Resolution of Canada-United States-Mexico metal tariff issue positive for hog markets

Expert says the removal of US tariffs on Canadian and Mexican aluminium and steel, and Canadian and Mexican retaliatory tariffs on US products, is a definite positive for North American pork producers.

28 May 2019, at 1:05pm

Last week the United States lifted duties imposed last year on steel and aluminium imported from Canada and Mexico and, in turn, Canada and Mexico have ended retaliatory tariffs on American products.

Speaking to Farmscape, Tyler Fulton, the director of risk management with HAMS Marketing Services, says that this is unequivocally positive for the North American hog market.

"When there was a tariff in particular that Mexico placed on US pork it had the effect of lowering the price of hogs in the United States and in Canada.

"What effectively was happening was the Mexican consumer was paying that tariff and because they had to pay a higher price for pork it meant that they consumed less and, when they consumed less that resulted in a back up of supply in the United States and consequently pressured prices domestically.

"This is because our price in Canada is a direct function of some US pricing points that translated into lower prices for Canadian pork as well."

Fulton says the Chinese tariff on US pork is no doubt a detriment but whether or not that is having a real impact on the amount of US pork being consumed in China is difficult to know. Hopefully, as time moves on, we'll get a clearer picture as to what that relationship is.

He says the effect of the Chinese tariffs on US pork on the movement of Canadian pork is also difficult to assess and is more likely to be determined in hindsight as pork export numbers become available but, he says, with Chinese domestic production down 20 percent they'll be looking for alternatives and hopefully Canada and the US will see some improvement in terms of export volumes to that country.