Packers and cattlemen are anxious about White House talk of
a 20 per cent tariff on Mexican imports to pay for President Donald Trump’s
promise to build a wall.
Ninety per cent of Mexico’a 161,000 tonnes of beef exports
in 2015 were to the United States, up from 60 per cent a few years earlier.
The United States also imports about one million live cattle
from Mexico each year, which are slaughtered, or fed then slaughtered, in the
United States, with some of the resulting beef products exported back to
Mexico, according to Kent Bacus, director of international trade and market
access for the National Cattlemen’s Beef Association.
He said Mexico has become the second-largest export
destination for U.S. beef by volume and the third-largest in value.
The United States exports beef rounds, tongues, intestines
and other cuts more popular in Mexico, while Mexico exports muscle cuts like
ribeyes and tenderloins to the United States. Ground beef and beef trim trade
goes both ways.
Bacus told Meatingplace Magazine the
big concern would be trade disruptions that would limit U.S. feed yards and
packing houses from running at optimum efficiency.
“We’ve seen this before under the five years of COOL
(Country-of-Origin Labeling) when purchasing foreign-born cattle was discouraged.
Feed yards were not run at optimal levels and neither were packing houses, and
some of these had to close,” he said.
Mexican beef packer SuKarne recently built a large feedlot
and packing plant in Tlahualilo, Durango, for its proximity to the U.S. market.
SuKarne accounts for roughly 74 percent of Mexico’s beef exports, processing
more than 1.2 million head of cattle annually.
There is now speculation that SuKarne will be wooing Chinese
buyers.
“Mexico is not going to do this without reacting,” said Darrell
Peel, an extension specialist with Colorado Sate University. Mexico might
impose “at least a matching tariff” on U.S. exports to Mexico, he said.
Peel’s biggest concern for the beef industry, however, is
the impact if U.S. poultry and pork exports to Mexico are disrupted.
In the January-November period in 2016, while 15.5 percent
of U.S. beef exports went to Mexico, 30 percent of U.S. pork exports crossed
the border, and more than 21 percent of broiler exports went south, Peel said.
“What does it mean to the beef industry if we suddenly have
to eat a lot more pork and chicken we are not exporting? That’s the real
impact,” said Peel.
According to the Peterson Institute for International
Economics (PIIE), there are multiple ways President Trump could implement
import tariffs without Congressional approval.
There are legally empowering provisions
included in the Trade Expansion Act of 1962, Trade Act of 1974, International
Emergency Economic Powers Act of 1977 and even the Trading with the Enemy Act
of 1917.
“Any effort to block Trump’s actions through the courts or
amend the authorizing statutes in Congress would be difficult and would
certainly take time,” authors Marcus Noland, Gary Clyde Hufbauer, Sherman
Robinson, and Tyler Moran wrote in a briefing paper.
