The American pork sector is keeping a close eye on the game that President Trump is playing on the international stage. The markets are in great uncertainty. Fear of the possible consequences led to a sharp increase in recent sales of pork to buyers on export markets, but a setback is looming. This would then offer opportunities for Dutch exporters, but they are still cautious and point to the tensions between...
The United States has a share of between 15% and 20% in the world pork trade. The main buyers are Mexico, Japan, South Korea, China and Canada. Of the total pork production in the United States (around 12,5 million tonnes in 2024), approximately one third is sold on export markets. This makes the dependence on exports for pricing significant and therefore also the risks that the sector runs in the current trade war. Fears about the impact of the tariff war already had a significant impact on expectations this spring. The contracts on the futures markets for meat pigs showed a sharp decline for the summer months.
High import tariffs for all major partners
The list of countries for which US import duties would be imposed included all of the aforementioned countries that are important for the sales of pork for the United States. Exporters fear that these countries could also impose duties, which could put pressure on the export position of the United States, including for pork. China has already announced additional import duties of 34% on goods that it imports from the United States. These will come into effect on 10 April.
The fear of these tariffs is also clearly visible in the weekly export and sales figures released by the United States Department of Agriculture (USDA). New sales increased at an unprecedented rate in the week ending March 27. In this week, new sales volume was 88% above the 4-week average, totaling 54.700 tons. This volume was 33.200 tons in the previous week. There appears to have been a lot of trading done to anticipate the introduction of the tariffs.
Market can't choose a direction
When the tariff list was announced this week, it was notable that Mexico and Canada were not on the list. Much of the discussion about the potential impact of the trade war focused on the trade relationship with these two countries. It is not clear why these countries are now missing, perhaps the impact of the measures was too great to force through the tariffs.
However, other major pork export countries will be subject to high levies: Japan (25%), China (34%) and South Korea (25%). The extent to which countries will retaliate and whether this will also include levies on pork will become apparent in the coming weeks. Tomorrow (Saturday 5 April) the generally applicable levies of 10% on all products will come into effect. From next Wednesday (9 April) the levies announced for each country will apply.
The futures market for slaughter pigs in Chicago is at a loss with the developments. The positive fact that important and nearby trading partners Mexico and Canada are currently being spared and the uncertainty about the impact of the tariffs on partners such as Japan, China and South Korea are keeping the sentiment in balance for the time being. The contract for delivery in May has been fluctuating, converted into euros, around €1,95 per kilogram of slaughter weight for weeks. That is higher than the current carcass prices published by the USDA, which are currently around €1,75 per kilogram of slaughter weight.
Dutch exporters: consequences limited for now
Inquiries with Dutch pork exporters show us that the consequences are difficult to estimate in the short term, but that the current developments in the United States will not have a major impact immediately. However, the tariffs can have unpleasant consequences for individual companies. There are slaughterhouses and meat processors that export to the United States every week and it is questionable whether these importers want to pay the levies. However, it does not concern large volumes, it is said. According to Eurostat figures, approximately 2024% of the export volume went to the United States in 2.
Whether the trade dispute between the United States and countries such as Mexico, Canada and China can also provide opportunities for the Netherlands in the long term is still very difficult to estimate. It is far from certain that this will provide opportunities in the long term, also because there is considerable disagreement between, for example, China and the European Union about the mutual trade relations around electric cars.
A sales manager of a large pig slaughterhouse explains: "The coming period will show what impact the tariffs will have on trade flows. If there is an impact, the cards will be reshuffled. Suppose the United States finds it more difficult to export to Canada or Mexico. This may create opportunities for Europe, but where will the United States then go with the remaining volume? This could get in our way elsewhere. In short: we will really have to wait and see what exactly will happen. At the moment, the consequences are still limited."
By the way, several insiders unanimously describe the export market as quite calm. Much of the pork trade for export outside the European Union is done in US dollars. Due to the historically relatively cheap dollar Recently, exports have become less lucrative and American exporters are more likely to have an advantage in terms of price. "The rapidly rising European pig prices are also of course creating a less favourable competitive position."
China and EU Struggles
Parties in the sector also emphasize that uncertainty, which is currently the case, in principle always results in risk premiums and therefore at the expense of margins. "Before you are allowed to export to countries such as the United States and Mexico, you have to invest a lot, which can be for nothing at some point", it is said.
According to exporters, a much greater risk for the sector here is the still threatening Chinese levy on European pork. Although now more in the background, there is still an ongoing anti-dumping investigation by the Chinese into European sales of pork on the Chinese market. This is seen as the country's response to the introduction of European levies on the import of Chinese electric cars. Exports to China still give a considerable boost to the value of the Dutch pork carcass, according to insiders between €15 and €20.