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Smithfield Foods China is Adversely Affected by Trade War

Very recently, the US has imposed trade tariff on the imports of steel and Aluminium, targeting countries like China. In response, China imposed trade tariff on the US imports of goods including pork meat. There are US based businesses like the Virginia, US based,Smithfield foods Chinawhich are known to produce and export pork meat to more than 40 countries around the world. In this context, it is important to understand that the Virginia based Smithfield foods China is the world’s biggest producer of pork. Beijing’s imposition of tariff on the imports of pork meat adversely affects the business, reduces its profitability. The company was bought in 2013 by China’s WH Group. The new tariff policy by Beijing has now become a concern for the both the US and Chinese based business.

Tariffs Can Reduce WH Group’s Operating Profits Significantly

After Beijing has imposed trade restrictions on the US, the Hong Kong listed shares of the WH Group have plunged significantly. In this context, it is to mention that China is the world’s largest producer and supplier of pork. The country is an important trade market for US pork manufacturers. Online reports suggest that on an average, the WH Group has exported hog meat worth around $1.1 billion. Followers of WH Group’s stock argues that that the tariffs can reduce WH Group’s operating profits significantly.

Sino-US Trade War- Imposition of Trade Tariffs  

It is understood that the WH Group exports to about 40 countries globally. The imposition of trade restrictions, tariffs on US imports by China can lead to profit loss on the part of the company. Apart from the WH Group, there are other companies like Tyson Foods that get adversely affected by the trade tariff. Many are of the opinion that there is some kind tension between the US and the China which leads to the trade war between the two countries. The US has already put trade restrictions on the imports of steel, aluminium from other countries including China.Reports suggest that UScontemplates on announcing further tariffs for other goods citing alleged theft of US intellectual property.


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