Implications of US Tariffs on the Beef Industry Amid Supply Constraints

The recent tariff hikes introduced by the United States (US) administration have added further pressure to an already strained US beef industry, contributing to higher prices amid tight market supplies. Over the past two years, beef prices in the US have been on a general upward trend, primarily driven by persistent supply constraints stemming from a shrinking cattle herd. 

According to the United States Department of Agriculture (USDA), the US cattle population stood at 86.7 million heads as of January 1, 2025, the lowest national herd since 1951. The beef cow herd was estimated nearly 1% lower year-on-year (YoY) at 27.9 million heads, the lowest since 1961. Notably, the US cattle herd has been declining since 2020, largely due to drought conditions and cyclical cattle production trends. Against this backdrop of tightening supply, the newly imposed tariffs have further exacerbated price pressures across the beef market.

US Sets New Tariffs Impacting Beef Trading Partners

On April 2, 2025, the US President announced a baseline 10% tariff on all imports, effective from April 5, along with higher tariffs targeting countries with which the US has trade deficits. These include a 34% tariff on Chinese goods (on top of existing 20% tariffs), 20% on European Union products, 46% on Vietnamese goods, and 32% on imports from Taiwan, all set to take effect on April 9. The tariffs aim to address unfair trade practices that have impacted the US economy. Canada and Mexico were exempt from this round, though the 25% tariffs on their goods imposed in Mar-25 remain in place.

Table 1. Apr-25 Tariffs on US Key Beef Trading Partners 

US Tariffs Add to the Burden of Already High Beef Prices

According to Tridge’s monthly outlook reports, the average free-on-board (FOB) price for fresh, chilled, or frozen beef in the US stood at USD 9.62 per kilogram (kg) in Feb-25, approaching the record high of USD 9.70/kg  in Jan-22. Meanwhile, wholesale prices of US lean beef (92% to 94% lean) reached a record high of USD 8.75/kg in Mar-25, with W13 registering the peak price of USD 8.81/kg, according to Tridge’s weekly update. Domestic beef prices are typically influenced by seasonal demand fluctuations in the US, rising in the summer months and falling during winter. However, the current price surge has occurred before the summer season of 2025, suggesting that the ongoing tariff increases have significantly impacted the US beef industry.

Figure 1. US Export and Wholesale Price Trends from 2023 to 2025

US Beef Trade Faces Challenges as Tariffs Prompt Shifts in Global Supply Chains

These tariff developments have created global market uncertainty, potentially disrupting US beef trade flows as some countries contemplate retaliatory tariffs on US products, including beef, which could reduce its competitiveness. This effect is already visible in China, where US beef exports have sharply declined, with sales dropping to just 54 metric tons (mt) for the week ending March 20. The decline is primarily due to the ongoing US-China tariff dispute, with China imposing a 10% tariff on US beef, making it less appealing to Chinese buyers. In response to a 34% increase in US tariffs, China announced a reciprocal 34% tariff on all US imports, effective April 10. Additionally, the expiration of export registrations for US meat plants, which China has not renewed since March 16, has further contributed to the drop in US beef sales to China. To offset reduced US supply, China is expected to turn to alternative suppliers such as Brazil, Argentina, and Australia. Nevertheless, China's beef market is projected to remain stable in 2025, with steady import and consumption growth despite a forecasted decline in domestic production to 7.74 million metric tons (mmt), according to the USDA.

On the other hand, some beef exporting countries to the US may choose to redirect their shipments to other destinations, further tightening US supply and driving domestic beef prices even higher. According to the USDA, US beef imports are projected to hit a record high of over 2 mmt in 2025, as domestic production declines, which is expected to reach a low of 11.3 mmt by 2027. This shift has positioned the US as a net beef importer, with Australia, Brazil, and Paraguay among the key beneficiaries.

However, the 10% tariff on all imports may complicate trade dynamics, as major beef exporters seek alternative markets to diversify their trade. For example, Australia has been shifting focus toward Southeast Asia, where its share of global beef exports grew from 9% in 2014 to 13% in 2024, with Indonesia, Malaysia, Singapore and Thailand leading as key destinations. Brazil, which has actively expanded its market reach to over 335 destinations since 2023, recently entered Vietnam and is set to begin exports to Japan in the near future. Despite resuming exports to the US in 2024, Paraguay is also diversifying its exports to Brazil, Colombia, Peru, and Saudi Arabia.

Figure 2. Australia’s Meat Export (HS Code 02) Flow in 2023

While Canada and Mexico are not impacted by the April 2 tariff proposals, the 25% tariff imposed in Mar-25 could still disrupt cross-border cattle supply chains. A significant portion of cattle imported into the US are calves raised in Mexico, which are then fattened in the US before being sent to Canadian slaughterhouses for processing. The final beef products are reimported into the US. The tariff burden on Canadian and Mexican imports could complicate this system, further influencing US beef supply and pricing.

Looking ahead, prices are expected to continue rising, with domestic prices anticipated to reach new highs by summer, driven by heightened seasonal demand and ongoing supply constraints. However, rising costs may prompt consumers to shift toward more affordable alternatives such as pork and poultry, reducing reliance on high-priced beef. To mitigate these challenges, the US beef industry should prioritize herd rebuilding by offering subsidies, tax incentives, and low-interest loans to cattle ranchers, encouraging long-term production growth. Additionally, the US should also consider engaging in diplomatic discussions regarding the tariffs to avoid further market distortions.