Retaliating against the Trump administration’s tariffs on steel and aluminum, the two largest overseas markets for the U.S. pork began to impose high tariffs.
Mexico declared a 20% tariff on imported pork leg and shoulder meat from the United States, which has taken effect on June 6. At the same time, the country announced that it would provide duty-free quotas for imported pork from other countries. The State Council Tariff Commission of China announced that starting from April 2, on the basis of the current applied tariff rates, tariffs on pork and products originating in the United States would be taxed at 25%. This means that the tariff rate on imports of U.S. pork raised from 12% to 37%.
The counter tariffs of these two countries target directly to Trump’s ticket bunkers—Iowa, Indiana, and North Carolina. The votes of Republican’s agricultural voters in these states helped Trump win the election in 2016. The Sioux County with the highest pork production in Iowa had more than 80% of the electorates supporting Trump. Even a small defection of farmers in these states could affect Trump’s re-election prospects.
Based on the export volume, Mexico has always been the largest consumer of U.S. pork products. Last year, the United States exported more than 800,000 tons of ham and other pork products to Mexico, worth US$1.5 billion. China is the second largest export market for pork in the United States. According to the U.S. Meat Export Federation, China bought almost half a million tonnes of pork products. And Canada is the fourth largest pork export market in the United States. By the way, Canadian Prime Minister Justin Trudeau received harsh criticism from Trump a few days ago and he warned that his country would respond to Trump’s trade measures.
To make matters worse, Trump’s steel and aluminum tariffs have been imposed at a time when the prospects of the U.S. pork industry are beginning to become bleak. After four years’ breeding expansion, the U.S. market is flooded with too much pig supply sources and pork production has been created a new high record. In this case, U.S. pork is more reliant on exports. According to the data from the National Pork Producers Council (NPPC), the average value of production from each pig in 2017 was 149 U.S. dollars, of which the output value brought by exports was above 53 U.S. dollars.
The counter tariffs on the U.S. pork would affect nearly 60,000 pig farmers as well as U.S. meat processors, such as Tyson Foods, Seaboard Corporation, and Brazil’s JBS. “With the current volatility in trade relations, we’ve experienced day-to-day uncertainty in our ability to deliver products and services to customers,” said Tyson.
Chris Hurt, an agricultural economist at Purdue University in Indiana, forecast that each pig would cost producers 11 dollars in 2018, and by 2019, each pig would cost 14 dollars’ loss. Prof Hurt said, “Obviously, any loss of demand from a Chinese or Mexican tariff would add to those losses. It’s a never a good time to have an assault on your industry, but when you’re down financially it’s worse.”