Since the beginning of the year, Brazil has gone from a zero within-quota tariff to a 76.4 percent tariff and then back to the zero within-quota tariff.
Derrell S. Peel, Oklahoma State University
Industry fears about the impact of packer losses and low cattle numbers were realized in late November with the announcement from Tyson that the Lexington, Nebraska packing plant would close and the Amarillo, Texas plant would decrease from two shifts to one shift in the coming months. This will reduce industry slaughter capacity by roughly 7,000 to 8,000 head per day. The exact impact will depend on forthcoming details, especially how Tyson will manage a one-shift plant. Depending on the details, the reduction represents roughly 7.5 – 9.0 percent of total industry slaughter capacity.
Monday – Friday daily fed slaughter thus far in 2025 has averaged 90,529 head per day, down 3.6 percent from the recent peak (93,931 head per day) in 2022. However, Saturday slaughter has averaged 4,878 head this year, just 13.1 percent of the 37,137 head per day average in 2022. For the first 45 weeks of the year, total weekly fed slaughter has averaged 457,524 head compared to 506,793 head per week in 2022, a decrease of 9.7 percent. The Tyson planned reduction in packing capacity may be nearly (but not quite) enough to balance the decrease in cattle slaughter since the peak in 2022. However, fed slaughter is expected to continue decreasing in 2026 and 2027. Excess packing capacity will continue to be an issue for beef packers for the foreseeable future.
In other news last week, the latest spins of the big tariff roulette wheel included lifting the 10 percent tariffs imposed in April on countries from which the U.S. imports beef. Major beef import sources are Brazil, Australia, New Zealand, Canada, Mexico and Uruguay, along with minor sources including Nicaragua and Argentina. A few days later, the additional 40 percent tariff imposed on Brazil in August was removed. Brazil, who filled the “Other Country” tariff rate quota in January, will still face the 26.4 percent over-quota tariff rate. For the first seven months of the year, Brazil was the largest source of U.S. beef imports.
Since the beginning of the year, Brazil has gone from a zero within-quota tariff (filled by January 17) to a 26.4 percent over-quota tariff later in January, to which an additional 10 percent tariff was added in April (36.4 percent total), to which an additional tariff of 40 percent was added in August (76.4 percent total), back to 66.4 percent total after removal of 10 percent tariffs in November, followed a few days later by removal of the 40 percent tariff and, thus, back to the 26.4 over quota tariff until the end of the year (maybe) when the “Other Country” quota resets for another year. If you are confused, don’t feel bad – how can any industry function in such a quagmire of changing rules?
Lack of trade data resulting from the shutdown has made it impossible to quantify the negative impact of the August tariff on beef imports from Brazil, let alone the impacts of now reverting back to the situation from early in the year. There will be impacts, likely relatively small on the ground beef market – probably more likely to simply moderate future increases rather than actually reducing ground beef prices in the U.S. Certainly there will be no relief for high steak prices, with even higher prices likely ahead as beef production continues to fall.
