MADISON, Wis. – The impact of the Section 232 tariffs on agriculture is extremely widespread. While retaliatory tariffs on U.S. produced goods by other countries have impacted growers directly, the U.S. tariffs on steel and tin plate is hurting our food processing and canning industry as well as the farmers that grow those vegetables.
“When it comes to vegetables, as much as 70 percent of processed vegetables in the U.S. come out of the Midwest,” said Nick George, president of the Midwest Food Products Association (MWFPA), during a recent phone interview. “The processed vegetable industry is highly competitive with a very small profit margin and we do rely heavily on exports.”
Canned food is a high-volume, low-profit industry. Increasing the cost of production, such as the cost of each can, even slightly can significantly impact the industry.
The President, under Section 232, which allows tariffs to be imposed on foreign-made goods for self-defense reasons, imposed a 25 percent tariff on imported steel and tin plate.
“We would argue there is no self-defense reason to include tin plate or aluminum in the tariff.” said George. “Tin plate is a type of metal that is specifically used for canning. Currently, canners in the U.S. get 48 percent of their tin plate from overseas, from countries like Canada, Belgium, and Korea.”
The U.S. steel industry produces about 50-52 percent of the tin plate used annually by the canning industry. That is their maximum production output. The U.S. simply cannot make enough tin plate to supply the canning industry and therefore, imported tin plate is extremely important.
“The price on cans went up last year immediately when the tariffs were first announced and it is having a horrible impact on the industry,” he said.
Now, the cost per can has increased around two cents per can. That does not sound like much, but to an industry that purchases billions of cans annually, those two cents per can add up fast.
According to the Can Manufacturers Institute (CMI), the canned food industry produces approximately 24 billion cans per year. A small increase to the cost of those cans due to the tariff adds $5 billion annually to the cost of inputs for the processed food industry.
“We are getting to the point now where foreign processed vegetables, canned and frozen, are cheaper to buy than U.S. produced, which is a shame,” he said. “Foreign processed fruits and vegetables are taking market share away from U.S. processors.”
It was in the spring of 2018 that the President imposed these tariffs as a means to improve the United States position in global trade.
“We have been working on this issue for a year now and nothing has really changed,” said George. “This is a big deal for Minnesota farmers and processors who process more sweet corn and peas than any other state in the nation. For example, the first congressional district in southern Minnesota produces more processed sweet corn than any other congressional district in the nation.”
Along with sweet corn, canned and frozen peas, carrots, and green beans are a huge industry across the whole Midwest.
“The section 232 tariffs on tin plate and steel have made U. S. grown and processed fruits and vegetables less competitive of a foreign product,” he said.