Canada strikes U.S. beef over metal tariffs

Trump and Trudeau shake hands during a joint press conference, Feb. 13, 2017, in the East Room of the White House. Despite talks of close friendship between the U.S. and Canada from both President Donald Trump and Prime Minister Justin Trudeau, the ongoing tariff fight deepens.

Canada joined Mexico recently in striking back against U.S. agriculture, trading tariff blows over metal tariffs. While Mexico went after U.S. pork, Canada is going after beef. Though it is hitting a narrow target—prepared, ready-to-eat beef products—the impact could be wide-ranging.

On Friday, June 29, Canada announced it would implement retaliatory tariffs against U.S. goods, including about $164-170 million in tariffs aimed at U.S. beef. The tariffs are valued at 16.6 billion Canadian dollars (approximately $12.6 billion) total.

“These countermeasures will take effect on July 1, 2018 and will remain in place until the U.S. eliminates trade-restrictive measures against Canadian steel and aluminum products,” announced the Canadian Department of Finance.

The Canadian tariff on U.S. beef is a 10 percent tariff on imports of prepared, ready-to-eat beef products and “other” beef products.

“It’s not beef in general,” Joe Schuele, vice president of communications for the U.S. Meat Export Federation (USMEF), told WLJ. He said the affected items come from “a very narrow category” of beef exports to Canada.

“Most of the volume—the fresh boxed beef that we’re shipping to Canada—is not subject to the tariff.”

However, this doesn’t mean that the tariffs are a small matter.

“Canada’s actually our largest market for those items,” Schuele said.

“To put it in perspective, we exported about $800 million in beef to Canada last year, and we would estimate that $164 million of that total export would have been subject to that tariff. Right around 20-21 percent of the value that we ship there would have been subject to the tariff. Even though it’s a very narrow and specific category, it’s certainly not a small amount of business.”

“These retaliatory tariffs were and still are clearly avoidable, and the unfortunate casualties will be Canadian consumers and America’s cattlemen and cattlewomen,” commented Kent Bacus, the National Cattlemen’s Beef Association’s director of international trade and market access.

“We may not know the extent of the damage these tariffs may have on our producers, but we believe that cooperation is a better path forward than escalation.”

In 2017, Canada was the U.S.’ fifth largest destination for exported beef by volume at 256.9 million pounds and value at $796 million, according to USMEF records. According to both USDA and USMEF records, Canadian imports of U.S. beef have fluctuated over the past decades with 2011 seeing the peak in terms of volume.

Also in 2017, Canada was the top source of beef imported into the U.S., sending the U.S. well over double the volume of meat the U.S. sent Canada.

Other impacts

Though the Canadian retaliatory tariffs strike U.S. beef, the primary targets are U.S. steel and aluminum goods. Much like the U.S. tariffs against Canadian steel and aluminum, Canada levied 25 percent tariffs on steel goods and 10 percent tariffs on aluminum goods.

The prepared beef items were on an additional list of non-metal items targeted for 10 percent retaliatory tariffs. Other items on that list include food and agricultural goods such as yogurt, coffee, prepared meals involving chicken, chocolate and sugar “confectionary” including toffee, condiments, jams, pickles, orange juice, agricultural pesticides, and soft wood and paper products.

The U.S. steel and aluminum tariffs were applied to Canada last minute on May 31, effective June 1. The lists of potential retaliatory tariff targets were open for public comment from Canadians beginning in early June.

When the May 31 announcement was made that the metal tariffs would apply to Canada as well as other countries, President Donald Trump wrote in a pair of presidential proclamations that he concurred with the Secretary of Commerce in finding that “steel mill [and aluminum] articles are being imported into the United States in such quantities and under such circumstances as to threaten to impair the national security of the United States…”

In both proclamations, Trump applied the 25 percent steel tariff and 10 percent aluminum tariff on Canada, Mexico, and the European Union. All three had previously been exempted from the tariff in earlier announcements.

Following the announcement of the tariffs, Canadian Prime Minister Justin Trudeau called them “totally unacceptable.”

“Today we find ourselves the target of punitive tariffs on Canadian aluminum and steel, under pretext of a 232 national security provision,” he said in prepared comments. “

“The numbers are clear: The United States has a 2 billion U.S. dollars-surplus in steel trade with Canada—and Canada buys more American steel than any other country in the world, half of U.S. steel exports. Canada is a secure supplier of aluminum and steel to the U.S. defense industry, putting aluminum in American planes and steel in American tanks. That Canada could be considered a national security threat to the United States is inconceivable.”

Reports from the U.S. International Trade Administration confirm some of these volume claims. In 2017, Canada was the top consumer of U.S. steel exports, taking 52 percent of all exports in 2017. — Kerry Halladay, WLJ editor

WLJ Managing Editor

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