International trade concerns have hit a major industry here in North Texas.
Cattle ranchers in Texas may have a “beef” with Washington if international trade agreements are not secured in the near future.
The uncertainty surrounding the North American Free Trade Agreement and the severed ties with the Trans-Pacific Partnership is costing the industry thousands of dollars each day. The industry has its sights set on international trade, specifically Asia.
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“The future of this business, especially for my kids, in not here in the U.S. It's off shore,” said Pete Bonds, who owns “Bonds Ranch” in Saginaw.
Bonds raises cattle on his land throughout Texas and eight other states. Texas ranks number one when it comes to cattle production and exports.
“The economy of agriculture may be only two percent, but we buy a lot of pickups, a lot of cars, and a lot of machinery to run these ranches. We employ a lot of people to run these ranches,” said Bonds.
According to the Texas Department of Agriculture, Texas leads the nation with a total number of 248,800 farms and ranches, covering 130.2 million acres.
Different beef products, that would not be popular here in the U.S., can be sold in other countries. In 2016, Japanese consumers purchased $1.4 billion of U.S. beef, but ranchers say that number could expand if a trade agreement was in place.
“Right now, we’re selling a lot of meat into Japan with a 38.5 percent tariff," said Bonds. "We are competing against Australia, that only has a 25 percent tariff. The TPP would have lowered our tariff 9 percent and given us a level playing field with Australia, but Trump killed the deal."
Since the deal never went through, the industry did not technically “lose” any money, but ranchers lost out on anticipated gains and their competitive edge.
“It's costing the industry $400,000 per day by not being able to be on a level playing field with the amount of extra beef we could ship into Japan on account of it,” said Bonds.
Ranchers are waiting to see what President Donald Trump will do moving forward, and how other countries will react. There is also concern surrounding NAFTA and President Trump’s threat placing tariffs on Mexico.
“We would like for him to negotiate a bi-lateral trade agreement with Japan, open up the market in China, and leave Mexico alone," said Bonds. "He’s supposed to be this great negotiator, let’s see what he can do."
After President Trump withdrew from the Trans-Pacific Partnership, and vowed to renegotiate NAFTA (placing new tariffs on Mexico), cattle ranchers in Texas say the change in trade is costing them at the bank.