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USDA study warns of U.S. beef triggering Japanese tariffs

A recent study from the USDA’s Economic Research Service shows U.S. beef exports to Japan could trigger tariffs beginning in 2028. 

Agricultural economist Brenda Boetel with the University of Wisconsin River Falls tells Brownfield she expects exports to Japan to decline in the near term as U.S. beef production decreases.  She says that is problematic because it lowers the threshold for tariff triggers. “As we start to build up again, then naturally, Japan would start to import more U.S. beef, and if we get to the point where we import more than we did the previous year, then we will hit this trigger.”

Tariffs on U.S. beef would be raised to 50% from the normal rate of 38.5%. 

Boetel says the U.S. accounts for about 40% of Japan’s imports, so a spike in Japanese imports of beef from Australia could also trigger tariffs when Japan’s total import threshold is met. “That trigger, in and of itself, that aggregate volume, is going to more adversely affect U.S. beef producers than it would say for example Australian beef producers just because of the nature of the amount of imports Japan gets from the various countries.”

Boetel says it’s not just the volume of beef but the value of the beef that’s important.  She says the U.S. will likely continue to export about 12% of its beef production, even with the decline in production.

By 2028, USDA anticipates Japanese beef production will fall 11.7% below 2018 levels while imports rise 17.2%, with U.S. sales valued at 267 million dollars.  The study shows that U.S. exports will likely trigger over-safeguard duties that year while exports from the CPTPP countries will not, creating a disadvantage for U.S. beef and about 24.5 million dollars less in U.S. export sales.

The U.S. Japanese bilateral trade agreement now includes a three-trigger mechanism that must be met for Japan to implement the safeguard and impose a temporary, higher tariff on US beef.  Those are:

1. Imports from the United States must exceed the original beef safeguard trigger level under the U.S.-Japan Trade Agreement;
2. The aggregate volume of beef imports from the United States and the original signatories of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) must exceed the CPTPP beef safeguard; and
3. Imports from the United States must exceed the total amount of beef imports from the United States during the previous year. This third trigger will be in effect until 2027.