Smithfield Foods, the largest U.S. pork processor, reported a strong first quarter but acknowledged a significant market loss—China is no longer viable due to soaring tariffs, executives confirmed on a recent earnings call.
The effective duty rate on U.S. pork entering China has climbed to 172%, rendering exports uncompetitive and forcing Smithfield to pivot toward alternative international markets.
“With China no longer essentially being available, we really had to pivot our business,” said Smithfield CEO Shane Smith.
📈 Strong Q1 Despite Trade Tensions
Despite the export challenge, Smithfield’s total Q1 2025 sales rose 9.5% to $3.77 billion, exceeding analyst expectations of $3.62 billion. The company’s hog production segment rebounded from prior losses, and overall shares rose nearly 9% following the earnings release.
However, Smithfield noted that while China previously accounted for 3% of its total sales, the tariff impact has become too steep to justify continued volume. Historically, Smithfield has exported variety meats like pig stomachs, hearts, and heads to China—products with limited domestic demand.
“China, at 145%, is not a viable sales market for us at the moment,” said Donovan Owens, president of Smithfield’s fresh pork division.
🌍 Exploring New Markets
Smithfield currently exports to more than 30 countries, and in 2024, exports made up 13% of total company sales. As access to China closes, executives emphasized redirecting pork products to next-best markets.
The shift reflects broader changes sparked by global trade tensions initiated during the Trump administration. Beijing’s retaliatory tariffs are part of a broader response to U.S. trade policy, which continues to affect major ag commodities.
🔻 Challenges and Adjustments
To offset rising input costs and market constraints, Smithfield has reduced corporate and plant jobs and streamlined operations in Q1. Although packaged meat and fresh pork sales increased, segment profits declined, partly due to raw material cost pressures and shifting consumer preferences.
Still, the company remains optimistic about its strategy in diversified export and domestic retail, maintaining its focus on brands like Smithfield, Eckrich, and Nathan’s Famous.
