China’s fine diners switch from American to Aussie beef
As president donald trump has a habit of pointing out, China sells a lot more to America than the other way round. It ran a trade surplus of nearly $300bn last year. The gigantic 145% levy Mr Trump has slapped on most Chinese goods in response is clearly hurting Chinese exporters. But importers are being affected, too. Last year China bought $145bn-worth of stuff from America. And after China’s own tit-for-tat tariff rises, these goods are now subject to a 125% levy when they enter the country—enough to make many American goods unaffordable.
How big a problem this is depends on whether China can find replacements. For simple goods, which are easy to produce, that should be straightforward. But finding alternative sources for more complex, hard-to-make goods is a bigger challenge. Though the bulk of China’s imports from America are fairly simple, it still buys a few very complex goods from the United States (see chart). It is these that may be giving policymakers in Beijing a headache.

China’s biggest imports from America are agricultural commodities, which are fairly easy to replace. “A bean is a bean is a bean,” notes Even Pay, of Trivium China, a consultancy. The most important bean in question is the soyabean, which feeds China’s vast pig herd. In 2017, at the start of Mr Trump’s first term, some 40% of China’s soyabean imports came from America. Now only 18% do, thanks to Chinese moves to buy more beans from other countries such as Brazil. Chinese domestic soyabean production will probably pick up this year, too, says Ms Pay.
China can drop other American commodities even more easily. In March the country bought no American wheat or liquefied natural gas (last year America provided 17% and 5%, respectively, of Chinese imports of those goods). Western-style restaurants in Beijing are already switching to Australian beef.
But more complex American goods are harder to switch. One example is pharmaceuticals. Although China manufactures lots of generic drugs for the American market, the trade in high-end products often goes the other way. Tariffs have got Chinese hospitals worried. Some American-made cancer treatments, for instance, will be very hard to replace, once stocks run out, says a hospital administrator in Beijing. American factories also supply China with treatments for conditions such as haemophilia. Over 40% of China’s imports of albumin, a protein extracted from human blood which is used to make medicines, come from America.
China’s aerospace industry relies heavily on American planes and parts. In mid-April at least two jets made by Boeing, intended for use by Chinese airlines, were flown back to America. With an original price tag of $55m each, the tariff had made them unaffordable. About half of China’s total passenger-jet fleet is made by Boeing; maintaining the planes will be hard without access to new parts, says Rob Morris, of Cirium, a consultancy. Production of the c919, China’s home-grown passenger aircraft, may also be affected, as crucial components, including its engines, are made using American parts.
These pressures may force China to quietly exempt certain goods from tariffs, as it did during Mr Trump’s first term. America has already made the first move. On April 12th Mr Trump said he would not levy the highest level of tariffs on Chinese-made computers and smartphones (for which there are few alternatives for American consumers). That may give China an excuse to carve out its own exceptions without looking weak—a simple solution for a complex problem.■
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