Lamb wars: Australia says it’s not to blame for struggling US industry

The United States is considering trade barriers because its sheep industry says imported lamb has displaced American producers and contributed to falling domestic production. US Trade Ambassador Jamieson Greer asked the US International Trade Commission to examine whether imports cause serious injury. That finding could support tariffs or quotas.

Australia rejects that explanation. Ambassador Greg Moriarty says drought, weaker wool demand and the removal of US wool subsidies caused the long-term decline. He argues imports filled a supply gap created by lower American output, rather than causing it. American industry representatives strongly dispute that account.

The decision matters because Australia and New Zealand supply nearly all imported lamb consumed in the United States. Restrictions could protect some domestic producers, but Australia warns they would raise consumer costs and reduce availability. The commission is due to decide by November 13 and report to Trump by January.

Tariffs and quotas are two ways governments restrict imports. A tariff adds a charge to imported lamb, usually making it more expensive for importers, retailers and consumers. A quota sets a maximum quantity that may enter the country during a specified period. Once that limit is reached, additional shipments may be blocked or face different rules.

In this dispute, either measure could reduce the volume of Australian and New Zealand lamb available to American buyers. A tariff might allow imports to continue but at higher prices. A quota would directly limit supply. The US sheep industry supports possible barriers because it says imports harmed domestic producers and displaced their output.

Australia argues the effects would spread beyond foreign exporters. Ambassador Greg Moriarty told the inquiry that restrictions would increase costs for US consumers, reduce product availability and risk reversing the steady growth in American lamb demand. The commission is examining whether such measures are justified.

The United States depends heavily on imported lamb. The US International Trade Commission’s staff report says nearly 80 per cent of lamb consumed by Americans comes from overseas. That makes international suppliers central to the country’s lamb market, especially while domestic production remains lower than in the past.

Australia and New Zealand are the dominant suppliers. The report says shipments from those two countries account for “nearly all” US lamb imports. Australia alone exports about $1.6 billion of sheep meat to the US, according to the inquiry’s context. This gives both countries a major role in American supply and makes them central to the tariff investigation.

The dependence also explains why restrictions could have broad effects. If imports were reduced, American producers might face less competition, but consumers would have fewer products available. Australia says costs would rise. The issue is especially significant as US lamb consumption is increasing, despite the typical American eating lamb only once a year.

Australia says the US sheep industry’s decline began with domestic problems, not foreign competition. Ambassador Greg Moriarty identified drought, reduced demand for wool and the US government’s removal of wool subsidies as major causes. In his view, imports arrived after American production had already fallen, filling a supply gap for consumers.

The US sheep industry sees the sequence differently. Its representatives argue that cheaper Australian and New Zealand lamb took market share from American producers. Trade lawyer Paul Rosenthal called Australia’s explanation disingenuous and said imports displaced US production. This disagreement is the central question in the commission’s injury investigation.

The evidence is contested. Moriarty pointed to several periods over 30 years when both imports and domestic lamb production fell together. He said that showed domestic output did not automatically improve when imports declined. US prices have recently reached historic highs, while Australian exports have fallen during drought, creating a live test of both sides’ claims.

Imports help supply American consumers because domestic production does not meet the country’s lamb demand. The United States imports nearly 80 per cent of the lamb it consumes. If tariffs or quotas reduced foreign supply, buyers would have fewer sources unless US producers quickly expanded output.

Australia’s ambassador Greg Moriarty told the inquiry that restrictions would increase costs for US consumers and reduce product availability. A tariff would raise the cost of imported lamb directly. A quota would limit quantities entering the market. Both could tighten supply, especially because Australia and New Zealand provide nearly all US lamb imports.

The market is already showing high prices. US lamb prices have recently surged to historic highs, while Australian exports to the US have fallen amid drought. Moriarty warned that barriers could reverse steady growth in American lamb demand. The likely beneficiaries would be some domestic producers, but consumers could face higher prices and fewer choices.

The current inquiry echoes a 1999 US investigation into imported lamb. That commission found imports were injuring the American domestic industry. President Bill Clinton then approved tariffs on Australian lamb exports, creating a major trade dispute between the two countries.

Australia challenged the decision at the World Trade Organisation. Australia won that challenge, and the subsequent Bush administration removed the tariffs. At the time, imports represented only a fifth of US lamb consumption, far below the nearly 80 per cent share described in the current commission report.

The earlier case shapes today’s arguments. Tariff advocates say Australia and New Zealand are repeating their 1999 claims and that conditions have worsened. Australia responds that the countries now have a free trade agreement, enacted in 2005, which should preclude lamb tariffs. The commission will decide whether the present case justifies new barriers.

Supply is the amount producers offer, while demand is what consumers want to buy. If domestic supply falls and demand continues, a gap appears. International trade can fill that gap by bringing in products from countries with available supply. This can keep products available even when local production is weak.

The US lamb market illustrates the mechanism. Americans consume more lamb than domestic producers supply, so imports provide much of the difference. Nearly 80 per cent of US lamb consumption comes from imports, with Australia and New Zealand supplying nearly all imported shipments. Australia says those imports followed the decline in US output rather than causing it.

Trade barriers would interrupt that adjustment. Tariffs could raise import costs, while quotas could limit quantities. Australia therefore predicts higher consumer costs and lower availability. The dispute also shows the political tension: US producers want protection from competition, while exporters argue that open supply supports demand and market growth.