Despite new tariffs on beef, China is far from closing the door on trade with Australia
- Written by The Conversation
Australia has been reminded once again that China isn’t always a reliable trading partner.
Last week, on New Year’s Eve, Chinese authorities announced new trade restrictions to protect the country’s domestic beef industry.
Effective from January 1 and extending to the end of 2028, countries like Australia will be allocated an annual quota. Any beef exports to China beyond this volume will be slugged with a 55% tariff.
These new restrictions do not single Australia out in the way that previous Chinese trade restrictions did when relations soured in 2020. Nonetheless, the local beef industry quickly responded that it was “extremely disappointed”. Some voices have warned of a “severe impact”.
The Australian government also said it had “serious concerns” and that Australia’s status as a free trade agreement partner with China should be “respected”.
Smaller producers that built business plans around supplying the Chinese market are most vulnerable.
These latest Chinese restrictions reinforce a broader narrative that China is so focused on achieving self-sufficiency and “mercantilism” (maximising exports and minimising imports) in its trade policy settings that, as journalist Robin Harding has argued:
there is nothing that China wants to import, nothing it does not believe it can make better and cheaper.
But reality is not so simple.
Still a major importer
China’s critics, concentrated in the United States and European Union, point to a “trillion-dollar” trade surplus as “exhibit A” supporting this narrative.
Many ignore that as a proportion of its economy, in fact, China imports more (17.2% versus 14.3%) than the US.
Meanwhile, as a proportion of its economy, the size of its trade surplus lags behind Germany, South Korea and Taiwan. Yet Washington and Brussels rarely accuse these economies of ruthlessly shutting out foreign competition and incentivising domestic “over-capacity”.
The problem for places like the US and Western Europe is more that in areas where they were previously dominant, like high-value-added vehicle manufacturing, China is now proving a formidable competitor.
But for countries like Australia, which has an economy that remains highly complementary to China’s, the picture looks very different.
Still Australia’s biggest customer
In 2024-25, Australia exported A$69 billion more to China than it imported. In contrast, Australia’s largest trade deficits are with the US and EU.
Exports of many Australian goods and services to China are at – or nearing – historical highs.
While prices have come off the boil, in the first 10 months of 2025 Australia exported 2% more iron ore to China than the previous record set a year earlier.
And it’s not just the traditional mainstay of minerals.
China is also Australia’s largest market for agricultural, forestry and fisheries products, topping $17 billion in 2024-25. Ditto services like education and tourism that collectively reached more than $18 billion.
China’s desire to buy what Australia excels at producing, as well as the ability of Australian exporters and Chinese importers to mitigate risks, means there is little reason to imagine that China’s status as Australia’s most important economic partner will diminish in the foreseeable future.
Will beef producers take a hit?
Some industry voices have suggested that Australia’s beef exports to China could fall by one-third, or around $1 billion, in the coming year.
But for context, having learned the lessons of previous Chinese trade restrictions, Australia’s beef industry is already highly diversified: China only accounts for around 17% of total beef exports.
Put simply, if China doesn’t want as much Australian beef as it did previously, plenty of other countries will happily take it, albeit perhaps not offering quite the same prices that Chinese importers did.
In aggregate, beef sales to China are also likely to fall by significantly less than one-third. Thanks to the China-Australia Free Trade Agreement, even under Beijing’s new restrictions, local beef exporters have been given a tariff-free quota of 205,000 tonnes.
The latest data suggest that total Australian beef exports to China finished 2025 at around 265,000 tonnes. In other words, if 2025 volumes were repeated this year, less than a quarter of exports would be vulnerable to higher tariffs.
How markets could adapt
There is also potential for the residual impact to be offset in creative ways.
For example, Australian exporters might stay within the allocated quota if they direct a greater proportion of their highest value, chilled, grain-fed cuts to China, while sending more of their less lucrative, frozen, grass-fed cuts to other markets.
Chinese supermarkets also won’t want to lose customers by sharply hiking prices by 55% once the quota has been reached. Instead, at least in the case of frozen beef, they might respond by spreading a smaller price increase on sales throughout the year.
A resilient relationship
It’s a safe bet that beef is just the latest case study of the resilience of Australia-China trade and the importance of the Chinese market to local prosperity.
Yes, Beijing may behave badly. And Australian producers and Canberra will rightly complain.
But economic fundamentals, like Chinese customers wanting access to competitively priced, high-quality Australian goods and services, are hard to budge.
