With the U.S. reaching a resolution with Mexico and Canada on steel and aluminum tariffs and Japan lifting restrictions on imports of U.S. beef, things are looking up for U.S. meat exports.
Mexico and Canada retaliated against U.S. steel and aluminum tariffs levied a year ago, with Mexico slapping a 20% tariff on imports of U.S. pork and Canada putting a 10% tariff on imports of prepared beef products from the U.S.
Pork exports to Mexico — the top foreign market for U.S. pork — were down 29% in value year over year in the first quarter of 2019, and Canada’s imports of U.S. beef were down 14%.
The U.S. Meat Export Federation is encouraged by Mexico and Canada lifting their retaliatory tariffs, Dan Halstrom, president and CEO of USMEF, said in a media call from the federation’s spring meeting in Kansas City, Mo.
USMEF is hopeful the development will lead to the quick passage of the new U.S.-Mexico-Canada Agreement, or NAFTA 2.0. The value of the relationship with Canada and Mexico for U.S. beef, pork and lamb cannot be overstated, he said.
“I mean it’s immense, immense opportunity, has been in the past and will continue to be in the future,” he said.
In another trade development, Japan has lifted its longstanding restriction on U.S. beef from cattle over 30 months of age.
That will open the market for products such as mountain chain tripe and tongue on the variety meat side and tenderloins, strip loins and chuck rolls on the middle meat side, he said.
“This is another segment that competes pretty directly with Australia where we should be able to make some market-share impact in relatively short order,” he said.
USMEF estimates the additional access will boost U.S. beef exports to Japan by $150 million to $200 million per year.
“However, headwinds continue on another front and that’s on the tariff front for the rest of our beef,” he said.
Competitors participating in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership enjoy a roughly 12% tariff advantage in Japan over U.S. beef, he said.
“We’re still seeing growth in this market. We will continue to see growth, but the potential for increased growth is much higher if we can get on a level playing field,” he said.
Japan is the top value market for U.S. beef and pork exports. While the value of U.S. beef shipment to Japan increased 5% in the first quarter, the value of U.S. pork shipments — which face a similar tariff disadvantage as beef — fell 11%.
USMEF is hoping for progress on a U.S. trade agreement with Japan and is aligned with industry working with the administration to move ahead, he said.
“Now that we have had progress on the USMCA, we hope to have the same sort of progress with Japan toward an agricultural agreement,” he said.