The US meat and poultry industry, as well as other key sectors of US agriculture, in early May faced an uncertain second half of 2025. This was due to President Trump’s imposition of tariffs on many imports and then retaliatory tariffs imposed on US exports. Trade in most agricultural goods between the United States, Canada and Mexico largely escaped unscathed but the opposite was true between the United States and China. US pork and beef exports to China hit a wall in mid-April due to China’s duties, which totaled 172% for US pork and 147% for US beef.
However, the outlook changed dramatically on May 12 when trade officials from the two countries agreed to reduce tariffs significantly after holding trade talks in Switzerland the weekend before. Tariffs on Chinese exports to the United States will be reduced from 145% to 30% for 90 days. The Chinese retaliatory duties on US exports will go from 135% to 10% for American goods.
The meat and poultry sector greeted the news with relief, although there are two caveats. There is no guarantee that higher tariffs might not be re-introduced. Second and more important, China in March renewed the eligibility of most US pork and poultry plants to export to China. But it did not and still has not renewed the eligibility of any US beef plants. This means that all US beef remains locked out of China until China acts.
The US Meat Export Federation (USMEF) on May 12 said it greatly appreciated the efforts of US Trade Representative Jamieson Greer and Treasury Secretary Scott Bessent to negotiate the agreement with their Chinese counterparts.
“Although this is a temporary pause, we are hopeful that it is the first step toward restoring access to China for US pork and beef,” said Dan Halstrom, USMEF president and chief executive officer.
Despite the tariff turmoil, cash live cattle prices set record highs for three weeks in a row in late April-early May. That’s because fed beef processors scrambled to buy enough market-ready cattle as the grilling season began. USDA’s 5-area fed steer price the week ended May 11 averaged $224.80 per cwt live, up $3.83 per cwt from the prior week’s $220.97 per cwt, which was the previous record. This meant that prices rose by $17.10 per cwt in three weeks. The trend of more record-high prices looked set to continue well into May, as the market continued to defy gravity. Calf and feeder cattle prices also rebounded from earlier in the year to new highs as well.
The record-high prices are primarily due to the US cattle herd being the smallest since 1951. But strong beef demand at home and abroad is also underpinning the market. Despite a great deal of uncertainty, global demand for US beef remains robust and resilient, USMEF’s Halstrom said on May 8.
The March export results confirmed this, with demand trending higher in Taiwan and Mexico, reaching record levels in Central America and holding up well in Japan and Korea, said Halstrom. Although USMEF anticipated that China’s retaliatory tariffs and expired plant registrations would have a more drastic impact on April and May exports, the US industry’s efforts to diversify markets and broaden US beef’s global footprint are definitely paying dividends, he said.
March beef exports totaled 109,330 tonnes, up 1% from a year ago, while export value reached $922 million, up 4% and the highest since June, said USMEF. First quarter exports were slightly below last year’s pace at 310,368 tonnes but increased 2% in value to $2.53 billion.
Emerging markets
To reinforce Halstrom’s message about diversity, beef exports to Central America continue to gain momentum after coming off a record year in 2024, USMEF noted in early May. Led by growth in Guatemala and Panama, March exports to the region increased 23% from a year ago to 2,158 tonnes, valued at $19.8 million (up 29%). First quarter exports were 5% above last year at 6,018 tonnes, with exports to Costa Rica and Panama on a record pace.
Value climbed an impressive 24% to $52.5 million, led by a record value pace in Guatemala, Panama, Costa Rica and Honduras. These markets are small but growing and will offset some of the loss of the Chinese market.Not surprisingly, the record-high live cattle prices have created a financial nightmare for fed beef processors. Tyson Foods’ beef segment, the largest fed beef processor in the United States, will this year have easily its biggest annual loss in its history. The segment had a $258 million operating loss in Tyson’s fiscal 2025 second quarter. This meant a $322 million loss for the six months ended March 29. The segment’s previous biggest annual loss was $244 million in 2006.
Beef is experiencing the most challenging market condition that Tyson has ever seen, CEO Donnie King told financial analysts on May 5. Beef sales in the quarter were $5.196 billion, versus $4.954 billion a year earlier. Volume was down 1.4%, primarily due to a lower number of cattle harvested than a year ago, partially offset by higher average carcass weights. The operating loss went against a $35 million loss a year earlier. This meant the operating margin was a negative 5.0% versus a negative 0.7%.
Operating income in beef decreased as beef margins remained compressed, partially offset by improved operational execution, said Tyson. Additionally, operating income for the second quarter and first six months of fiscal 2025 was impacted by the recognition of legal contingency accruals and network optimization plan charges. But beef sales increased primarily due to a higher average price per pound, reflecting ongoing healthy demand, the company said.
Tyson’s beef business is navigating a challenging environment with discipline, King told analysts. It is managing costs and enhancing its mix for more value-added offerings. While limited cattle availability is pressuring spreads, consumer demand has remained resilient. Tyson’s teams are executing well across procurement, production and distribution to meet customer needs and stay on price, he said.
It is important to note that cattle on feed from a weight perspective are extremely heavy, Brady Stewart, Tyson’s group president of Prepared Foods, Beef and Pork and chief supply chain officer told analysts. Tyson is at record weights throughout the business as well. The weights are offsetting from a volume perspective of the lower head counts as the supply has been obviously lower than a year ago. Relative to heifer retention, if the industry is not at the bottom relative to cow inventories, Tyson can definitely see it from here as well, said Stewart.
No one however will shed a tear about packers’ financial woes, as they made billions of dollars before and during the COVID-19 pandemic. Tyson Beef had operating income of $10.232 billion in the five years from 2018 to 2022 inclusive. Tyson no doubt squirrelled much of that away. But the huge profits, followed by a flood of red ink, show what a fickle business beef processing is.
Chicken came to Tyson’s rescue in its second fiscal quarter, as it did in its prior quarter. It showed volume growth for the second consecutive quarter and reported its best second quarter adjusted operating income in nine years. Tyson’s chicken segment had sales in the quarter of $4.141 billion versus $4.065 billion a year earlier. Volume was up 3.0% but the average selling price was down 1.1%.
Tyson’s pork business also delivered its second best adjusted operating income in three years with $55 million, up from $33 million last year. But it had an operating loss of $195 million in the quarter, versus a $1 million loss last year. Sales dipped year-over-year to $1.244 billion from $1.486 billion. Tyson’s Prepared Foods’ sales remained flat compared to the same period last year at $2.396 billion versus $2.404 billion. Adjusted operating income was $244 million, up from $233 million the previous year.
Source: ©TEAMFOTO - STOCK.ADOBE.COMSqueals of approval
Meanwhile, Smithfield Foods, the world’s largest pork company, started 2025 strongly. This showed up in its second earnings call on April 29 since reentering the US public equity market. Covering financial results for the first quarter of fiscal 2025 ended March 30, the company demonstrated a positive outlook for the year ahead. With a sharp rebound in hog production and strong execution of its strategies during the first quarter, Smithfield begins the year on a firm foundation, the company said.
The first three months of the year generated an operating profit of $321 million and an adjusted operating profit of $326 million. Both increased more than 85% compared to the first quarter of 2024, which Smithfield credited mainly to improved hog production. Smithfield posted net sales of $3.8 billion, with an operating profit margin of 8.5%, up from 4.7% last year, while its adjusted operating margin rose from 5.1% last year to 8.6%.
The bottom line is that the tariff war in April-early May only impacted red meat exports to China. But the prospect of more damage will still hang over the US red meat industry until the United States and China permanently end their trade war.
