A Senior Risk Management Analyst with HAMS Marketing Services says increased import tariffs imposed by the United States on its trading partners will pressure the value of North American live hogs if those partners impose retaliatory tariffs on U.S. pork.Effective August 7th the general tariff the United States charges on imports from Canada not protected by the Canada United States Mexico Agreement increased from 25 to 35 percent and additional tariffs have also been levied on other U.S. trading partners.
Paul Marchand, a Senior Risk Management Analyst with HAMS Marketing Services, says, because Canadian hog prices are determined by a formula based on the U.S. price for hogs, Canadian hog prices will be negatively affected by any retaliatory action that affects U.S. pork.
Quote-Paul Marchand-HAMS Marketing Services:
Once again, we're fairly fortunate that the new levies are applied to those goods that are not covered under the USMCA or the CUSMA as we know it in Canada, the old NAFTA, so the North American pork industry should remain fairly resilient and not a lot of changes are expected on that front.Of course, there will be some supply and demand chain disruptions if these tariffs last for any length of time and we're going to be watching that closely to find out if there's any policy lag or follow through on that front.
But, of course, because of the way prices are determined in Canada, we're more interested in the retaliation on the U.S.A. than any application of a tariff on another global trading partner from the U.S.A.Again, for now USMCA-CUSMA has protected the North American hog industry for now at least and that's really important because it includes Mexico and Mexico is the number one export destination for U.S. pork and so far, the retaliatory measures have only been threats at this point.
Marchand says if, trading partners decide the U.S. is no longer a reliable trading partner because of the tariff issue and move away from U.S. pork, both Canadian and U.S. prices will face pressure.He notes, while it may or may not be related to tariffs, Brazil has overtaken the United States as the number one supplier of pork to the Philippines.
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Source : Farmscape.ca