Leather Gets Caught in Trade Crossfire

(Bloomberg) -- Count leather as the latest victim of the escalating U.S.-China trade war.

Tariffs against American cattle hides were included in Tuesday’s $60 billion hit list as China struck back against the Trump administration. The duties come at a time when prices for hides, a proxy for finished leather, had already been tumbling thanks to a supply glut.

Leather Gets Caught in Trade Crossfire

A bulging U.S. cattle herd along with record demand for beef means that more cows are making their way to slaughter, leaving behind a glut of hides, said Don Ohsman, editor-in-chief of Hidenet, which reports on leather markets. The byproduct of beef production can sometimes to be used to bolster profits for farmers and meatpackers.

As supply grows, demand has been declining from China, the world’s largest hide importer. In the Asian country, the leather industry is facing stiffer competition from synthetic materials, rising labor costs, tighter environmental regulations and industry consolidation, a unit of the U.S. Department of Agriculture said in a report posted to its website this week.

The trade war is “depressing an already weak market,” Ohsman said.

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