President Donald Trump’s message that he will impose a 25% tariff rate on all imports from Canada and Mexico as of February 1, 2025, will probably collide with all three countries of the USMEC. I don’t know how the Mexican government will react on this, but let’s play with this scenario – Mexico strikes back with a 25% tariff rate on all goods imported from the U.S.
Let’s now focus only on the poultry and grain industries. Mexico is the main destination of U.S. yellow corn, with around 14 million metric tons (MMT) imported just for feed (according to the National Feed Council of Mexico – Conafab 2024 Annual Report) and a total of over 24 MMT in trade year 2023/24 and 2024/25. Mexico will definitely be highly impacted in feed and poultry production if tariffs are applied, not to mention the economic impact on the inflation rate.
Depending on the price of corn, tariffs, transportation and so on, Mexico may continue importing from the U.S. at a much higher price or may look toward the South – Brazil and Argentina. The same would be for soybeans and soybean meal. And the U.S. will be stuck with metric tons of corn that would need to be sold somewhere else. Quite a market disruption.
Then comes poultry meat imports. According to the National Poultry Producers Association of Mexico (UNA – 2024 Annual Report), Mexico imported 17.8% of its chicken meat needs, from which 80.5% came from the U.S. – a total of around 700,000 metric tons (MT) in 2023. Import tariffs on chicken will most likely force importers once again to look down south – Brazil and maybe Argentina and Chile. Let us not forget that Mexico is already the eighth destination of Brazilian chicken exports, with 212,500 MT in 2024. The channel is open.
With the likelihood of not enough workers in the chicken processing plants – not to mention the impact of avian flu in states such as Georgia on exports – the poultry industry will be severely affected.
I don’t even want to enter into the transportation industry. Trains that come and go with grain from the U.S. to Mexico may need to take some time off. And Mexican ports may be busier with unloading vessels coming from the south.
I think that in the end, with a market as big as Mexico’s, Brazil will be the winner in all senses. And let us not forget that the present Brazilian and Mexican governments share a common political line.
And let us also not forget that Brazil is a founding member of the BRICS+, the reviled and rival group of some of the largest world’s emerging economies.
Is this an interesting Latin American poultry panorama? Let’s hope for the best.
What do you think?
