The Effects Of Tariffs On US Pork Producers

Another batch of tariffs from Mexico and China is about to hit the United States pork producers, and the predictions are not looking great for US producers. On Friday, China will begin collecting another 25 percent for pork imported from the U.S. When combined with the previous import taxes, the new tax will surpass seventy percent. There will also be a 25 percent tariff on U.S. soybeans. 

Fear is rising due to the threat of a trade war. The Chinese are the top pork consumer and 25 percent of all U.S. hogs are sold overseas. One of the companies that may be impacted by the tariffs is Smithfield Foods, Inc. A company that had, until recently, been making a healthy margin off pork bread in the US and sent to China. A ten percent tariff beginning June 5th has been imposed by Mexico on frozen and chilled pork muscle. This doubles the import tax to twenty percent. This action occurred after the duties the Trump administration placed on imported steel and aluminum. 

The additional import duty of 25 percent from China will impact $34 billion on U.S. goods. This response is to the actions against Beijing from President Trump for the alleged theft of intellectual property. Additional taxes are being added by China for U.S. autos. dairy, cotton, soybeans, wheat, and whiskey. 

The U.S. exported $20 billion to China last year. Soybeans were more than fifty percent. The 25 percent duty in April was retaliation for the steel tariffs from the Trump administration. The high import taxes close the door on the United States importing pork into China. The industry experts have calculated the tariffs from China amount to roughly $18 for ever animal annually. This is over $2 billion.

These new tariffs will amplify and impact the expansion of the pork industry during the last several years. Last week, the hog herds were disclosed as being at a record high by the United States Department of Agriculture. The trade issues with China are affecting the export volumes from the U.S. These have been decreasing since 2016. The need to import additional pork is currently high. Last year, China presented the second largest volume market for hog producers in the U.S. According to the federation, the export value was approximately $1.1 billion. 

The biggest volume market for the previous year came from Mexico. The export value was just behind Japan at $1.5 billion. The Chinese and Mexican markets are considered extremely important for the U.S. This is because they are buying the products usually not purchased by Americans such as raw hams and variety meats including heart, snout, ears, and tongue. The typical value of a hog in 2017 was $147. Of this value, $54 came from exports. There are approximately 550,000 jobs connected to the pork sector. Unfortunately, 110,000 are directly connected to exports. 

In the past, President Trump has made offers to compensate the farmers. Sonny Perdue is the USDA Secretary. He has stated numerous times he was instructed by President Trump to formulate a plan to protect the agricultural businesses and the farmers.