As the Trump administration imposes tariffs on countries in response to their unfair trade practices, the National Pork Producers (NPPC) urges a cautious approach. Negative consequences often follow such duties, in particular NPPC points out retaliatory tariffs on U.S. goods, including pork.
“NPPC is asking USTR to ‘carefully’ target trade remedies only at products where foreign government intervention has created excess capacity that is immune to market correction,” NPPC says. “NPPC also wants USTR to exclude agricultural equipment and components and inputs from tariffs to avoid inflating domestic production costs.”
The Impact of Section 301 Tariffs
The challenges caused by nations using forced labor and fostering overcapacity of products and subsequently subsidizing exports are undeniable, NPPC points out in comments submitted to the Office of the U.S. Trade Representative. NPPC also acknowledged the administration’s use of Section 301 tariffs as a way to protect domestic manufacturers of, for example, steel, aluminum, and semiconductors.
The U.S. pork industry historically has been the primary target in trade disputes involving manufacturing, NPPC says.
“Pork is a high-value commodity on which trading partners often impose retaliatory duties ‘to exert maximum political pressure on the U.S. government’ to back off its tariffs,” NPPC wrote.
Using Section 301 tariffs as a permanent trade architecture creates uncertainty, which stifles long-term business planning and investment, NPPC adds.
“Section 301 was designed to enforce U.S. rights under trade agreements and encourage negotiations, not to serve as a permanent tax on imports,” the oganization says.
Section 301 tariffs directly inflate input costs for a U.S. crop sector that is already struggling with high costs and low market returns, they shared in the comments.
“U.S. farmers rely heavily on modern pesticides to protect their crops from diseases, weeds, and insects, ensuring strong yields and a reliable supply of food, fiber, and fuel,” the comments say. “The manufacturing of these crop protection products relies on highly complex, global supply chains, with final formulated products often containing dozens of active and inert chemical ingredients. Although some specific pesticide ingredients have received tariff exemptions, many crucial active and inert ingredients remain subject to Section 301 tariffs, making it significantly more expensive for companies to manufacture and deliver vital products to American farmers.”
When grain prices rise, so do the costs to produce pork and pork products, NPPC explains. In the end, these increased costs threaten farmer incomes, crop quality and the economic health of rural communities.
Positive Investments Instead of Punitive Tariffs
Imposing of U.S. tariffs can prompt retaliatory duties on American goods, NPPC says.
For example, trade disputes with China in 2018-2019, saw that country respond to U.S. 301 tariffs (and Section 232 duties) with tariffs on U.S. pork of 62% to 70%. This resulted in an estimated annualized loss of nearly $646 million in exports.
It’s also difficult and costly to regain market share in a country once a trading partner responds to U.S. tariffs by sourcing pork from U.S. competitors such as Brazil or the European Union, even after the tariffs have been lifted, the organization says.
“If the U.S. government’s overarching goal is to strengthen domestic agricultural supply chains and manufacturing, it should replace punitive tariffs with positive investment strategies, “NPPC wrote. “These strategies should include tax credits, low-to-no-interest loans for capital investment, grant programs for workforce training to bring innovative, domestically manufactured products to the U.S. market.”
