Market News

Retaliatory tariff slows pork exports to Mexico

U.S. pork exports to Mexico appear to be headed for another record in 2010. But export activity slowed in September, when total pork exports to Mexico were down 12 percent from August.

One major factor may have been the five percent tariff imposed by Mexico as a result of the NAFTA trucking dispute.  U.S. Meat Export Federation head Phil Seng says while it’s difficult to draw solid conclusions based on only one month’s results, those who downplayed the significance of the tariff may have underestimated its impact.

“You’re talking about a market that’s very price-sensitive—and obviously anything that would raise our prices vis-à-vis Canada would be a setback,” Seng says, “and so we’re seeing that—basically, that five percent nullifies the freight advantage that we have in dealing with Mexico.  So in many ways this is a disadvantage to the U.S. industry.”

The United States’ main pork competitor in Mexico is Canada—and Canada’s exports to Mexico rose sharply in September.  Seng points out that came at a time when the Canadian dollar actually gained strength compared to the U.S. dollar.