Mexican pork imports from the US still growing- despite hefty tariffs
In June this year, Mexico retaliated to the introduction of tariffs on shipments of steel and aluminium to the US, by introducing retaliatory tariffs on US pig meat imports. Despite this, pig meat imports from the US have remained strong in subsequent months, according to the latest figures from INEGI.
For January-July this year, Mexican fresh/frozen pork imports from the US were 11% higher than the same period in 2017. Even in July alone, when the tariffs on US pork were raised from 10% to 20%, deliveries were still 3% higher than year earlier levels. Overall pork imports so far this year are 12% higher compared to 2017, at 503,000 tonnes. The latest USDA forecasts anticipate an 8% growth in pork imports for the year overall, suggesting the pace of growth will be slowing in the latter half of the year.
Of course, there have been some impacts of the new tariffs on the Mexican pork market. National pig prices rose sharply after the introduction and have subsequently remained well above year earlier levels. The new duty-free Tariff Rate Quota, open to other global suppliers, has also led to an increasing diversity in suppliers. Typically, the US supplies around 85% of Mexico’s fresh/frozen pork imports, but in July this share dropped to under 80%. Most of this was picked up by Canada, but Germany and Spain also began to ship product during the month, though admittedly in very small volumes.
The continued import of US pork products reflects strong demand for pork in Mexico. The USDA forecasts reflect this, with domestic consumption of pork expected to grow 6% in 2018, compared to 2017. Domestic production is also increasing; a growth of 3% is anticipated for 2018 overall to bring annual production to 1.3 million tonnes carcase weight equivalent. However, it seems this expansion has been insufficient to keep pace with developments in demand levels. Further increases in production are anticipated next year (+4%).
It is somewhat difficult to anticipate how imports will pan out in the coming months. Recently, a new agreement, the US-Mexico-Canada agreement (USMCA), was reached with the US, but the tariffs on steel and aluminium products are yet to be removed. A senior Mexican trade negotiator last week indicated that the USMCA will not be signed until this is the case, and hence it is unlikely that the pork tariffs will be removed before this point. So it seems that while there has been some progress, the outlook for US pork in Mexico is still uncertain.
Bethan Wilkins, Analyst
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