How Tariffs Are a Wash in the Cross-Border Flow of Cheese

(Bloomberg) -- You’d think Canada’s biggest dairy producer might be secretly rubbing its hands after Mexico announced plans to slap tariffs on imports of U.S. cheese, but in the world of trade warfare, there are always ripple effects.

Saputo Inc. may benefit if it can help replace Mexico’s lost imports with products from other countries, but it may also suffer if an excess of cheese in the U.S. depresses prices in that market, CEO Lino Saputo said. Montreal-based Saputo has operations in the U.S., Canada, Argentina and Australia.

“We have other platforms like Argentina and Australia that could ultimately service Mexico for their cheese requirements,” Saputo said on a conference call Thursday. “We think net net net it would be neutral for Saputo, but perhaps there might be some great opportunity for us to make Mexico a decent market for us for a long time to come.”

Mexico’s duties are in retaliation for U.S. President Donald Trump’s tariffs on Mexican steel and aluminum. In addition to a 25 percent tariff on some cheese products, it will also slap taxes on steel, Tennessee whiskey, pork, apples and potatoes.

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