U.S. Mexico Canada Agreement

Splitting USMCA Into Two Separate Trade Deals Would Be a Mistake, Argues Trade Groups

Wed, 25 Feb 2026 16:13:29 GMT

With the 2026 review of the U.S. Mexico Canada Agreement (USMCA) approaching, President Donald Trump is signaling he may seek to replace the current three-nation pact with separate bilateral trade deals for Canada and Mexico. The move, driven by dissatisfaction with elements of the existing agreement, would shift away from the trilateral framework in favor of one-on-one negotiations aimed at addressing specific trade disputes, particularly with Canada, and could reshape the structure of North American agricultural trade.

The future of USMCA, and the importance of a trade deal with both Canada and Mexico, is one of the hallmark discussions taking place during Commodity Classic this week.

During a roundtable in San Antonio, just steps away from where North America’s modern trade era began, Farmers for Free Trade made its case: keep the three-nation trade pact intact and make it stronger for U.S. agriculture.

Speaking on “AgriTalk” from Commodity Classic, Farmers for Free Trade executive director Brian Kuehle told Michelle Rook renewing and strengthening the USMCA is one of the most important trade priorities facing the Trump administration.

“This agreement is critically important for U.S. agriculture,” Kuehle says.

North America: Agriculture’s $60 Billion Neighborhood

USMCA is scheduled for a mandatory joint review and potential renewal on July 1, 2026, six years after it entered into force. This review, part of the agreement’s sunset clause, allows the United States, Mexico and Canada to confirm their commitment to the deal and extend it, with formal discussions already underway.

But Farmers for Free Trade says Mexico and Canada aren’t just neighbors. They are the top two export markets for U.S. farm goods.

According to Kuehle, U.S. agricultural exports to Mexico and Canada totaled nearly $60 billion last year, up from just $9 billion before the original North American Free Trade Agreement (NAFTA) took effect in 1994. Mexico is now the largest export destination for U.S. corn, while Canada is a leading buyer of U.S. ethanol and a key market for dairy, meat and specialty crops.

For Texas alone, agricultural exports to Mexico and Canada reached $6.4 billion in 2025.

“That’s a lot of food and ag products going out to these two countries,” Kuehle says. “For one state, that’s significant.”

The original NAFTA laid the foundation for that growth. Its successor, the USMCA, was negotiated during Trump’s first term and updated the rules but preserved the integrated North American market.

Now, with a mandatory review looming, Farmers for Free Trade wants the administration to renew the pact and avoid splintering it into separate bilateral deals.

Keep the Three Nations Together

The current push by the administration is to break up the current USMCA, moving to two bilateral deals. But is this just posturing? Kuehle says talk of negotiating separate one-on-one deals with Mexico and Canada echoes the 2018 process, when Mexico negotiated first and Canada joined later. But he warns formally splitting the agreement would be a mistake.

“I think it would be a colossal error to split the two apart and try to do two bilateral deals,” he says. “We want everyone in the same tent working together for an integrated market.”

The strength of USMCA, he argues, is in its predictability, stable rules for the road and a formal dispute resolution system. That mechanism proved critical when Mexico attempted to ban imports of genetically modified corn. The U.S. successfully challenged the move under USMCA’s dispute process, preserving market access for American growers.

“That’s why free trade agreements are so important,” Kuehle says. “We can depend on those exports.”

Farm Groups Push for USMCA Renewal

Forty national farm and agricultural organizations have also announced the formation of the Agricultural Coalition for the United States Mexico Canada Agreement, launching a coordinated push to secure renewal of USMCA ahead of its mandatory 2026 review.

The coalition says the agreement serves as a critical economic engine for U.S. agriculture and is urging policymakers to renew it with targeted improvements, rather than risk uncertainty in export markets. As part of the roll out, the group unveiled a new website and began an aggressive advertising campaign in Washington, D.C., aimed at highlighting the benefits the pact has delivered to farmers, ranchers and agribusinesses. The effort comes as the administration prepares for the formal review process required under the agreement.

“USMCA is one of President Trump’s signature achievements and one that has significantly propelled the ag economy,” says Bryan Goodman, a spokesperson for the new coalition. “We are not saying it’s perfect, as some changes are warranted, but we are saying it is of paramount importance to farmers that all three countries renew the agreement.”

If all parties agree to extend it, the pact would remain in force for another 16 years, with a subsequent review in 2032. If renewal efforts fail and a country opts to withdraw, the agreement would terminate in 2036. Alternatively, the review could shift into annual consultations without resolution, creating prolonged uncertainty for agricultural producers.

The Trump administration has signaled renewal is not automatic, though officials have acknowledged the agreement has delivered measurable benefits.

“Our farmers make decisions a year or more in advance,” Goodman says. “They need the certainty of knowing USMCA is here to stay.”

Coalition leaders argue Trump reshaped North American trade policy by negotiating and signing the pact, and they plan to emphasize that message in the months ahead.

“We want to protect this agreement and build on what President Trump started in his first term,” Goodman says. “We are confident we will be able to share the facts and farmer testimony that will help the Trump administration benefit rural communities throughout the process of the 2026 review.”

