Effects of an ad valorem tariff on pork meat imports in Mexico

Abstract

The objective was to evaluate the application of a 20% tariff approved by Mexico in June 2018, on imports of pork carcass from the United States, through a non-linear programming model with data from 2017. The country was divided into eight producing and consuming regions: Northwest, North, Northeast, Center-West, Center-East, South, East, Peninsula, and two admissions points for imports, Admissions Point One and Admissions Point Two. The analysis was performed in production, imports and consumption. Under optimal conditions the model underestimated domestic production in 3.7%, overestimated imports and consumption in 2.4% and 0.8% with a Net Social Value of 4,635 billion pesos. The 20% tariff ought to have increased national production in 0.4% (4774 t), decreased imports in 18.9% (19.141 t), and reduced consumption in 0.6% (14 367 t) and the Net Social Value in 0.1% (6 billion pesos). The Mexican pork market is sensitive to the tariff effect; such a policy protects national producers, is detrimental to both importers and consumers, and is considered as viable in favor of production if the government objective is directed at this sector.