How are U.S. tariffs affecting American agricultural trade so far?
Key points:
New deals could be struck with over tariffs “perhaps even by the end of the week,” U.S. Agriculture Secretary Brooke Rollins told Fox News on Tuesday as the country’s self-made trade war threatened markets for American farm goods.
“I believe, sincerely, it will be sooner rather than later,” Rollins said, adding that 70 countries had reached out to the U.S. for talks.
Wednesday, China and the European Union announced new trade barriers for U.S. goods. The EU imposed 25 per cent tariffs on a range of imports in retaliation for 20 per cent tariffs on most products, and higher levies on autos and steel.
China ratcheted up its duties on U.S. imports to 84 per cent from 34 per cent. This new levy adds to the 10-15 per cent tariffs China imposed in early March on approximately $21 billion worth of American agricultural and food products.
American tariffs totaling 104 per cent on Chinese imports took effect Wednesday.
Asian buyers backing off U.S. farm goods
Asian buyers are reported to be reducing purchases of U.S. agricultural goods as Washington’s planned fees on China-linked vessels and sweeping tariffs on key regional trading partners stoke uncertainty and dampen appetite for American products.
President Donald Trump’s plan to revive U.S. shipbuilding using port fees of up to $1.5 million (C$2.1 million) on China-linked ships has forced exporters to hunt for non-Chinese ships. This has driven up freight costs.
“As of now, most importers are not taking the risk of importing from the U.S.,” a Singapore-based trader at an international company which sells U.S. grains and oilseeds into Asia told Reuters. “Shipping costs have gone up and there is so much uncertainty over the trade war.”
China is the largest importer of U.S. agricultural products, but other Asian countries including Japan, South Korea and Thailand also buy significant volumes of U.S. wheat, corn, and soybean meal.
Traditional U.S. wheat buyers like Japan and South Korea are expected to continue purchasing American cargoes, however they may buy some corn and soybeans from alternative suppliers in South America and the Black Sea region.
China is set to receive about 3 million metric tons of U.S. soybeans in April-May, Reuters reported on Wednesday. Most of the soy was purchased by state stockpiler Sinograin, which is likely to have to absorb the tariff costs itself.
Irreplaceable market
U.S. agricultural exports to China declined sharply after Trump, in his first term, slapped tariffs on Chinese solar panels and other goods. China retaliated with tariffs on some industrial goods and agricultural products like fruits, nuts, pork and soybeans.
Beijing has diversified its agricultural imports since then, ramping up purchases from Brazil and boosting domestic production. However, it remains the largest export market for American farmers. U.S. farm leaders and traders have described China as “irreplaceable” even as they look for alternative markets.
China imported $29.25 billion (C$41.47 billion) worth of U.S. agricultural products in 2024, a 14 per cent decline from the previous year, extending a 20 per cent drop in 2023.
About half of U.S. soybeans, the country’s largest agricultural export to China, were shipped to the Asian nation in 2024, totaling $12.8 billion in trade, according to U.S. data.
China has increasingly relied on cheaper Brazilian soybeans to reduce its dependence on U.S. supplies. This has resulted in the U.S. market share in China dropping to 21 per cent in 2024 from 40 per cent in 2016, according to Chinese customs data.
China’s imports of U.S. corn fell to $561 million in 2024 from $2.6 billion a year earlier as domestic production increased. While China’s corn demand has grown over the past decade, Brazil has rapidly surpassed the U.S. as China’s leading supplier.
China is also a key market for U.S. exports of chicken legs, pork ears and offal — products for which there is little demand in the United States. China bought $2.54 billion of meat and offal from the U.S. in 2024, down from $4.11 billion in 2021.
EU launches countermeasures
The European Union will launch its first countermeasures against U.S. President Donald Trump’s tariffs next week, the bloc’s members agreed on Wednesday.
The European Union will put in place duties mostly of 25 per cent on a range of U.S. imports from next Tuesday in response specifically to the U.S. metals tariffs. The bloc is still assessing how to respond to the car and broader levies.
The U.S. imports include corn, wheat, barley, rice, motorcycles, poultry, fruit, wood, clothing and dental floss, according to a document seen by Reuters. They totaled about 21 billion euros (C$32.8 billion) last year.
The levies are to take effect in stages – on April 15, May 16 and a final stage on almonds and soy beans on December 1.
“These countermeasures can be suspended at any time, should the US agree to a fair and balanced negotiated outcome,” the European Commission said in a statement.
Ukraine may increase its soybean exports to the European Union if the trade conflict between the U.S. and the EU escalates, Ukrainian farm producers union UAC said on Wednesday.
“If the situation with duties between the U.S. and the EU escalates, it is likely that European demand will be redistributed in favour of Ukrainian soybeans,” UAC said in a statement.
“Europe is already increasing its purchases from Ukraine, and this trend is likely to intensify in the coming months,” it noted.
Ukrainian agricultural analysts said last week that Ukraine-origin corn, a key commodity in the country’s grain sector, could benefit from the tariffs imposed by the U.S., as it is able to partially substitute for U.S. corn if retaliatory sanctions are imposed.
Source: Farmtario.com