In a deal that coincides with President Donald Trump’s visit to Beijing this week, China’s largest online retailer says it will buy $200 million dollars worth of Montana beef over the next three years.
The non-binding agreement calls for Montana ranchers to supply beef to Chinese company JD.com starting in January.
Republican Senator Steve Daines was instrumental in laying groundwork for the deal. He says Montana’s iconic imagery will help sell the beef.
“Clean air, pristine waters, the high-quality beef that Montana produces, it’s a great brand that we can actually sell in China and this will be very good for Montana cattle producers,” he says.
In June, China lifted a ban on U.S. beef imports that was in place since 2003 due to a case of mad cow disease in Washington State. The deal with JD.com could add four percent to Montana’s total cattle sales over the next three years and raise the state’s beef export sales by 40 percent.
But the state’s ranchers will also pay nearly $24 million dollars in tariffs to the Chinese government over the next three years. That’s far more than competing producers in Australia and Brazil pay because those countries have a free trade agreement with China. The U.S. does not.
Daines says the Trump administration will work to lower those tariffs, but was unable to say when negotiations would begin.
“You’re always going to have some trade issues to sort out with, frankly with any country we trade with, but we’re just glad to see the door is back open again and Montana beef is being shipped into China,” he says.
JD.com says it also intends to invest $100 million dollars into building a processing plant in Montana. The exact location is still unknown, but the agreement says construction could begin as early as next spring.
But Jay Bodner, spokesperson for the Montana Stockgrowers Association, says ranchers shouldn’t hold their breath.
“I think when you have the actual logistics of actually building a facility of that magnitude in size, it probably is going to be initial phases, maybe, starting in next year but actually being up and running I think it’s going to take a little bit longer than that,” he says.
A final, binding contract between JD.com and the Montana Stockgrowers Association has yet to be signed, but Daines says he’s hopeful that will happen by the end of this year.