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USMEF Assesses Financial Impact of Mexico Duties on U.S. Pork

Wednesday, June 27, 2018

(North American Meat Institute)

The U.S. Meat Export Federation (USMEF) estimates the U.S. pork industry could lose more than $300 million for the remainder of 2018 and nearly $600 million in next 12 months resulting from a decline in ham primal value caused by Mexican tariffs on U.S. pork products. The added negative price pressure for both hams and picnics could result in industry losses of $425 million between July and December 2018, and $835 million during the next 12 months, according to the report. The report finds new import duties may result in decreased export volumes as U.S. products are priced out of the marketplace; lower prices and margins for exported items as the trade adjusts to the new tariffs; lower livestock prices in response to the decrease in meat prices; and long-term losses in market share due to Mexico’s desire to diversify away from the U.S.

According to USMEF, Canada will be the most likely beneficiary of the Mexican tariffs. The European Union also could benefit, as approximately 60 slaughter plants are approved to export to Mexico with others waiting for approval. Transportation and logistical challenges will make it difficult for Mexican processors to switch to Canadian and European pork, USMEF concluded, but increased Canadian and European supplies of pork could result in U.S. market share dropping to 75 percent from the current 90 percent in the latter half of 2018.

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