A Bright Spot Amid Tariff Turbulence

As broader tariff battles reshape global trade, North America has remained comparatively stable — something Kuehle describes as a bright light for agriculture.

While targeted tariffs can serve a purpose in response to unfair trade practices, he cautions against broad, across-the-board tariffs that raise input costs for farmers and consumer prices at home.

He also stresses the importance of congressional involvement in trade policy. USMCA was negotiated under trade promotion authority, passed by Congress and enacted into law, giving it durability beyond a single administration.

By contrast, Kuehle says, executive-only tariff deals lack transparency and long-term certainty.

“Is it a deal that exists beyond a president’s term? Does it have staying power?” he asks. “That’s the difference between going it alone and following the constitutional structure where Congress has authority over trade.”

Fix What Needs Fixing… Without Burning Bridges

All of this talk doesn’t mean USMCA is perfect, Kuehle says.

Dairy access into Canada remains a sticking point, and Kuehle says the administration is right to push for improvements. But he cautions against rhetoric that could alienate a critical partner.

“We want to be fair but firm,” he says, echoing advice from former U.S. Sen. Max Baucus. “Nobody likes to be bullied.”

He warns unnecessarily straining relations could push Canada toward deeper ties with the European Union or China — a shift that would undermine decades of North American integration.

“We don’t want Canada orienting toward the EU,” he says. “We want them continuing to orient toward us.”

A United Front at Commodity Classic

At Commodity Classic, that message is resonating across farm country.

Kuehle says commodity groups, from corn and soybeans to wheat and sorghum, are largely united in supporting renewal of USMCA. Farmers for Free Trade hosted a roundtable discussion at the historic site in San Antonio where NAFTA was originally signed in 1992, symbolically “going back to the original location.”

The organization is also collecting farmer signatures, urging Congress and the administration to renew and strengthen the agreement.

“U.S. ag obviously sometimes has its differences,” Kuehle says. “But on USMCA, it’s darn near united.”

As the review process unfolds, Farmers for Free Trade hopes unity translates into action, preserving what many producers see as the backbone of American agricultural trade.

For Kuehle, the stakes are simple: Protect the integrated North American market farmers depend on and make sure it continues delivering for the next generation.

Water Fight With Mexico Leaves South Texas Farmer Unable to Plant Half His Acres

Mon, 22 Dec 2025 19:27:57 GMT

For South Texas farmers, the ongoing water dispute between the United States and Mexico isn’t an abstract policy issue. It’s a crisis that has reshaped planting decisions, reduced production and injected deep uncertainty into every growing season along the Rio Grande.

Brian Jones, a South Texas farmer, says years of shorted water deliveries under the 1944 Water Treaty have forced him and many of his neighbors to dramatically scale back their operations. What once was a fully irrigated farming system has turned into a constant struggle to stretch limited water supplies across fewer acres.

“I believe it really starts to reach a crescendo in the 2023 crop year,” Jones says. “For 2024 and 2025, basically I’m only able to plant half of my farm because we don’t have enough water.”

Jones says the water shortages are not the result of drought alone, but of Mexico failing to live up to its treaty obligations. Under the 1944 agreement, Mexico is required to deliver water to the United States through the Rio Grande basin. However, U.S. officials and South Texas producers argue those deliveries have fallen well short in recent years.

“That’s exactly right,” Jones says, confirming that he has been unable to plant roughly half of his acres. “Going from fully irrigated to basically only being able to plant half the farm — and not even having full irrigation for that half — has been quite a struggle over the last couple of years.”

The reduced water supply has forced farmers to make hard decisions, prioritizing which crops and fields can survive with limited irrigation. Jones says even the acres that do get planted are often under-irrigated, increasing risk and lowering yield potential.

“Mexico has willfully held back water that they had,” Jones says. “That puts us in a huge shortfall.”

Hope on the Horizon?

Earlier this month, USDA announced it had reached an understanding with Mexico to release 202,000 acre-feet of water to the U.S., following heightened pressure from the Trump administration — including threats of tariffs if Mexico failed to comply. The announcement marked the most significant movement on the issue in years. But for growers on the ground, the news has been met with cautious optimism.

“I would say I’m both hopeful and skeptical,” Jones says. “I’m hopeful because President Trump and his administration really take the bull by the horns on this and bring the fight to Mexico.”

Jones says farmers in South Texas have long felt ignored as water shortages worsened, and he credits the current administration for taking a more aggressive stance.

“Under the previous administration, it’s like talking to a brick wall,” he says. “Under this administration, President Trump and Secretary Rollins really pick up the club and use it to bring Mexico to the table.”

Despite the agreement, Jones says trust remains an issue. Years of unmet commitments have made farmers wary of celebrating until water is actually flowing into the Rio Grande and irrigation systems.

“On the other hand, I’m still skeptical because Mexico has willfully withheld the water for a number of years,” Jones says. “Until it really starts flowing and they meet that full agreement of the 202,000 acre-feet, we’re still skeptical.”

