China’s state-backed media, Global Times, came out with the news suggesting the dragon nation’s turning down of the US-based poultry company’s meat citing the coronavirus (COVID-19). The news also signaled an escalation of the US-China tension based on the issue.
Key quotes
The force majeure clause of the phase one trade deal between China and the US might be triggered if more meat companies in the US are affected by COVID-19, Chinese experts said, after China suspended imports from Tyson Foods, one of the largest meat producers in the US on Sunday, over cluster cases of COVID-19.
The suspension is not likely to "fundamentally" harm the phase one deal, under which China promised to purchase $36.5 billion worth of American agriculture products, experts said, but they warned that renegotiations will be needed if there's a large-scale COVID-19 outbreak in the US food sector.
Although many of the hotspots with COVID-19 infections in the US are linked to meat plants, so far, China's General Administration of Customs (GAC) has not banned imports from other US meat companies, the GAC said on Sunday, noting that shipments from Tyson that have arrived at ports or are still in transit will be detained.
Tyson Foods, which produces around 20 percent of the beef, pork and chicken in the US, confirmed on Friday that of the 3,748 employees are tested for COVID-19, 481 - or 13 percent - were positive.
FX implications
The news keeps the risk-off mood on the table while also weighing on the AUD/USD pair. That said, the quote drifted lower to 0.6812 at the week’s start versus Friday’s closing near 0.6835.
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