Despite pulling back hours before midnight, the consequences of the Trump tariffs on the North American cattle industry could be huge. Here, we take a look at some of the numbers on the boxed beef trade and how the trade disruption could impact our markets.
While the North American beef industry can be broken down into its individual countries, it is, in reality, highly integrated. Movements of live cattle and beef across national borders are somewhat akin to how cattle and beef are traded between states here.
Last week, Trump signed executive orders affecting trade with Canada and Mexico. In retaliation, these countries imposed reciprocal measures, creating price pressures felt throughout the supply chain. The pause on the sweeping tariffs marks a significant victory for both traders and consumers.
Figure 1 shows that Canada is traditionally the largest exporter of beef to the US. In the 11 months to November 2024, Canada was slightly edged out by Australia but still exported 22% of the supply of US-imported beef.
Mexico is also a large supplier of beef to the US. In 2024, Mexico was the fourth-largest beef exporter to the US, accounting for 13% of total US beef imports.
The US also exports large amounts of beef to Canada and Mexico, as shown in Figure 2. However, US imports are much larger than their exports to Canada and Mexico.
With the threat of the imposition of tariffs, companies importing beef from Canada or Mexico would pay 25% on top of the price of the beef, and this goes to the government. In effect, beef might become 25% more expensive for the US consumer, or exporting countries would likely decrease their price by 25%. In reality, both probably occur, if the beef can compete in the US market.
When China imposed tariffs on Australian barley, it effectively ended the trade, as Chinese importers could source cheaper barley elsewhere.
We know the US cattle herd is currently very low, and prices are very high. Tariffs on two major exporters will see less beef imported, pushing prices higher.
Weaker supply from other countries, and considerably higher prices, should be good news for Australian beef export prices, as demand should strengthen even further. However, if the tariffs are imposed, we could also see displaced Canadian and Mexican beef find its way into some of our other export markets.
What does it mean?
Local cattle prices do traditionally respond to increases in export demand and prices, but they have been lagging way behind for the past 18 months. With the cattle supply strong, increased processing capacity is required to realise higher export values. With Trump in for four years, the potential stronger export prices might be enough to encourage processing expansion.
Key Points
- Canada and Mexico, both major beef exporters to the US, still face the looming threat of tariffs despite an agreement between Canadian Prime Minister, Mexican President, and US President Donald Trump to pause them for at least a month.
- Trump’s tariffs against China are still slated to go into effect on Tuesday.
- Tariffs will push the price of beef higher in the US.
- Australia could see stronger demand for its beef exports
Click on figure to expand
Click on figure to expand
Click on figure to expand
Data sources: USDA, MLA, Steiner, Mecardo
