Beijing extends probe that could result in quota, tariffs on China’s beef imports

On Wednesday, China's commerce ministry (MofCom) extended its safeguard investigation into beef imports for an additional three months.

• It will now wrap up on November 26.

ICYDK: MofCom launched the investigation in December to determine whether safeguard measures – a WTO-approved approach for protecting domestic industries – were necessary after surging imports contributed to a collapse in domestic cattle prices.

• Safeguard measures (typically tariffs) apply to all imports of a given product – meaning major beef exporters Argentina, Australia, Brazil, Uruguay, and the US would bear the brunt.

Officially, MofCom extended the investigation due to "the large volume of investigative work and the complexity of the case."

• However, when we predicted this investigation would be delayed, we had some beefier reasons in mind.

First, any safeguards against Brazil, which supplies around 40% of China’s beef imports, would risk torching goodwill with a key trade partner.

• And Beijing already slapped a temporary ban on Brazilian poultry imports a few months back.

Second, new beef duties could derail the US tariff truce – and undermine the recent positive momentum with Australia and Argentina.

Finally, China’s domestic beef cattle prices have recovered somewhat since December.

Get smart: Extending the investigation buys time, but doesn’t guarantee it will go away.

• Beijing is committed to keeping cattle farmers in the black.

What to watch: Industry rumors are flying that Beijing is weighing a global safeguard quota – capping the annual volume of beef that can enter China at standard tariff rates, with higher duties applying once that threshold is exceeded.