Mexico set to impose 20 percent tariff on US pork legs: sources

World
Europe

Mexico will impose a 20 percent tariff on US pork imports, two industry officials with direct knowledge of the plan told Reuters on Monday, for the first time providing details of the country’s retaliatory measures to US President Donald Trump’s tariffs on steel and aluminum.

Last week, Mexico said the retaliatory tariffs would apply to pork legs and shoulders from US suppliers, which account for about 90 percent of the country’s 1.07 billion US dollars annual imports of the cuts.

“It’s a 20 percent (tariff) on legs and shoulders, fresh and frozen ... with bones and without bones,” said Heriberto Hernandez, president of Mexico’s leading pork producers association OPORPA, following a briefing earlier on Monday with Economy Minister Ildefonso Guajardo and his team.

The government has not yet given details of the level of the tariff and did not immediately respond to a request for a comment about the tariff or the meeting.

Hernandez said he supported the Mexican government’s decision and does not expect it to cause pork prices in Mexico to rise because “there are many alternatives” to US suppliers.

The tariff was in response to the Trump administration’s decision last week to impose steel and aluminum tariffs on Mexican exporters on grounds that countries including Mexico engage in competition damaging to US national security.

Reuters Photo

The US decision to go ahead with the steel and aluminum tariffs has complicated talks with Mexico and Canada to rework the North America Free Trade Agreement (NAFTA).

Other industry officials pointed to Canada as a possible substitute pork supplier that has tariff-free access to Mexico thanks to NAFTA, or the European Union, which recently concluded a revised trade pact with Mexico that allows tariff-free pork imports but does include other restrictions like volume quotas.

The industry officials said the new pork tariff schedule will be published on Tuesday in Mexico’s official gazette and will go into effect on Wednesday.

Last year, Mexico imported nearly 650,000 tons of pork legs and shoulders worth an estimated 1.07 billion US dollars, according to government data.

Mexico’s overall pork imports in 2017 totaled about 840,000 tons.

Pork legs and shoulders are not as highly valued in the United States, where ribs and bacon are in greater demand, but in Mexico they are used to make some of the country’s most popular dishes, including tacos al pastor and carnitas.

Victor Manuel Ochoa, chief executive of top Mexican pork producer Granjas Carroll, said he would support a temporary import deal for Brazilian pork legs if Mexico goes ahead with the tariffs on US imports.

He said prices in Mexico will likely rise as a result of the tariffs on US pork. “We think they’d rise around 15 or 16 percent, and I think that could reduce consumption which worries me,” Ochoa said.

Granjas Carroll is a joint venture of ECOM Agroindustrial Corporation, a major commodity trader, and China’s WH Group.

“It would be very difficult for Mexican pork prices to stay the same,” Ochoa added, if imported US pork prices spike as a result of the tariffs.

VCG Photo

Mexico to take trade spat with the US to WTO

Meanwhile, Mexico will take its tariff dispute with the United States to the World Trade Organization (WTO), the Ministry of Economy said on Monday.

In a brief statement, the ministry said Mexico will begin the process of dispute resolution at the WTO over Washington's new steep tariffs on imported steel and aluminum.

"Mexico believes the measures imposed by the US ... arguing threats to national security, violate the WTO's Agreement on Safeguards, as well as the 1994 General Agreement on Tariffs and Trade," the ministry said.

As of June 1, the US imposed steep tariffs on imported steel (25 percent) and aluminum (10 percent) from the European Union as well as Mexico and Canada, partners of the United States in NAFTA.

Mexico's National Iron and Steel Industry Chamber (Canacero) last week said the new tariffs will cost two billion US dollars a year.

In 2017, the United States received 80 percent of Mexico's total exports, with steel representing just two percent, according to government figures.

Source(s): Reuters ,Xinhua News Agency