Mexico Threats of Pork Tariffs Pushing Losses in Iowa Higher

Iowa producers of pork that are already dealing with a tariff of 25% on pork exports from the U.S. to China could be facing another big hit with Mexico considering a tariff of 20% on pork shoulders and ham.

Growing worries over trade have cut prices of pork over the last few weeks, costing producers in Iowa close to $560 million, said an economist at Iowa State.

Mexico is the biggest export market for pork from the U.S. on volume. Last year Mexico purchased $1.5 billion of pork form the U.S. The next largest importer of U.S. pork is China at close to $1.1 billion annually.

The tariffs equal potentially devastating news for pig farmers in Iowa and the state’s rural economy. The state is the largest pork producer in the nation raising close to 40 to 50 million animals each year.

The association has said that close to 27% of all U.S. production of pork gets exported, which accounted for close to 40% of an animal’s average value in 2017.

Members of the pork industry in Iowa hope that Canada, Mexico and U.S. trade officials stop using food as one of their negotiating tactics.

The additional costs with tariffs have hurt the consumer in China and could potentially do the same in Mexico.

U.S. President Donald Trump late last week announced that the U.S. would be implementing a tariff of 25% for steel and a 10% one on aluminum imports from Canada, Mexico and the European Union.

In response, on Friday Canada said it would place tariffs on U.S goods worth $12.8 billion including whisky, aluminum and steel.

Europe proposed targeting the U.S. on icons like Levi’s Jeans, Kentucky bourbon and even Harley-Davidson. Mexico has also announced that it would consider tariffs for blueberries, steel and other types of products it did not name.

The threat of placing pork tariffs has come during the peak demand for the meat which is summertime grilling.

The pork industry would look normally to China for the purchase of excess pork, but China is closed now with tariffs that make products from the U.S. less competitive.

Most producers are likely going to withstand such as hit, as they have enjoyed strong profits the last four years and most enter this difficult period with heathy balance sheets, claim analysts.

Even though disruptions in trade hurt famers in Iowa, it will help the consumer with increased supplies of pork.

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