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Beef Tariff Hike Threatens US-Japan Trade Relations

01 August 2017

US & JAPAN - Japan's decision to hike tariffs on frozen beef imports from the United States could disrupt sales and harm trade relations between the two countries, US Agriculture Secretary Sonny Perdue said on Friday.

According to The Asahi Shimbun, the Ministry of Finance said that Japan will raise tariffs from August on imports of frozen beef, popular in beef bowl dishes, from the United States and some other countries to 50 per cent from 38.5 per cent, until next March.

"I am concerned that an increase in Japan's tariff on frozen beef imports will impede US beef sales and is likely to increase the United States' overall trade deficit with Japan," Mr Perdue said in a statement. "This would harm our important bilateral trade relationship with Japan on agricultural products."

The tariff hike is a "safeguard" mechanism to protect domestic farmers, Japan's ministry said. It is the first time it has been used since 2003.

Japan is the top destination for US chilled and frozen beef, with trade valued at $581 million this year through May. Exports of chilled beef from the United States to Japan totaled 57,970 tons during that period and frozen beef exports were 44,760 tons - valued at $414.4 million and $166.7 million, respectively, according to US Meat Export Federation data.

Tyson Foods Inc., the largest meat processor in the United States, said on Friday it supported US government efforts to address the issue with Japan.

The tariff hike comes as the US beef industry is expecting an increase in supplies, according to two recent US Department of Agriculture reports.

"US beef needs all the demand it can get," said John Nalivka, president of industry research firm Sterling Marketing.

The expected ample US beef supplies could mean export prices fall to compensate for the increased tariffs or demand could switch to chilled beef imports.

Among the countries not affected by the tariff increase are Australia and Mexico because they have economic partnership agreements with Japan.

Australia could still struggle to win market share as its prices remain high because of a drought that has cut cattle numbers, said Mr Nalivka, who added that a weaker US dollar could help offset the tariff increase.

Mexico sends about 2.7 per cent of its total exports to Japan, mostly frozen beef, and could take advantage of the tariffs to boost that.

"This does present an opportunity for Mexico," said Rogelio Perez, the top trade official with Mexican cattle growers association AMEG.

Any new beef exports to Japan from Mexico, however, would not occur until at least September.

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