Trump’s Trade War Could Have an Unexpected Victim: Burgers

The China-U.S. trade war exposed an unforeseen issue for Beijing. China has a strong reliance on U.S. soybeans, which it imports in millions of tons each year. As a result, Brazil, the world’s leading soybean exporter, emerged as an unexpected winner from the trade conflict. The Latin American country is also the largest beef exporter. However, President Donald Trump’s tariffs are creating an uncertain future for meat consumption.

The global burger market. The New York Times recently reported that most burgers consumed in the U.S. aren’t actually made from American beef. Despite being a national symbol, the American hamburger relies on a vast international supply chain. The ground beef used in barbecues, school cafeterias, and fast food chains often combines local meat with imports, especially from Brazil.

This interdependence became evident after Trump’s tariffs came into effect. The U.S. levies have reshaped the global meat trade and increased the prices of commodities that millions of Americans consume on a daily basis.

Caught between two giants. Amid the current trade war, Brazil emerges as a clear winner. Brazilian meat is produced at a low cost due to the country’s vast pastures and affordable labor. It’s seen a surge in demand from both the U.S. and China, two economies that can’t meet the increasing appetite for lean protein.

In a single year, U.S. imports of Brazilian meat grew by more than 50%, reaching a record $1.3 billion, despite a 10% tariff that raises the final price for consumers. Meanwhile, China has reduced its purchases from the U.S. and has increasingly turned to Brazil, which supplies nearly half of its beef.

Beef prices. This realignment of trade flows has led to rising prices in the global market. The price of Brazilian meat has increased by around 20% since April alone. U.S. meat companies are caught between the need to keep prices affordable and rising costs. As such, they’ve started mixing pork into their burgers to lessen the impact on consumers.

Meanwhile, Brazilian producers like Grupo Fribal are planning to expand their herds to capitalize on the growing demand. However, while the demand is promising, it faces challenges, including recurrent droughts. Additionally, logistical congestion at Brazilian ports requires time and resources to navigate.

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Dependence on the U.S. The U.S. remains a major beef producer. However, its focus is primarily on premium steaks such as rib-eye and filet mignon, rather than the lean, inexpensive beef that’s used for mass consumption. As such, U.S. processors need to combine local beef and fat with imported lean varieties. Brazil plays a significant role in this process.

“In the U.S., we consume more ground beef than we produce,” agricultural economist Glynn Tonsor told The New York Times. This structural dependence leaves consumers vulnerable. Ground beef prices have risen by 43% over the past five years. What’s more, they’re expected to continue increasing as inflation drives households away from more expensive cuts and back to basic options.

This situation is compounded by the fact that U.S. cattle inventories are at their lowest level in 73 years due to droughts and rising feed prices.

Brazil. According to The New York Times, China is strengthening its ties with Brazil, particularly after revoking the licenses of more than 390 U.S. processors in retaliation. Meanwhile, Brazilian President Luiz Inácio Lula da Silva is striving to maintain a balanced diplomatic relationship between the U.S. and China. However, Celso Amorim, Lula’s top foreign policy adviser, said that China offers “more opportunities and fewer risks” than the U.S.

Brazilian producers are working to fill the gap, even though they acknowledge that expanding production takes time. With an increasingly steak-loving Chinese middle class and a U.S. demand that lacks equal substitutes, Brazil is positioned to become the epicenter of an evolving meat trade.

However, there’s a caveat to this situation. While Brazilian ranchers may benefit, “it’s American society that will have to foot the bill,” Robert Perosa, the president of the Brazilian Association of Meat Exporting Industries, succinctly summarized.

Image | Amirali Mirhashemain

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