U.S., Mexico and Canada Reach Agreement that Removes Retaliatory Duties on U.S. Red Meat

On May 17, the Office of the U.S. Trade Representative (USTR) posted this announcement regarding removal of Section 232 tariffs on steel and aluminum imports from Mexico and Canada and removal of those countries’ retaliatory duties on U.S. goods:

Today, the United States announced an agreement with Canada and Mexico to remove the Section 232 tariffs for steel and aluminum imports from those countries and for the removal of all retaliatory tariffs imposed on American goods by those countries. The agreement provides for aggressive monitoring and a mechanism to prevent surges in imports of steel and aluminum. If surges in imports of specific steel and aluminum products occur, the United States may re-impose Section 232 tariffs on those products. Any retaliation by Canada and Mexico would then be limited to steel and aluminum products. This agreement is great news for American farmers that have been subject to retaliatory tariffs from Canada and Mexico. At the same time, the Agreement will continue to protect America’s steel and aluminum industries.

The Mexican government also issued a statement saying that it is “committed to eliminating all tariffs imposed in retaliation for the measures taken by the Government of the United States,” which would mean restoring duty-free access to Mexico for U.S. pork. In June of last year Mexico began imposing a 10% retaliatory duty on imports of U.S. pork cuts, a 15% duty on U.S. pork sausages and a 20% duty on some U.S. processed hams. The duty rate for U.S. pork cuts increased to 20% in July 2018.

“Mexico’s retaliatory duties on U.S. pork have absolutely hammered the U.S. industry, and removal of these duties is tremendous news for the entire U.S. supply chain,” said USMEF President and CEO Dan Halstrom.

Mexico is the leading volume market for U.S. pork, and exports in the first quarter of 2019 were down 13% from a year ago to 177,420 metric tons (mt). Value declined 29% to $261.9 million as U.S. producers and exporters bore the cost of the retaliatory duties. When factoring in the lost value due to lower prices for key items often exported to Mexico, such as bone-in hams and picnics, from every hog produced in the United States, industry losses have exceeded $1 billion since June 2018.

Global Affairs Canada posted a joint statement announcing that the United States and Canada have agreed to eliminate, no later than May 19, all tariffs the United States imposed on imports of aluminum and steel products from Canada and all tariffs Canada imposed in retaliation.

This would include removal of the 10% tariff Canada imposed, beginning in July of last year, on prepared beef items imported from the United States. Canada is the fourth-largest market for U.S. beef and first quarter exports were down 14% in both volume (23,199 mt) and value ($143.8 million). Canada’s imports of the U.S. beef products affected by the 10% duty fell by about $20 million (or 16%) from July 2018 through March 2019.

“This is also excellent news for the U.S. meat industry, as it will mean restoration of duty-free access for all U.S. red meat to Canada and Mexico,” Halstrom added. “Elimination of these duties also removes a major obstacle for the U.S.-Mexico-Canada Agreement, which is a very important trade agreement for U.S. agriculture.”