U.S. Pork Surprised by Mexican Tariffs, Cautiously Optimistic on China

01:56PM Jun 05, 2018
While there is increasing hope for an end to the Chinese tariffs, today Mexico added a 20% duty to U.S. pork imports—another hit for producers as supplies continue to grow.
( Farm Journal )

Tuesday, Mexico begin to tax a range of U.S. products, including a 20% duty on pork, in retaliation for tariffs on Mexican steel and aluminum that President Donald Trump announced last week.

“It’s definitely not good news for our producers,” Maria Zieba, deputy director of international affairs for the National Pork Producers Council (NPPC), told Chip Flory on AgriTalk Tuesday.

The announcement came as a surprise, mainly because pork is such a staple to Mexican consumers. “We’ve been able to export a lot of our shoulders and hams to Mexico, because they have such a demand for it…they don’t want to increase domestic prices on a key staple right before a presidential election. It was quite surprising to see us on the list,” Zieba said.

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US shipped $15 billion pounds of pork to Mexco in 2017
(Source: National Pork Producers Council; Produced by Sara Brown)

 

Negotiations with China Offer Some Hope For Now

Also on Tuesday, an olive branch from China might put negotiations back on track with the U.S.

China promised to purchase an additional $70 billion worth of U.S. goods if the U.S. backs off proposed tariffs on Chinese imports. This comes after already hopeful weekend meetings with USDA undersecretary for trade and foreign agriculture affairs, Ted McKinney, and chief ag negotiator, Greg Doud. The discussions centered on energy and agriculture.

But will pork be on that list of U.S. goods that China says it will purchase?

“We have to be cautiously optimistic. Of course, China is a major market for U.S. pork and we’ve been facing a 25% duty on our exports since March 1. So any positive announcement like this from China gives a boost to our producers,” Zieba said.

“We’ve been working really closely with the administration since the beginning of this and I’m optimistic that they’ve been able to reach an agreement on pork,” she added. But Zieba reiterated that she hasn’t seen the details and could not confirm what that agreement might hold for pork exports.

Since the tariffs began, lean hog futures have dropped $18 per animal. Not all of this lost value is due to trade friction with China, but it is one of the main factors, she added.

Even though China has been expanding and modernizing its hog industry for the past few years, Zieba said the country continues to rely on pork imports from the U.S., totaling over a billion dollars in 2017.

Zieba said NPPC is continuing to work with the U.S., Chinese and Mexican governments, as the pork industry continues to get hit from all sides and added, “We somehow need to get off that favorite list.”

 

 

 

6/6/18 Mexico Retaliates by Setting Tariff on U.S. Pork