President Trump's decision late Friday to not impose tariffs on all goods imported from Mexico was a major relief to the U.S. red meat industry, as Mexico is the largest volume destination for U.S. pork exports and the third-largest export market for U.S. beef.
In late May, U.S. pork gained relief from a 20% retaliatory duty imposed by Mexico since mid-2018 in response to U.S. tariffs on steel and aluminum, and U.S. Meat Export Federation president and CEO Dan Halstrom says it is essential that U.S. pork's duty-free status is maintained. The 20% duty had a severe impact on U.S. pork exports in the second half of 2018, and through April of this year pork export value to Mexico was down nearly 30% year-over-year.
“Mexico being our largest volume market for pork is absolutely an essential market and the fact that we are able to maintain our zero-duty status and avoid any further complications as it relates to tariffs is unbelievably positive for the pork industry,” Halstrom says. “Just to give you an idea for the first four months of 2019, we were down 18% in volume and down 29% in value to Mexico on pork. The fact that we are able to get back to zero-duty and avoid this complication we will see a rebound in this most important market for U.S. pork, especially when you look at items like hams.”
While Mexico did not retaliate against U.S. beef in the steel and aluminum dispute, Halstrom notes that the U.S. industry was very concerned that U.S. beef might be targeted if new tariffs were imposed on goods imported from Mexico.
“Beef has done very well,” Halstrom says. “We are up almost 10% in value to Mexico, but suffice it to say that we were very concerned about retaliation from the Mexico side if a deal had not been worked out.”
Halstrom adds that new tariffs would have also presented an obstacle for the U.S.-Mexico-Canada Agreement, which still must be ratified by all three nations. USMCA preserves duty-free status for all U.S. red meat entering Mexico and Canada.
“USMCA has to be ratified by all three countries and up until now I would say the U.S. has been lagging a bit but this may provide us the momentum needed to get us moving in the right direction and getting approval of the USMCA sooner rather than later, another important step for U.S. agriculture,” Halstrom says. “I think the biggest thing our buyers have seen is a lot of uncertainty, uncertainty around tariffs, which we have now elimnated, and uncertainty around the passage of the USMCA. As for the pork and beef industry in the U.S., I think this is the momentum we needed.”