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Japan’s Tariff Action Raises Export Fears, Pressures Cattle Markets

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Friday’s announcement of Japan’s increase tariffs on U.S. frozen beef starting Aug.1, is sending ripples of concern through the cattle industry. There was little time to prepare, as U.S. exports just barely reached over Japan’s tariffs trigger point. Watch video above for more industry reaction.

The U.S.’s top beef processing states: Nebraska, Texas and Kansas, are all readjusting to the possibility of higher costs of doing business in Japan.

“Japan is the largest buyer of U.S. beef exports and the third largest destination for Texas beef,” says Richard Thorpe, president of the Texas and Southwestern Cattle Raisers Association (TSCRA). “A 30% increase in the tariff rate will be detrimental to the U.S. cattle raisers, who rely on beef sales for their livelihoods, as well as the Japanese consumers who enjoy U.S. beef on their dinner tables. This is a prime example of why we need a free trade agreement, like the Trans Pacific Partnership (TPP), with Japan,” Thorpe adds.

In 2016, Nebraska exported over $316 million in beef and beef products to Japan which accounted for 16% of the total U.S. beef exports to Japan.

“What makes this action worse is that the United States recently walked away from an agreement, the Trans Pacific Partnership, which would have rendered this action meaningless,” says Steve Nelson, president of the Nebraska Farm Bureau. “Now is the time for the Trump administration to follow through on their promise for a “better deal” for Nebraska’s cattlemen and women, and now is the time for a bilateral agreement with Japan.”

Cash and Futures Markets React

Feeder cattle closed sharply down Friday, after USDA confirmed Japan planned to increase tariffs on U.S. frozen beef.

Along with the news from Japan that day, analysts say U.S. cattle markets were still slumping from unseasonably high summer prices and the past week’s growing U.S. cattle inventory report.

August live cattle ended $1.40 lower on Friday at $112.900 cwt, and October $1.15 cwt lower at $112.42 cwt.

August feeders ended $1.77 cwt lower at $146.05.

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