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Is bacon at risk?

Tim Nelson
June 06, 2018

Are trade wars really as easy to win as President Donald Trump said they are? With Mexico aiming retaliatory tariffs at some crucial American food exports, it’s looking like this one might not be an easy fight.

This week, Mexico announced it will introduce roughly $3 billion in import tariffs on American made steel, as well as agricultural products like pork and cheese. According to a Mexican Ministry of Economy spokesperson quoted by NBC News, pork shoulders and legs are subject to a 10% tariff, which will increase to 20% by July 5th.

The move comes in response to steel and aluminum tariffs levied against Mexico, imposed by the Trump administration in an effort to gain the upper hand as they work to renegotiate NAFTA in a way that’s more favorable to US interests. Mexico chose these particular industries were chosen because they would hit leading American politicians where it hurts: the selection of steel was meant to troll former Indiana governor and current Vice President Mike Pence, while House majority leader Kevin McCarthy’s California constituents will be among those to feel the pinch from a smaller export market for agricultural products.

The effects won’t be contained to a single congressional district, however. Mexico is the second-biggest export market for US pork, with the 650,000 metric tons of legs and shoulders sent across the southern border last year accounting for upwards of $1 billion in sales. According to the Iowa Farm Bureau (an organization that represents the nation’s largest pork-producing state), lost revenue for US pork producers could add up to $100 million.

“These tariffs will exact immediate and painful consequences on many American farmers,” said Farmers for Free Trade deputy director Angela Hofmann in a statement quoted by the New York Times. “Farmers need certainty and open markets to make ends meet. Right now they are getting chaos and protectionism.”

There’s a possibility that this trade protection is good news for American consumers, at least in the short term. Some producers will likely choose to steer those exports back to the domestic market, potentially driving prices on bacon and other cuts of pork down. Of course, a prolonged trade war would encourage pork producers to reduce their supply and negate such savings in the long term.

Exacerbated by the White House’s desire to conduct separate bilateral negotiations with Canada and Mexico, continued uncertainty around the future of NAFTA could cause some long-term problems. The window for getting a deal done in time for congressional approval this year is closing rapidly, and a possible shift to a Democratic majority in the house and/or senate after the midterms could complicate proceedings further. With tales of tariffs affecting everything from beer cans to bacon dragging on for months now, the only thing we know for sure is that whatever trade war we’re fighting hasn’t been won by anyone yet.

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