Import tariffs on U.S. beef to Canada and China are top of mind for the U.S. beef industry.
Canada implemented a 10 percent tariff on some U.S. beef products on July 1 after the U.S. moved ahead with tariffs on U.S. imports of Canadian steel and aluminum.
“Unfortunately we are the direct victims of trade retaliation,” Kent Bacus, director of international trade and market access for National Cattlemen’s Beef Association, said in the Beltway Beef podcast on Thursday.
The tariff applies to prepared and preserved beef, represented $170 million of the $800 million in U.S. beef sales to Canada in 2017. They were a small but significant part of sales to Canada, he said.
“It’s a tough situation for us,” he said.
A 10 percent tariff is not a lot but added to a strong U.S. dollar compared with the Canadian dollar, it makes U.S. product more expensive and less competitive, he said.
“So there’s a disincentive to buy American. If the whole point is to buy American, this is not really going about it the right way,” he said.
While it might bring some short-term victories to the U.S. steel and aluminum industries, beef producers are going to carry a big part of the retaliation, he said.
Across the globe, China raised its 12 percent import tariff on U.S. beef to 37 percent on July 6. The tariff comes as the U.S. is just starting to make inroads into China’s grain-finished beef market after being banned for 13 years.
It’s a small market, but U.S. beef was doing a good job in taking market share from competitors. U.S. exports grew at a steady pace from zero sales to $30 million in sales in just six months, he said.
The U.S. Meat Export Federation was forecasting those sales to grow to $70 million in 2018 and reach up to $400 million in three or four years.
“And that’s with all those restrictions on hormones, beta agonists, traceability,” he said.
Without those restrictions, USMEF projects U.S. beef exports to China could reach $4 billion annually in the next five years, he said.
“That’s huge. Last year, we exported $7 billion total, and now we’re talking about a market with that much potential. But we’re not going to be able to realize that as long as we’re going to be in the middle of this tit-for-tat tariffs,” he said.
The additional duty is a tariff on importers, and they’re not going to buy U.S. product when they can buy product elsewhere for much less. He doesn’t know the U.S. administration’s long-term plan but things are probably going to continue to escalate, he said.
“We need our country and the Chinese government to come and find a way that both of our economies can mutually benefit in the long-term because the future of our economies are intertwined. … We are two of the biggest economies in the world,” he said.
The U.S. has economic superiority, and China has the population and growing middle class to provide a customer base.
The U.S. can either secure its place in the Chinese market or continue to cede future market share to competitors that are striking trade agreements with China, he said.