analysis

Is the Mexico tariff on US pork about to tarnish its reputation?

By Ashley Williams contact

- Last updated on GMT

Is the thriving US pork market about to plummet?
Is the thriving US pork market about to plummet?
High demand from Mexico for US pork during April resulted in a new volume record, according to data compiled by the US Meat Export Federation (USMEF), but with sharp Mexican tariffs slapped on US pork last week, are we about to witness a significant decline in US pork trade?

US pork exports to Mexico in April alone reached 79,019 metric tonnes – up 34% compared to a year ago – and was the second-largest on record, while export value to Mexico was US$134.1 million (m), an increase of 28%.

During the first quarter of this year (January-April), exports to Mexico were up 7% on last year’s record volume of 282,675 metric tonnes, with value up 6% to $505.4m.

Mexico is the largest export market for US pork, representing nearly 25% of all shipments last year. More than 800,000 tonnes of pork were distributed from the US to Mexico in 2017, valued at $1.51 billion.

US trade tensions with major international markets intensified last week as US President Donald Trump imposed tariffs on steel and aluminium imports, provoking a negative reaction from Mexico, as well as many other nations.

As a result of the US steel and aluminium tariffs, Mexico imposed tariffs on US pork cuts that became effective from 5 June.

The tariff rate on chilled and frozen pork muscle cuts will be 10% until 5 July, when it will rise to 20%. The increased rates are likely to put pressures on US pig farmers, with many already fearing for the future.

Mexico tariff infographic

Fending off competitors

Despite USMEF stating that maintaining the pace of pork exports to Mexico will be challenging, it said it would make every effort to help US suppliers retain their businesses.

The outstanding April performance for pork exports to Mexico really underscores the importance of this market to the US industry and how it has been such a reliable trading partner for hams, picnics and other pork cuts​,” said USMEF CEO Dan Halstrom.

USMEF will continue to emphasise the quality and consistency of US pork to red meat customers in Mexico. But make no mistake about it, the US industry is going to have to fend off competitors who suddenly have a significant tariff advantage and see a clear opening into the Mexican market​.”

China feeling the effects on US pork tariffs

While it is likely that US pork exports to Mexico are about to plummet, the China/Hong Kong market is feeling the aftershock of the additional 25% tariff on US pork​ that took effect from 2 April.

Pork exports to the China/Hong Kong region were down 14% in April compared to last year to 41,567 metric tonnes, but slipped only slightly in value to $95.9m.

The tariff disadvantage is still having a negative impact on the US industry and has pressured prices for key export items​,” Halstrom added. “It’s another situation in which our competitors are capitalising on the extra cost associated with importing US pork​.”

US tariffs are evidently having a considerable strain on its pork industry as key international markets react negatively to Trump’s export decisions.

US pig farmers are clearly concerned for their industry as Trump’s controversial tariffs could pose a serious threat to US pork trade.

The National Pork Producers Board's president Jim Heimerl said the move would be "devastating" for his family and pork-producing families across the United States.  

Related topics: Industry & Markets, United States, Pork

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