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Cattle ranchers expect to eventually feel the effects from tariffs

Posted at 5:48 AM, Jul 26, 2018
and last updated 2018-07-26 06:48:51-04

The agriculture industry is bracing for new tariffs placed on American goods and products and potential impacts on profits, the effects of which are expected to trickle down to the consumer.

Earlier this month the Trump administration imposed a 25 percent tax on $34 billion worth of Chinese imports, and China is retaliating with taxes on an equal amount of U.S. products, including soybeans, electric cars and pork.

Right now cattle ranchers say things are looking good, but they do expect changes.

The top commodity in the state of Texas is beef, but we do not export a lot of beef to China, and when it comes to tariffs, it does not mean our cattle rangers are in the clear, and prices on beef could change.

“The thing is, we have had a trade imbalance with China for a long time and probably need to correct it a little bit. But, unfortunately, what is happening is China is putting tariffs and stuff on things that we have a comparative advantage and that’s like beef, cotton, or whatever, so it is going to impact our demand,” said Texas A&M Agrilife Extension Center program specialist Mac Young.

As trade opportunities open up internationally, they also trickle down to local industries like the ones right here in Texas.

“In the short term, it might help lower prices in the supermarket, but I doubt it will have very much impact in the short term because the farmer only gets maybe 45-48 percent of the value of the beef you pay for in the supermarket. So I doubt in the short term, it will have a major impact,” said Young.

“If we do have these tariffs, and when they all come down, it will impact prices, and that is going to affect the ranchers, cattlemen, and so forth,” said Young.

Cattle ranchers will be the first to tell you that it is never good news if you think you’re going to get less for your product.

“If this trade war continues on, and there is not a negotiation whatsoever, we don’t know exactly what the bottom line is going to be yet. We do know it is going to impact our cattle prices, and unfortunately, in the short term, it will have an impact on what cattlemen can sell their cattle for,” said Young.

Right now cattle is still looking good, and experts say it’s too early to tell what the overall impact will be on cattle ranchers in the long run if the tariffs continue.

“I am sure they are not very happy about it. We say we are going to put tariffs on their products.

They are going to pick the ones that they think are going to hurt us the worst, and unfortunately, they picked things like cattle, cotton, and so forth. But we have a comparative advantage on beef production and probably in cotton production which means we grow probably a better quality product than other countries. So it is going to be interesting to see how this plays out,” said Young.

From an economic perspective, U.S. beef products will be a little more expensive, and people are going to cut down on buying U.S. beef products.

With higher prices, the demand could lower and not as much supply would be needed, potentially hurting area beef producers.

Nationwide, the U.S. Chamber reported that $75 billion in U.S. exports will soon be subject to retaliatory tariffs.