The economic impact of tariffs could be immense, given the highly connected nature of Canada, United States and Mexico
Glacier FarmMedia – Cattle producers throughout North America have been holding their breath since President Donald Trump began his second term in office.
They are hoping he will not go ahead with his threat to impose 25 per cent tariffs on all goods from Canada and Mexico, an additional 10 per cent tariff on all Chinese imports and a 100 per cent tariff on imports from the BRICS nations (Brazil, Russia, India, China, South Africa).
You can find all our coverage of the U.S. tariffs situation here.
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Tariffs, if enacted even at smaller percentages, could sharply increase costs for American, Canadian and Mexican businesses and consumers. They would make agricultural products from all three countries, including meat, harder to market abroad, while simultaneously raising costs for farmers, food manufacturers and consumers, say U.S. agriculture industry groups.
Should Canada, Mexico and China impose retaliatory tariffs on U.S. meat and poultry exports, they could severely damage what is a vital global trade for the U.S. industry.
The economic impact of tariffs could be immense, given the highly connected nature of the three North American countries. In fiscal 2024, Mexico became the number one destination for American agricultural exports for the first time (US$30 billion). Canada was number two (US$29 billion) and China was number three (US$25.7 billion).
In 2023, the United States imported nearly 17 million tonnes of agricultural goods from Mexico worth US$45.5 billion, according to U.S. Department of Agriculture data. Top categories included fresh fruits and vegetables (about two-thirds of all U.S. vegetable imports come from Mexico), sugar, dairy products and distilled spirits such as tequila.
Meanwhile, Mexico last year imported 40.45 million tonnes of U.S. agricultural goods worth $28.6 billion. Mexico is the biggest importer of U.S. corn and corn sweeteners, leaving American corn farmers particularly exposed to retaliatory tariffs.
U.S. agricultural imports from Canada in 2023 totalled 23.6 million tonnes, worth $40.1 billion, with top commodities including beef, pork, dairy products, oats and canola oil.
U.S. cattle producers have enjoyed several profitable years, in large part due to declining cattle numbers and strong beef demand. These two factors will likely determine whether producers will have an even better year in 2025 than last year.
However, the imposition of tariffs might threaten higher prices. It might be several weeks or months before North America knows for sure whether Trump will follow through on his threat.
This past year saw record prices for all classes of U.S. beef cattle.
Live cattle prices, based on a five-area steer, averaged $186.68 per hundredweight live, up 6.3 per cent from 2023’s $175.54 per cwt. live. Feeder steers (Medium Frame No. 1, Oklahoma City) averaged $252.09 per cwt, up 15.3 per cent from 2023’s $218.69 per cwt.
Slaughter cows (live equivalent, cutter 90 per cent lean) averaged $118.71 per cwt, up 25.3 per cent from 2023’s $94.77 per cwt.
The U.S. Department of Agriculture currently forecasts that live cattle prices this year will average $191 per cwt. live, up 2.3 per cent from last year. Feeder steer prices will average $272.50 per cwt., up 8.1 per cent on last year, and cow prices will average $127.75 per cwt., up 7.6 per cent on last year.
In other words, U.S. producers will again enjoy higher prices, albeit with smaller increases than seen in 2024.
The big question on the supply side will be whether higher prices will encourage cow-calf producers to retain more heifers than they did in 2024 and start expanding their herds in a meaningful way.
Three potential negatives to this would be widespread drought, tariffs and a sudden decline in beef demand.
Right now, beef production is forecast to decline five per cent this year from last year, which will likely push retail beef prices higher.
Steve Kay is publisher and editor of Cattle Buyers Weekly.
