There’s been a distinct shift in opinion over the last seven days about the likelihood of tariffs being applied on Australian beef exports to the United States in the next round of tariff moves starting 2 April.

A week ago, analysts and trade sources mostly felt a tariff imposition on Australian beef was unlikely, based on the current US domestic beef supply predicament, but that appears to have changed.

Outside of the tariffs themselves, the unpredictability of President Trump’s policies is an additional challenge to exporters in Australia and worldwide. Trump’s on-again, off-again trade measures have fuelled uncertainty that make it harder for export-oriented sectors like beef and lamb (see yesterday’s report).

Analyst Matt Dalgleish, who is speaking to a producer audience in Bendigo this afternoon on tariffs and other matters, says he is one who has shifted from the ‘unlikely’ to ‘likely’ camp on tariffs over the past week or so.

“A tariff level of 2-10pc would likely have little real impact, but anything 15pc or higher on beef would start to make a real impression on trade,” he said.

Elders analyst Richard Koch said lamb would arguably be in an even more precarious position than beef under an added tariff burden into the US, due to higher demand elasticity and (relative to beef) lack of alternative export markets.

“For that reason its likely any tariff impact in lamb would be borne more by the exporter,” he said.

One lamb exporter suggested a sizeable tariff on lamb into the US next month could knock $2/kg off Australian lamb values overnight. The US last year took more than 85,000t of Australian lamb, or about 24pc of total export trade.

Back on 4 March Trump flagged tariffs on all agricultural imports entering the US.

StoneX’s analyst Ripley Atkinson this afternoon suggested, without qualification, that “the US is going to place some kind of tariff on Australian red meat exported into the US, including beef, lamb, mutton and goat.”

“At present, in a very fluid environment, VAT/GST looks likely be added to the tariff rate itself which places Australia’s rate at 12-18pc. If VAT/GST isn’t included, 2-8pc is the rate industry is expecting,” he said.

“Its important to recognise and acknowledge that this situation is coming at us, but the outcomes of impacts on livestock pricing remain to be seen. My gut feel is that the higher the rate, the bigger affect it will have on livestock prices.”

Markets weren’t yet pricing-in the implications of tariffs on livestock cash prices,” Mr Atkinson said. “It’s just the supply and demand dynamic dictating terms at present – but this could change as quickly as next week, when the market begins to work out that tariffs are coming.”

The depth of the livestock pricing affect would depend on how the rate is distributed across the supply chain and whether this is an even spread, or one sector more than the other absorbs it.

“Discussions have indicated the US market intends to try to push it back down the supply chain to shield consumers, which in effect means there’ll be pressure on livestock prices,” Mr Atkinson said.

“There is a lot of uncertainty in the market at present and markets don’t like uncertainty, this comment is more directed at the processor/exporter end.”

He said the industry was yet to see how the livestock markets react to this impending tariff situation.

“Another point that is worth referencing is what tariff is imposed on Brazil for its beef exports, and if this will be on top of the 26.4pc Brazil is already paying for out of quota exports to the US.”

“The tariff rate on Brazil will be important as it will determine how competitive Australia can be in trim exports to the US relative to Brazil. My feeling is the tariff imposed on Brazil will be on top of the out-of-quota rate they’re charged already.”

2-8pc tariff looks likely

The Australian Financial Review published an item yesterday speculating about tariff impact on Australia, quoting US Studies Centre senior economics advisor Dr John Kunkel.

It suggests Australia faces a potential tariff of between 2pc and 8pc on the $30 billion of exports sold annually to the US, including headline items like beef and pharmaceuticals, if the Albanese government fails to win an exemption from the next round of tariffs.

The relatively low tariff – compared to rates of 25pc to 100pc the US has threatened on China, Canada, Mexico and Europe on select goods – is the estimate of trade experts and government sources, based on preliminary talks with the Trump administration and public statements by US officials.

By April 2, President Trump is expected to reveal the next steps for imposing tariffs on each of the US’s 200 foreign trade partners, in retaliation to hurdles faced by US exporters. Rates are expected to vary, depending on the size and breadth of each country’s tariffs and other regulations imposed on US businesses.

More extreme US beef lobby groups like R-Calf have been active in their support for tariff protection for US beef in recent weeks.

Under the 20-year old Australia-United States Free Trade Agreement, Australia does not impose any tariffs on the US, but the Trump administration is analysing the cost to American exporters of non-tariff barriers, government sources and trade analysts said.

Some see lack of access since 2003 for US beef to the Australian market as a form of non-tariff barrier. Australia continues to insist that any access decision must be along scientific lines, and must include equivalence with Australia’s own whole-of-life livestock traceability system.

The US Trade Representative body is about to update its annual report listing hurdles faced by American exporters. The 300 page report is expected to form the basis for reciprocal tariffs to be applied from early next month, on a country-by-country basis, the AFR reported.

Australia came in for criticism in last year’s report for strict biosecurity restrictions blocking the sale of American beef, apples, pears, pork and poultry. Some of the concerns trace back to the early 2000s.

John Kunkel, a senior economics adviser at Sydney University’s US Studies Centre and former chief of staff to prime minister Scott Morrison, told AFR that any additional tariff the US threatened to impose on Australia would depend on how aggressively the Trump administration was in negotiations.

“They are putting the fine tooth comb over everything with a view to coming up with a reciprocal tariff,” Kunkel told AFR.

“If they add in all the non-tariff grievances the USTR has had for the past 20 years like biosecurity and the PBS, the equivalent could be a 3pc tariff. But they could add in other things and take it higher.”

Yale University has modelled a scenario where the US matched other countries’ tariff and value-added tax (VAT/GST) rates, as threatened in an executive order by Trump last month.

In this extreme scenario, there is a 13-percentage-point lift in the US effective tariff rate on average against all countries, raising it to the highest level since 1937.

Australian exporters would face an effective tariff rate of 8pc, according to the university’s modelling. But this counted the goods and services tax imposed on imports from overseas as a trade barrier, a radical threat that trade officials and tax experts warned would be extreme and unwarranted, AFR reported.

Excluding the GST, government sources and analysts estimate any threatened reciprocal tariff for non-tariff barriers could be as low as 2-3pc on trade flows to the US.

• Independent analyst Simon Quilty discusses US tariff issues in a Weekly Grill podcast episode being published tomorrow