The Trump administration announced plans on May 17 to lift the 25% tariff on steel and the 10% duty on aluminum imports imposed last year on Canada and Mexico.
Hailed by some as the biggest obstacle to passing the U.S.-Mexico-Canada (USMCA) Agreement, this announcement provides hope for pork producers for an agreement to preserve zero-tariff trade for U.S. pork in North America.
“The lifting of the metals-related tariffs was seen as a necessity to get an eventual vote in the U.S. Congress on USMCA,” says Jim Wiesemeyer, Pro Farmer analyst. “But the timeline on when an actual vote will take place is murky. The key to that is primarily up to House Speaker Nancy Pelosi (D-Calif.), who has said she and many Democrats have issues relative to labor and environmental language enforcement, particularly regarding Mexico."
A big hurdle has been lifted but lobbying by the Trump administration and lawmakers supporting USMCA will now accelerate, Wiesemeyer adds. The Trump administration aims to send paperwork to Congress soon, which could set up a vote on USMCA before lawmakers leave for the entire month of August, but some congressional sources say that time line appears optimistic.
A Strain Lifted for Pork Producers
After Trump imposed tariffs on Canada and Mexico on June 1, 2018, both countries retaliated against a host of U.S. products. Mexico’s 20% retaliatory tariff on U.S. pork cost producers $12 per animal, or $1.5 billion on an annualized, industry-wide basis.
The metals tariffs not only hurt U.S. pork producers, but also caused challenges for U.S. manufacturers that depend on steel and aluminum imports, increasing costs for American industrial and consumer goods.
“We thank the administration for ending a trade dispute that has placed enormous financial strain on American pork producers,” said David Herring, a pork producer from Lillington, N.C., and president of the National Pork Producers Council.
Last year, Canada and Mexico took over 40% of the pork that was exported from the U.S., impacting U.S. pork producers greatly.
“Removing the metal tariffs restores zero-tariff trade to U.S. pork’s largest export market and allows NPPC to focus more resources on working toward ratification of the U.S.-Mexico-Canada Agreement (USMCA), which preserves zero-tariff trade for U.S. pork in North America,” Herring said.
NPPC has designated USMCA ratification as a “key vote” and will closely monitor support of the agreement among members of Congress, NPPC said in a statement. U.S. pork exports to Mexico and Canada support 16,000 U.S. jobs.
NPPC Pushes for End to Japan Trade Dispute
“We are also hopeful that the end of this dispute allows more focus on the quick completion of a trade deal with Japan,” Herring added. “U.S. pork is losing market in its largest value market to international competitors that have recently implemented new trade agreements with Japan.”
According to Dr. Dermot Hayes, an economist at Iowa State University, U.S. pork will see exports to Japan grow from $1.6 billion in 2018 to more than $2.2 billion over the next 15 years if the U.S. quickly gains access on par with international competitors. Hayes says that U.S. pork shipments to Japan will drop to $349 million if a trade deal on these terms is not quickly reached with Japan.