Source: Tom Johnston, MEATINGPLACE.COM, 4/28/10

The Chinese government's announcement today that it will impose new duties, up to 31 percent, on imports of U.S. poultry is doing little to cause worry among U.S. exporters, analysts said.

"We believe the practical effect of this new round of tariffs will be minimal," JP Morgan analyst Ken Goldman said in a note to investors. "In speaking with U.S. chicken companies this morning, they reiterated what USDA export data have suggested, that very little chicken has been going directly to China from the U.S. anyway. So, whether the tariff is 1 percent or 1000 percent is not particularly relevant at this point."

Move anticipated

Processors also expected a higher tariff to come, Goldman added.

In February China began imposing duties on imports of U.S. chicken in the form of anti-dumping duties ranging from 43 to 105 percent of value. The move followed Beijing found that U.S. chicken producers sold at below-market prices and receive subsidies for feed grains.

Importers will now have to pay the new anti-subsidy tariff in addition to the anti-dumping duties. Pilgrim's Pride Corp. product will incur a 4.9 percent anti-subsidy duty and Tyson Foods Inc. imports face an 11.2 percent duty, China's Ministry of Commerce said.

China launched its investigation in September after President Obama placed tariffs on Chinese automobile tires to protect U.S. jobs.

"The Chinese actions are likely part of the tit-for-tat trade issues between the U.S. and China that include the tariffs the U.S. is putting on Chinese pipes and tires," Stephens Inc. analyst Farha Aslam wrote in a note to investors. "We do not anticipate a significant sell-off in poultry stocks on the Chinese headlines."

Tyson shares were $19.46, down 11 cents, and Pilgrim's shares were $11.98, down 39 cents, during mid-day trading today on the New York Stock Exchange.

Product flow

China's tariffs aimed at U.S. chicken paws has have not impacted prices, Goldman noted, because "many U.S. companies, we believe, are able to ship indirectly into China via Hong Kong and other Asian nations without paying the tariff."

Aslam also said, "U.S. protein product is flowing into China via Hong Kong and Vietnam fairly smoothly."

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