US president Donald Trump removed baseline tariffs on Australian and New Zealand beef on 14 November, returning their tariffs to pre-April levels.
The executive order published on 14 November but effective for "goods entered for consumption, or withdrawn from warehouse for consumption" after 12:01am ET on 13 November also reduces tariffs on beef from other major exporters, including Argentina, Uruguay and Brazil.
The baseline tariffs introduced on 2 April squeezed margins for US importers and Australian and New Zealand exporters, who were already facing volatile trade conditions and shifting consumer demand.
The tariff changes reflect the need to import agricultural products the US cannot produce in sufficient quantities, the White House said. The US cattle herd fell to a 50-year low in July due to drought conditions, according to the USDA, and the ongoing border closure with Mexico is curbing the supply of feeder cattle.
Australia, Argentina and Uruguay's 10pc baseline beef tariffs were removed, along with New Zealand's 15pc baseline tariff, but Brazil's 50pc tariff was cut to 40pc for beef and other agricultural products, not including its 26.4pc out-of-quota tariff rate triggered in January.
The steep effective tariff rate on Brazilian beef has made it uncompetitive for US importers, driving stronger demand and bids for Australian and New Zealand products.
Australian beef exports to the US remained strong despite the 10pc tariff. The country's beef exports to the US climbed by 17pc on the year to 1.27mn t in January-October, data from Australia's Department of Agriculture, Forestry and Fisheries (DAFF) show. Meanwhile, exports of Brazilian beef to the US more than halved on the year to 10,824t in October because of the combined tariffs of 76pc imposed in early August, according to Brazil's development, industry, trade and services ministry.
Australia benefitted most under the previous structure, but removing New Zealand's higher tariff now creates a more level playing field among beef suppliers in the region. Australia enjoyed tariff-free in-quota exports to the US, avoiding the 4.4¢/kg in-quota tariff applied to other exporters excluding Mexico and Canada. New Zealand has 60,900t and Australia has 78,700t of US beef export quotas remaining for the calendar year as of 29 September, according to the US Customer and Border Protection.
Beef production in New Zealand will likely rise in the coming weeks as summer begins, but values currently offered by New Zealand's processors have been considered too high, traders said, which may change following the tariff cut. New Zealand beef imports into the US have incurred tariffs costs of over NZ$300mn ($170mn) since April, according to lobby group Beef and Lamb New Zealand.
Australian and New Zealand beef tallow is excluded from the latest amendments. Tariffs on other exports, including coffee, tea, tropical fruits, cocoa and spices were also reduced.
