers.

The US is now Brazil’s second largest beef export destination, after China.

Calendar year to date, the US has imported 165,000 tonnes of Brazilian beef, up 85 percent on the same six-month period last year. In comparison, US imports from Australia so far this year are at 210,00t, up 32pc on last year.

Brazil is now the second largest imported beef supplier to the US after Australia – considerably larger than Canada, Mexico or New Zealand.

The impost of an additional 50pc tariff on imported Brazilian beef – on top of existing tariffs of 26.4pc under the MFN ‘Other Country’ quota within which Brazil operates – would take the tariff total to a colossal 76.4pc.

Effectively, that would mean a US importer from August would pay $13.50/kg (including additional tariff) for a box of Brazilian lean trimmings currently bought at around A$9/kg.

Trade sources close to the US imported beef market say pricing at that level of tariff would make Brazilian beef ‘largely uncompetitive’ in the US market – almost regardless of the current US domestic supply situation. One contact said the likely outcome would be more even Brazilian beef directed into China – especially as there are still close to 400 US beef packing plants awaiting renewal of their China licenses, meaning US beef into China has slowed dramatically.

“If Brazil doesn’t find a way out of this by 1 August, its beef exports to the US will effectively halt,” another trade source said.

In a brief overnight advice, the US Meat Export Federation said the higher tariff – if it takes effect – will likely result in larger shipments of Brazilian beef to markets other than the US.

Because the threatened tariff is borne by the importer – not the exporter – the returns to Brazilian beef processors would not change, unless the US importer is able to negotiate a portion of the rise in the landed cost in pricing.

Brazil threatens retaliation

The Brazilian government has already threatened equal retaliatory tariffs if the US goes ahead, calling the move an abuse of the country’s sovereignty.

In a post on social media, Brazilian President Luiz Inácio Lula da Silva said that Brazil was “a sovereign country with independent institutions, and will not accept any tutelage.”

Trump warned that the 50pc tariff on Brazilian products was “far less than what is needed to have the level playing field we must have,” and suggested that additional economic measures could follow if Brazil retaliates.

In a letter to the Brazilian President, Trump stated the tariffs were imposed “due in part to Brazil’s insidious attacks on free elections, and the fundamental free speech rights of Americans.”

He also cited vague economic reasons for the tariffs, such as “unfair trading practices,” and ordered US officials to open a trade investigation into Brazil.

President Trump incorrectly said that the US had a trade deficit with Brazil. Last year, the US had a US$7.4 billion trade surplus with Brazil on trade worth US$92 billion. He also criticised Brazil’s judiciary, accusing it of undermining democratic institutions.

Other than beef, the US imports large volumes of gas petroleum, iron and coffee from Brazil.

Japan, South Korea and Sri Lanka are among 21 other nations which received letters this week warning of higher US tariffs from August. None were close to the 50pc imposed on Brazil, however.

Trump Media, which operates the US president’s Truth Social platform and is majority-owned by him, is among the US tech companies fighting Brazilian court rulings over orders suspending social media accounts.

The Brazilian President justifying the rulings with the retort: “Brazilian society rejects hateful content, racism, child pornography, scams, fraud, and speeches against human rights and democratic freedom.”