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Trade disputes costing meat industry billions

Getty Images U.S., China Agree to Reduce Tariffs if Deal Reached
Meat groups welcome signing of USMCA and moving toward ending China trade dispute.

The news of a potential holding off on implementation of additional tariffs with China and the U.S.-Mexico-Canada Agreement (USMCA) were welcome news to the meat industry, which continues to suffer from the lingering impacts of the ongoing trade woes created from the North American trade deal uncertainty and the trade dispute with China.

Iowa State University economist Dermot Hayes estimates that the trade dispute has cost U.S. pork producers an estimated $1.5 billion this year.

National Pork Producers Council president Jim Heimerl, a pork producer from Johnstown, Ohio, said, “We are very pleased with the new trade agreement with Mexico and Canada, one that preserves zero-tariff pork trade in North America for the long term, but it’s imperative that we remove U.S. tariffs on Mexican metal imports so that retaliatory tariffs of 20% against U.S. pork are lifted.”

Hayes estimated that live hog values this year have been reduced by $12 per animal due to retaliatory tariffs Mexico imposed against U.S. pork in June. The loss estimate of $1.5 billion is based on an expected total harvest of 125 million hogs in 2018. These tariffs, along with China’s retaliatory tariffs, have turned what promised to be a profitable year into a year of losses for export-dependent U.S. pork producers. Hayes estimated U.S. pork producer losses of $ 1 billion, or $8 per animal, from the ongoing trade dispute with China.

Mexico and China represent approximately 40% of total U.S. pork exports.

U.S. Meat Export Federation (USMEF) president and chief executive officer Dan Halstrom said USMEF supports the Trump Administration’s efforts to finalize USMCA and to continue seeking resolution to the metal tariffs dispute with Mexico and Canada, which resulted in retaliatory duties on U.S. pork and beef.

“U.S. meat exports have become entangled in trade disputes with China, so it is encouraging to see the U.S. and China return to the negotiating table. Global demand for U.S. red meat is very strong, but exports cannot reach their full potential until the retaliatory duties imposed by Mexico, China and Canada are removed,” Halstrom noted.

In the latest agricultural trade outlook released by the Economic Research Service on Nov. 29, ERS projected livestock, dairy and poultry exports to be down $200 million to $30.1 billion. Declines in poultry and dairy products offset increases in beef and pork products.

“Beef is up $500 million largely on higher unit values, as export volumes are fractionally higher. Pork is up $100 million as strong demand in Latin America and other emerging markets supports slightly higher export volumes. Poultry and poultry products are forecast $200 million lower to $5.1 billion on weaker prices and volumes for eggs and turkey meat. Dairy product exports are lowered $300 million to $5.3 billion as export shipments for major products such as cheese and whey lag last year’s pace and global prices weaken. Hides and skins are down $100 million to $1.5 billion as prices decline and as demand remains soft,” ERS reported.

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