President Donald Trump probably would make a good horse or cow trader, as he uses leverage adroitly. He has threatened to cut one-third or half of America’s troops, planes and ships from the North Atlantic Treaty Organization. He had already raised tariffs on European Union (EU) steel and aluminum, and threatened to raise the 15% tariff on goods to 25% if they didn’t deal. So, after nine months, the EU seems ready to approve a new trade deal with the U.S.
U.S.- EU Ambassador Andy Puzder expects approval by mid-June. The U.S. would set tariffs of 15% on most goods entering from the EU, while the EU would lower or eliminate tariffs on U.S. goods. Special preferential treatment will be given U.S. agricultural goods. The U.S. adjusted their tariffs last fall, complying with the July 2025 deal, but the EU hasn’t yet implemented the deal.
Puzder said only Trump could manage this. He was also surprised the EU was able to get the deal through the EU’s two houses of parliament. We’re surprised for one, that they could get any sort of “preferential treatment” for agricultural goods through the ultra-protective EU farm bloc.
For two, importantly for beef, Puzder said the deal includes reducing non-tariff trade barriers. He wasn’t specific, but the EU’s non-tariff trade barriers have reduced or eliminated American imports. Will beef get relief now?
China used the timing of the Trump and Chinese President Xi Jinping summit to renew registration of hundreds of U.S. beef processing plants to export to China. Evidently, details beyond that have been scarce and no purchase agreements have been announced on beef.
Action on imports of feeder cattle from Mexico is unlikely from USDA for a while as everyone’s attention is focused on the New World screwworm’s (NWS) appearance in Texas. As of this writing, four calves have been affected by the NWS. The comprehensive response was well mapped out ahead of time involving USDA and Texas officials. If these calves are native to Texas and weren’t shipped in, that confirms the fly has crossed the border.
That means imports of lean beef will continue to be the primary method of supplementing the tremendous demand for ground beef in America.
Some considerations:
• Affordability is always critical for the meat protein that is premium priced by dint of hard-earned consumer demand.
• We are now producing six to 10 times more Prime carcasses; the rest is mostly Choice. We have more fatty trim.
• Trim value is boosted by blending it with lean beef.
• We have fewer beef cows and dairy cows as culls.
• Part of the total value of a carcass is determined by trim value. It’s worth much more as an ingredient in ground beef than as tankage or pet food.
• That carcass value comes back to feedyards, to customers feeding in feedyards and the producers supplying the feeder cattle to feedyards.
• The beef production chain has spent decades and millions of dollars, including grocery chains, restaurants and fast food chains, developing ground beef demand.
• Demand for ground beef is not impervious to price and supply factors, as evidenced by value meal campaigns key to fast food chains.
• Our modern culture thrives on eating out, especially young people. Ground beef in some form is key.
• The demand for ground beef as a convenient and versatile ingredient is dependent on its reputation for quality, taste and safety. We must continue only importing lean beef that is either USDA-inspected or verified USDA-equivalent.
• Lowering tariffs by government means lean beef is available to private firms at a more favorable price point.
• The government and beef industry has followed a countercyclical approach for beef imports for decades, importing more when we had fewer cows and less when our cow numbers were up. That serves both the beef industry and consumers best.
Speaking of affordability, it seems the administration is suffering a pestilence also present in the cattle industry: PDS (Packer Derangement Syndrome). Even if basic economic logic—economies of scale—dictates that breaking up the big packers would raise consumer prices, at a time when record prices are already testing the limits of consumer demand, bureaucrats want to fight the big packers.
That reflects disregard for the beef industry’s long-term future, from the bull/semen tank to the consumer’s plate. — Steve Dittmer, WLJ columnist
(Steve Dittmer is the author of the Agribusiness Freedom Foundation newsletter. Views in the column do not necessarily represent the views or opinions of WLJ or its editorial staff.)
