ASK CLARA: Are tariffs actually good for the U.S. beef industry?

🔄 Tariffs: Friend or Foe for the U.S. Cattle Industry?

✅ Why Tariffs Could Help the U.S. Cattle Industry:

1. Import-Export Imbalance
   The U.S. imports more beef than it exports, especially lean trimmings from places like Australia and Brazil to blend with our fattier domestic supply. Tariffs on those imports could raise prices on foreign beef, potentially increasing demand for domestic cattle and improving prices for U.S. producers.

2. Cheaper Feed Corn
   If export demand for U.S. corn drops due to retaliatory tariffs from trading partners, that typically results in lower corn prices domestically. Since feed is a major cost for cattle feeders, cheaper corn lowers input costs, potentially boosting profitability — especially for those in the feedlot segment.

⚠️ But Here's the Catch:

1. Retaliation Hits U.S. Beef Exports
   Countries hit with U.S. tariffs often respond with tariffs on American beef. That hurts our premium export markets like Japan, South Korea, and Mexico. When that happens, domestic supply increases, which can suppress prices, especially on higher-value cuts that normally go overseas.

2. Global Trade Dynamics
   U.S. beef exports support carcass value by moving high-end cuts (ribs, loins) abroad. If those channels are blocked, we lose margin on every carcass, not just the ones staying home. That trickles down all the way to cow-calf and backgrounders.

3. Packers Could Benefit More Than Producers
   Even if beef import tariffs help limit competition, it’s often the packers and processors who benefit most, not the cow-calf or feeder sector. Why? Because they control margins both upstream (buying cattle) and downstream (selling boxed beef).

🧠 CLARA’s Take:

In the short run, cheaper corn and fewer imports sound great. But the long-term health of the U.S. cattle market depends on exports, especially of premium beef. Tariffs risk retaliation, which dampens global demand and can create a backlog of supply at home — exactly what we don't want when slaughter capacity is tight and boxed beef is showing volatility.

For example, while corn has been soft recently at $4.55, and domestic steer prices are historically strong at $292.79, any trade disruption could tip that balance fast.