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News Alert


June 19, 2018

 

Mexico retaliatory tariffs vs. US pork to start July 5

 

 

US President Donald Trump's tariffs on steel and aluminium has led Mexico to impose retaliatory tariffs on US products including virtually all fresh/frozen pork, sausages and some prepared hams.

 

A current 10% duty on fresh/frozen pork cuts is set to rise to 20% on July 5, even as a 15% tariff on sausages and 20% on some hams came into effect immediately. In 2017, this trade totalled around 1.35 million tonnes worth around $1.2 billion, and accounted for 89% of total Mexican imports of the mentioned products, AHDB Pork reports.

 

For other global exporters, however, Mexico is opening a 350,000-tonne duty-free quota for imported pork cuts planned to remain in place until the end of this year to minimise any potential rise in pork prices on the Mexican market, according to the pork division of the UK levy body Agriculture & Horticulture Development Board.

 

The quota is open to Mexican pork processors and operates on a first-come-first-served basis. Established importers have access to 97% of the quota, with the remaining 3% reserved for new importers. Imports can be sourced from any country eligible to export pork to Mexico, which technically includes the US, according to the USDA as reported by AHDB Pork.

 

AHDB Pork said that several EU plants are already approved to export pork to Mexico. "Outside of the quota, these shipments would incur a 20% tariff, significantly limiting the viability of the trade and so in previous years, volumes supplied by the EU have been negligible", it added.

 

AHDB Pork further noted that it would not necessarily be easy for the EU to win a slice of the Mexican market. "It is unlikely to be viable to supply fresh/chilled product, which occupies 88% of imports at the moment". In addition, product will have to compete with Canadian and Chilean pork, which enjoys tariff-free access under separate trade agreements. 

 

Besides, EU pork prices are also generally higher than those in North America, which may limit the opportunity unless discounts are made. However, the average EU export price for frozen shoulders and legs was lower than Mexican import price last year, and this may offer some opportunity for these products, in particular. However, this product only accounted for less than 0.5% of Mexican pork imports in 2017, AHDB Pork said.
 
 
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