National Press Foundation

Impacts of Tariffs on U.S. Pork

September 17, 2019
John Johnson, COO National Pork Board
China
Retaliatory Tariffs in China Target U.S. Pork
March 23, 2018
U.S. imposes worldwide Section
232 tariffs on steel (25%) and
aluminum (10%) imports.
April 2, 2018
China levies a 25%
retaliatory tariff on
U.S. pork.
Source: NAMI
July 6, 2018
U.S. imposes 25% tariffs on $34
billion in Chinese imports after
Section 301 investigation.
July 6, 2018
China retaliates with 25% tariff on $34
billion in U.S. goods, including pork.
Pork imports now face up to 62% tariff
(Sec. 232 + Sec. 301 + existing duty)
August-September, 2018
U.S. imposes additional tariffs (10-25%)
on $216 billion in Chinese imports.
August-September, 2018
China continues retaliating at a
tariff rate of 5-25% on an
additional $76 billion in goods.
September 1, 2019
After months of unproductive
negotiations, U.S. adds 15% tariff
to additional Chinese imports.
September 1, 2019
China answers with additional 10%
tariff on goods including pork and
beef. Pork imports now face tariffs
up to 72%
 Tariffs Limit Export Growth to China
• U.S. pork faces a 72% tariff in China, 60% is retaliatory
• Increased tariffs with China have cost the U.S. pork
industry $8 per animal or >$1 billion in total losses
– ~6% of market share and $308 million in lost exports*
– Prices of feet down 45% and neckbones/hocks down 25%

• Most countries saw growth in 2019 Q1 exports to China,

while the U.S. was down 20%
– China was the 3rd largest market for U.S. pork in 2018

Source: USMEF, Dr. Dermot Hayes – Iowa State University

*June 2019
China Pork Shortage Exceeds Global Trade
China Pork Shortage in 2019 vs. Total Global Pork Trade
12,000,000

Chile
10,000,000
Brazil
8,000,000 -10.8 MMT Chile Canada
Metric Tons

China pork Brazil

shortage if Canada U.S.
6,000,000
production
falls by 20% U.S.
4,000,000

EU
2,000,000 EU

0
Shortage Global Trade '18 Global Trade '19
Source: GTA and USMEF estimates, Erin Borror USMEF
U.S. Pork Volume Sales to China
Monthly Pork Sales to China/HK by Volume

70,000
60,000
50,000
Metric Tons

40,000
30,000
20,000
10,000
2017 2018 2019
0
Jan. Feb. March April May June July Aug. Sep. Oct. Nov. Dec.

Source: USMEF
Canada Pork Exports to China/Hong Kong
60,000 Canada Exports to China/Hong Kong
50,000

40,000
Metric Tons

30,000

20,000

10,000
2017 2018 2019
-
Jan. Feb. March April May June July Aug. Sep. Oct. Nov. Dec.
EU Pork Exports to China/Hong Kong
EU Exports to China/Hong Kong
1,000,000

800,000
Metric Tons

600,000

400,000

200,000
2017 2018 2019
0
Jan. Feb. March April May June July Aug. Sep. Oct. Nov. Dec.
U.S. Share of China Pork Imports (2018)
CHINA PORK CONSUMPTION CHINA PORK IMPORTS

Chile Australia/NZ
Imports
3% 1%
3%
Brazil
7%

U.S.
13%
Canada
13%

Domestic
Production
EU
97%
63%

Source: GTIS, Pork & Pork Products Imports

Mexico
Section 232 Tariffs and Mexico Retaliation

March 23, 2018 June 5, 2018 November, 2018 May 2019

U.S. imposes worldwide tariffs on Mexico places 10% tariff U.S., Canada, and Mexico sign Canada and Mexico remove
steel (25%) and aluminum (10%) on unprocessed U.S. USMCA at G-20 Summit. retaliatory tariffs on U.S.
imports with some exemptions. pork hams and Tariffs remain in place. imports.
shoulders.

June 1, 2018 July 1, 2018 May 19, 2019

Exemptions removed Mexico increases tariff U.S. removes Section 232
for Mexico, Canada, EU. on U.S. pork to 20%. tariffs from Canada and
Mexico.

Source: NAMI
Tariffs Have Significant Impact in Mexico
• Tariffs in Mexico have cost the U.S. pork industry $12 per
animal or >$1.5 billion in total losses
– Beginning June 2018, retaliatory tariffs led to 4% loss in market share and
$398 million in lost exports
– 20% decline in the prices of hams and picnics

• Tariffs lifted in May 2019

– Allowing the U.S., Canada, and Mexico to move forward with USMCA
– New agreement would ensure tariff-free exports of U.S. pork to North
American partners
– Export volumes to Mexico still down 12% YoY as of July 2019

Source: USMEF, Dr. Dermot Hayes – Iowa State University

Effect of Tariffs on Ham Prices
$1.00
Sec. 232 retaliatory
$0.90 tariffs lifted by Mexico

$0.80
$0.70
$0.60
$0.50
$0.40 Mexico levies 10%
retaliatory tariff on
$0.30 U.S. hams* Mexico tariff
increased to 20%
$0.20 *Mexico
purchases 50%
$0.10 2017 2018 2019 of U.S. hams
$0.00

Source: USDA, GTIS

Japan
Lack of Bilateral Agreement Hurts Exports to Japan
• Japan is the #1 value market for U.S. pork
• U.S. withdrew from the Trans-Pacific Partnership (TPP) in
2017
– Top U.S. export competitors such as Australia, Canada, Chile, Japan, Mexico
and New Zealand formed CPTPP agreement in 2018

• U.S. pork faces a significant tariff disadvantage compared to

competitor product
– 2.4% of market share and $88.4 million in exports lost
– In-principle bilateral agreement announced in August 2019 could put U.S. pork
back on a level playing field
Source: USMEF
Impact on Ground Seasoned Pork
Japan Imports of Ground Seasoned Pork
9,000
8,000
7,000
Metric Tons

6,000
5,000
4,000
3,000
2,000
1,000
0
Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19
U.S. Canada Mexico EU
Source: GTIS, Dr. Dermot Hayes
*EU data only available through 4/19