TL;DR:
- Brazil and other smaller beef exporters have reached their 2024 US quota limit, necessitating a 26.4% tariff on further exports, potentially benefiting competitors like Australia and New Zealand.
- The quota was filled much earlier than in previous years, indicating a high demand for Brazilian beef in the US amidst declining domestic production.
- Despite the tariff, Brazilian beef is expected to continue entering the US market, with global economic challenges affecting the meat trade.
Brazil, along with a few other smaller beef exporting countries, has recently met its tariff-free export quota to the United States for the year 2024. This development means that for the remainder of the year, these countries, including Brazil, will face a 26.4% tariff on any additional beef exports to the US. This situation could potentially enhance the competitiveness of other beef exporters like Australia and New Zealand in the US market.
The 2024 ‘Other Country’ US beef quota was filled by 27 February, a significant advancement from the previous years, highlighting the increased demand for imported Brazilian beef in the US, where domestic beef production is declining.
Brazil, which began exporting beef to the US in 2017, had faced interruptions due to sanitary concerns but has since become a major player under the US ‘Other Countries’ quota, regularly occupying more than 90% of the Total Allowable Quantity (TRQ).
Currently, 17 countries are eligible to export fresh and frozen beef to the US under various quotas. Australia, New Zealand, Argentina, and Uruguay have their independent Tariff Rate Quotas (TRQs), with Brazil and others operating under the ‘Other Country’ TRQ. Brazil’s quota for the US market is 65,005 tonnes, significantly less than Australia’s quota of 448,214 tonnes, which is unlikely to be filled shortly.
Despite the tariff, Brazilian beef is expected to continue finding its way into the US market. Factors such as some South American exporters having plants not approved for China, combined with a less vibrant Chinese market, mean the US remains an attractive option, even with the additional tariff costs. The global economic slowdown and financial pressures are affecting the meat trade worldwide, making it challenging to sell export meat.
This situation presents an interesting dynamic for Australian beef in the US market, potentially offering an advantage due to the early filling of Brazil’s quota and the subsequent tariffs on Brazilian exports.
However, the evolving preferences of US customers and the global economic context will continue to play significant roles in the international beef trade landscape.
