By Alasdair Pal and Jill Gralow
MOSS VALE, Australia (Reuters) – At a cattle auction in Australia’s lush Southern Highlands, an auctioneer shouts from a gantry over the din of nearly 2,000 cows waiting to be bought.
Prospective owners in felted hats bid up prices with a nod of the head, and business is brisk, despite U.S. President Donald Trump on Thursday imposing a 10% import tariff on Australian goods and singling out the country’s beef exports for criticism.
Australian beef farmers, traders and industry groups said on Thursday they would pass on the extra costs of U.S. tariffs to the American consumer, pushing up the prices of hamburgers and steaks.
“The effect on our market here today … we haven’t seen it,” said Dhugald McDowall, of livestock agency Elders Cleary McDowall, at the Southern Regional Livestock Exchange in Moss Vale, around two hours by road from Sydney.
“It does make the commodity that’s going into America a lot dearer for their own consumers. So I think in the short term, it could be quite detrimental to the U.S. economy.”
Australia exports beef worth a record A$4 billion ($2.52 billion) annually to the United States – its largest market – while banning U.S. fresh beef products since 2003 due to the detection of bovine spongiform encephalopathy, known as mad cow disease, in U.S. cattle.
That has drawn the ire of Trump, who said on Thursday Australia “won’t take any of our beef” as he announced tariffs on the country.
PRIZED BEEF
Australian beef is prized by U.S. fast food chains for its lower fat content, which is combined with fattier U.S. beef to produce hamburgers with the ideal fat content.
Under regulations from United States Department of Agriculture, hamburgers and ground beef cannot have a fat content of more than 30%.
Garry Edwards, chair of Cattle Australia, an industry trade body, said Australian producers had seen some short-term disruption to U.S. exports in recent weeks while waiting for details on tariffs, but buyers there would ultimately be forced to pay up for Australian beef.
“They are completely reliant on our grass-fed beef and some of our high quality grain-finished beef to meet their requirements of their domestic consumers,” he said.
“I can’t imagine that the American consumer is going to like paying more for their burgers or their steaks for the foreseeable future.”
The industry’s presence in the American fast-food supply chain has been used as a negotiating tactic by the Australian government.
Australia trade minister Don Farrell said last month higher tariffs on beef could push up the price of McDonald’s hamburgers. Trump’s support of the chain featured prominently in his electoral campaign.
Livestock agent McDowall noted Australia had been given an identical tariff to export rival Brazil, the world’s largest beef exporter, as well as Argentina, which together with Australia and the United States comprise the world’s four largest beef exporters.
“So we’re all at 10%, it really doesn’t change anything,” he said.
Australia Prime Minister Anthony Albanese said on Thursday the government would provide support to industries impacted by the U.S. tariffs to sell into alternative markets.
“America’s not the only market,” said James Fitzpatrick, a cattle farmer at the auction.
“There’s a worldwide market out there.”
($1 = 1.5860 Australian dollars)
(Reporting by Alasdair Pal, Jill Gralow and James Redmayne in Moss Vale and Cordelia Hsu in Sydney; editing by Barbara Lewis)
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