Business Irish

Saturday 21 April 2018

Explainer: US/China trade war; what does it mean and how could it benefit Ireland?

Yang Jiechi (right), a member of the Political Bureau of CPC Central Committee and head of the General Office of the Central Committee for Foreign Affairs, speaks with Swiss Federal Councillor and Foreign Minister Ignazio Cassis during a meeting at the Zhongnanhai Leadership Compound in Beijing, China, April 3, 2018. Parker Song/Pool via Reuters
Yang Jiechi (right), a member of the Political Bureau of CPC Central Committee and head of the General Office of the Central Committee for Foreign Affairs, speaks with Swiss Federal Councillor and Foreign Minister Ignazio Cassis during a meeting at the Zhongnanhai Leadership Compound in Beijing, China, April 3, 2018. Parker Song/Pool via Reuters

Claire Fox

China has increased tariffs by up to 25pc on almost 130 US products ranging from frozen pork and wine to certain fruits and nuts.

The move is seen as escalating a dispute between the world's biggest economies in response to US duties on imports of aluminium and steel.

But just what exactly does it mean, and can Ireland benefit from the possible trade war?

Why did China increase tariffs?

China is retaliating amid escalating trade tension with the US, with the announcement coming in direct response to US duties on imports of aluminium and steel from China.

Mr Trump's tariffs are partly a response to complaints that Beijing steals or pressures foreign companies to hand over technology.

The results of the US and Chinese actions has rocked global financial markets in the past week as investors are concerned that a full-blown trade dispute between the two will damage world growth.

Will the US respond?

In a word, yes.

At some point this week, the Trump administration is expected to unveil a list of Chinese goods that could be subjected to new US tariffs.

Could this benefit Ireland?

The US and China trade war could provide opportunities for Irish pig farmers and fruit producers looking to expand into the Chinese market, according to the Irish agri-food sector.

Irish exporters said there could an opportunity to now gain ground in China.

According to Bord Bia's latest figures, Irish pig meat exports to China fell by 14pc to €93m in 2017.

But those in the agri-food sector say Ireland's exporting position could be improved in both markets due to the current trade issues.

Irish Farmers' Association (IFA) pig chairman Tom Hogan told the Irish Independent that the trade debacle could improve the competitiveness of Irish pig meat. "China has developed into a very important market for Irish pigmeat since the Russian ban," he said.

"The cost of production of US pigmeat is significantly below that in Ireland and the EU due to our welfare requirements and higher feed costs," Mr Hogan added.

"The US is a significant exporter of pigmeat to China and if tariffs on US pork improve the competitiveness of Irish pigmeat in the market, it would be positive for Irish pig farmers," he said.

Mr Hogan also said he foresees the trade war between China and the US having a positive effect on Irish pig prices.

Meanwhile, IFA horticulture chair Gerard Reilly added that the tariffs placed on US fruit imported in to China also signals potential for Irish fruit products in the Asian market.

"With Brexit, any alternative market is a good advantage to producers and farmers," he said.

Additional reporting from Bloomberg

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