Tariff Disadvantages Making It Tough for U.S. Beef and Pork to Compete

Posted on 06/10/2019 12:15 PM

During April, exports of U.S. beef and pork fell short of year-ago levels both in terms of value and volume.

The U.S. Meat Export Federation (USMEF) reports that its analysis of USDA data shows the U.S. exported 105,241 MT of beef during April, which was a 5% drop from year-ago levels, with the value of that meat coming in at $674.2 million, a slight dip from year-ago levels. For the first four months of the calendar year, exports are lagging year-ago by 4% in volume and 1% in value, but we should note that last year was a record-setter. USDA’s latest forecast is for beef exports to total 3.171million lbs. this marketing year, a 0.5% increase from the 2018 season. It will revisit this forecast tomorrow.

South Korea is still the growth leader in terms of U.S. beef shipments, USMEF details, pointing out that shipments to the country surged 18% in April to 22,584 MT, with the value of those products climbing 22% versus year-ago to $164.3 million. Taiwan was another strong market for the U.S.

But the story is different for Japan, “where all of U.S. beef’s major competitors have gained tariff relief in 2019,” USMEF explains. “With the April 1 rate cut, Australian, Canadian, New Zealand and Mexican beef are now subject to a 26.6% duty while the rate for U.S. beef remains at 38.5%,” the federation explains. As a result, beef exports to the country dropped 6% in terms of both volume and value versus year-ago during April. USMEF continues to push for an agreement with Japan, noting that “U.S. beef’s exceptional growth in Korea is a great example of what’s possible when tariffs are less of an obstacle.”

U.S. pork exports totaled 216,757 MT in April, a 6% decline from year-ago in volume. That equated to a value of $535.2 million, which was down 8% from year-ago. Four months into the calendar year, exports lag year-ago by 6% in volume and by 12% in volume. USDA expects 2019 pork exports to total 6.246 million lbs., up 6.4% from 2018.

Tariffs are also a major story for the pork sector, with USMEF pointing out that on May 20, the 20% retaliatory duty on most U.S. pork entering Mexico was removed, as the U.S., Mexico and Canada reached an agreement on steel and aluminum tariffs. Obviously, this came too late to improve pork exports to Mexico during April; our shipments of the meat to our southern neighbor dropped 30% in volume and 29% in value for the month relative to year-ago. For January through April, exports to Mexico are down 18% in volume and 29% in value.

USMEF President and CEO Dan Halstrom says the “lifting of Mexico’s retaliatory duties was the most welcome news the U.S. pork industry has received in a long time.”

On the other hand, retaliatory duties from China continue to put U.S. pork at a “significant disadvantage in China, where retaliatory duties remain in effect and competitors are positioning to fill China’s looming African swine fever-driven shortfall,” according to USMEF. Our pork exports to China/Hong Kong are down 16% in volume and 32% in value versus year-ago for the first four months of the year.

And once again, U.S. pork faces a disadvantage in terms of tariffs versus its lead competitors in Japan, our leading value market. U.S. pork shipments to Japan are running 7% behind year-ago in terms of volume and 9% behind year-ago in terms of value through April.

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