Key points:
- Korean President Yoon Suk-Yeol announced that tariffs would be suspended for 100,000 tonnes of imported beef, beginning on 20n July and running until the end of the year.
- As the US currently faces lower tariff rates than Australia, this tariff pause offers an outsized opportunity for Australian exporters.
- In 2021, Korea was Australia’s second largest beef export market and grew by 5% year-on-year.
In an effort to combat rising inflation, the South Korean Government has announced several temporary measures to lower prices in staple goods, including beef. President Yoon Suk-Yeol announced that tariffs would be suspended for 100,000 tonnes of imported beef, beginning on 20 July and running until the end of the year.
Inflation is currently sitting at roughly 6% in South Korea, and the Won has been trending down against the US Dollar. As a major importer of energy, raw materials and food staples, weaker exchange rates and high fuel prices have led to price increases and squeezed discretionary income. These moves from the South Korean Government are designed to lower prices and maintain confidence among consumers.
Australia currently faces a 16% tariff on exports to South Korea, while the United States faces a 10.6% tariff. Other exporters, including the Mercosur trade bloc of South American exporters, face a 40% tariff.
Korea was Australia’s second largest beef export market in 2021, receiving 178,931 tonnes. In an otherwise slow year for Australian exports, Korean exports grew by 5%, with particular growth seen in chilled product.
South Korea’s main suppliers are the United States and Australia. The US exported 250,000 tonnes, around 53% of the total, while Australian imports made up 38% of the total. The remainder was mostly made up by New Zealand, Canada, and Mexico, while South American producers were virtual nonentities in the market.
As the US currently faces lower tariff rates than Australia, this tariff pause offers an outsized opportunity for Australian exporters.
According to MLA’s Global Consumer Tracker, South Korean consumers have a taste for fattier, grainfed product, which drives demand for Australian and American product over leaner, cheaper South American beef.
This comes as other countries have taken similar steps to restrain prices recently. Mexico has reduced its beef import tariff to zero through to the end of 2022, while Taiwan has extended tariff reduction from NT$10 to NT$5/kg for countries with ‘most favoured nation’ trading status, including Australia.
While details are yet to be announced regarding the specific structure and roll-out of the scheme from the South Korean Government, it represents a considerable opportunity for Australian exporters in a large, high value market we already compete strongly in.
Attribute above content to: Tim Jackson, MLA Business Analyst
