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Key Takeaways
- Smithfield Foods, a Virginia-based company, said selling pork to customers in China isn't feasible because of tariffs.
- China is imposing a 125% tariff on goods from the U.S. in response to America's 145% tax on imports from China.
- Executives at Smithfield believe that there will be a demand for the pork that was sent to China on other foreign markets.
Smithfield Foods, a Virginia-based pork producer, said selling meat in China is no longer viable due to the country's tariffs on American exports.
Shane Smith, CEO of Smithfield (SFD), said during a Tuesday earnings conference call that sales to Chinese customers would account for approximately 3% of Smithfield’s (SFD’s) 2024 sales. The company still released a positive outlook for 2025, as it believes that there will be a demand for these products in other markets. China imposed a tariff of 125% on American products in response to the White House’s announcement of a 145% tax for goods imported from China.
Smith, in a transcript provided by AlphaSense, stated that “China is no longer available to us as a viable option, so we have had to pivot our businesses.” “While it is important, we believe we have other choices.”
Smithfield executives believe that there will be a large demand for pork in the other 30 markets where Smithfield exports. Mark Hall, CFO of the company, said that sales are expected to increase in 2025 by low-to-mid single digit percentages.
The company did acknowledge that tariffs may have unintended consequences. In its annual report for 2024, the company said that tariffs on exports of pork could lead to a higher level of domestic supply that would weigh on prices.
Steven France, the president of packaged meats at Smithfield, said that in addition to focusing on new markets, Smithfield also aims to boost earnings by increasing sales of its most profitable products, like lunch meats and sausages.
Smithfield reported $3.8 Billion in sales for the quarter ending March 30, an increase of 9.5% compared to the same period last fiscal year. The filing stated that Smithfield’s net income increased by more than 40% over the past year to $224 millions.
The stock gained nearly 9% on the day, bringing it to about 3% for the year despite a choppy run.
