After rising to 50 percent in August, the tariff on U.S. frozen beef sold to Japan has gone back down to 38.5 percent. The rate was reduced on April 1, the start of the new Japanese fiscal year.
Kent Bacus, National Cattlemen’s Beef Association director of international trade and market access, explained, “The big problem with our access to Japan right now is we’re limited in the volume we can send into the Japanese market. Unfortunately, we sold so much beef into the Japanese market that we exceeded a preset threshold and triggered what is referred to as a snap-back tariff. So that already really high tariff of 38.5 percent jumped up to 50 percent.”
Bacus said the higher rate during those months meant the U.S. wasn’t able to capitalize on the opportunities it could have because of the added tariff.
Bacus said Japan is an important market for the U.S., representing about $2 billion annually, even with the 38.5 percent tariff. But, he said competing countries are negotiating agreements that will give them preferential tariffs in the Japanese market. He noted, “That means that we are going to be much more expensive than everyone else.”
Australia has a bilateral trade agreement with Japan that had the tariff on frozen beef at 27.2 percent; that duty was reduced to 26.9 percent on April 1.
Speaking of the importance of trade agreements, Bacus said, “We don’t know how much longer we can continue to enjoy these gains, but if we don’t have a meaningful trade agreement that locks in those lower tariffs for us, then eventually we’re going to get squeezed out of the market. As the Australian herd recovers, as they become more competitive—that $2 billion market may not be there for us.” He added, “And there’s no other market that we know of and that we’ve been able to develop that can absorb the volume and the value that Japan is for the U.S.”
As previously covered in WLJ, President Donald Trump pulled out of negotiations with 11 other nations, including Japan in the Trans-Pacific Partnership. Had the U.S. remained in that agreement the tariff on U.S. beef would have eventually dropped to 9 percent.
Japan remains a valuable trading partner for the U.S. because consumers there enjoy beef tongue and other cuts that Americans find less desirable, Bacus said. “That’s why it is a top priority for us to secure a trade agreement with the Japanese.”
Bacus noted, “We were hopeful that we would get that through the Trans-Pacific Partnership, but if that’s not an option we need a bilateral agreement and we need it right away.” — Rae Price, WLJ editor
