US pork producers turned into casualties of trade wars
China and Mexico have imposed additional taxes on US pork products and the industry is anticipating heavy winds ahead.
Mexico has doubled the duties to 20% for pork, while China seems to be a forbidden land with taxes that reach 81% in value, of which 10% is represented by VAT.
"At 81 percent net tariff, you're not moving any pork product into China.I would suspect by the end of the year, hog producers will be losing quite a bit of money. Part of it is just surplus pork on the market. We've been in an expansion mode", declared Christine McCracken, executive director of animal protein at Rabobank, for CNBC.
By now, 25% of the pork production in the US was sold on the external markets, Mexico and China being top buyers. A new set of duties announced in the spring by president Trump on imported steel and aluminium have led to a trade war with foreign partners and many producers are now worried about what lies ahead.
"It's really tough and we had anticipated a decent 2018-19. This is only the second time we've had red ink 37 years in the business. We want to compete and be able to sell abroad and make sure our government knocks down trade barriers. All we've accomplished is getting more trade barriers. We are the casualty and predicted it from day one", declared Ken Maschhoff, chairman of Maschhoff Family Foods and co-owner of the nation's largest family-owned pork producer.
The losses for the industry may reach $2 billion annually in the Chinese market alone, according to experts. "Mexico and China are about 40% of total exports, so those are critical markets and it's a significant concern with U.S. pork," said Jim Monroe, a spokesman for the National Pork Producers Council, who also predicts significant financial problems for the industry.
Last year, China's pork imports from the US reached a value of $1.1 billion and Mexico accounted for $1.5 billion, according to US Meat Export Federation (USMEF) statistics.
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