Water Releases Reported to Start Immediately

According to Jones, Mexico indicates water releases should begin immediately, though geography and infrastructure mean the impact is not instantaneous for South Texas farmers.

“It should start this week,” he says. “It takes about three to four days for the water, once they release it in the lower parts of Mexico, to reach the Rio Grande. Hopefully by now, we start seeing that flow.”

Beyond the immediate relief, Jones says the water dispute highlights deeper concerns about fairness and competition. He believes the issue should be addressed in broader trade discussions, particularly as the U.S. reviews the U.S.-Mexico-Canada Agreement (USMCA).

“We actually hope it is a point of contention,” Jones says. “Not only is Mexico withholding water, they’re using that water to grow products we normally grow here in South Texas and compete directly in our marketing window. That creates a trade imbalance.”

Water Issue Could Be at the Center of USCMA Review

Jones says Texas lawmakers and agricultural groups are pushing to bring the issue into USMCA negotiations, arguing water compliance should carry real consequences.

“We’re hoping to use USMCA as a tool to put some punitive measures and some teeth into the water-sharing agreement,” he says.

Planting Decisions Uncertain

As planting season approaches, uncertainty remains front and center. Jones says decisions for the 2025 crop year will hinge almost entirely on whether Mexico follows through on its promises — and how quickly water arrives.

“We’re about 45 days from corn planting here in South Texas,” he says. “I’ll definitely get all my corn in, then switch over to milo. Cotton is the big question mark.”

Cotton planting typically begins in mid-March, leaving little margin for error if water deliveries fall behind schedule.

“All the details are supposed to be out by January 31, and they’re guaranteeing all that water by the end of March,” Jones says. “By early- to mid-March, we should know where they stand on deliveries, and that will shape how I plant this upcoming year.”

For now, Jones and other South Texas farmers are watching river levels, weather forecasts and diplomatic negotiations with equal intensity — hoping that this time, the water fight turns into real relief on the ground.

How Will Trump’s Tariffs Disrupt The Trajectory of U.S. Ag Exports?

Tue, 08 Apr 2025 19:12:10 GMT

As the Trump administration’s tariff proposals continue to bring uncertainty, the agricultural sector is assessing how any forthcoming country by country trade deals may offset the disruption, or if the industry needs to brace itself for a different kind of future.

“Farmers are big exporters,” says Jacob Shapiro, director of research for the Bespoke Group. “For a hundred plus years, U. S. agriculture has been all about exporting its surplus abroad. So when you get the decline of U. S. relative power to some other countries in the world and rising protectionism and the threat of tariffs–which this started under the Obama administration but Trump has brought it to a crescendo–you get farmers who are really concerned about what the future looks like. They’re talking about changes that haven’t happened in their lifetimes.”

Shapiro says for the past four months, President Trump has talked about tariffs leaving many to think if he really will act on his intentions.

“People thought, hey, maybe he’s the boy who cried tariff. Maybe he’s going to pull back again and he’s not going to push forward,” Shapiro says. “And it seems like he’s pushing forward. I don’t blame people for being surprised by this because the Trump administration has been fairly mercurial about this.”

The U.S. export policies have been a growth strategy totaling more than $175 billion of exported ag products in 2024, up from $57.3 billion in 1998 according to the USDA. Those exports are currently concentrated with key trade partners.

According to Ty Kreitman, Associate Economist, KC Federal Reserve Bank, U.S. agricultural trade is particularly concentrated among Mexico, Canada, and China, which added up to be the destination for about 50% of the total value of U.S. agricultural exports in 2024. Kreitman cites exports to China account for 20% percent of U.S. soybean production, 55% of sorghum production, 20% of cotton production, and 8% percent of U.S. tree nut production (including 18% of pistachios.)

Vince Malanga, president of LaSalle Economics says farmers in the cross hairs for this latest round of tariff negotiations, along with automotive products.

“In order to reorder world trade, the question is how big and how fair?” Malenga says.

Hear more from him on Tuesday’s Agritalk:

Shapiro says tariffs can be a tool for trade deals, but he says they should be used with surgical intentionality.

“A scalpel is an incredibly useful surgical tool. We couldn’t like do modern medicine without scalpels. But if you took a scalpel to my jugular right now and sliced it, that probably wouldn’t be good for me. So tariffs are the same thing. They’re a surgical instrument. I think you can make a good case that there are particular sectors where it would be very smart to put tariffs on.”

As an example for tariff potential, he points to used cooking oil from China or canola from Canada.

“These have been eating up the market share that American soybean and corn farmers thought was going to go for renewable diesel and things like that,” he says. “You want to keep those products from being dumped into the American market so the American farmer who has planted these things as part of a renewable diesel, sustainable aviation fuel future can get the value that they think they’re going to accrue.”

The timing of the Trump tariffs intersects with new research highlighting “peak population” theories. One such is from Terrain, titled “The Big Shrink.”

Shapiro casts doubt on international trade playing the same role as it has for the U.S. agricultural industry. He says the longer-term wins will come from greater diversification in domestic markets.

“My message literally since early in the Biden administration was exports are not the future,” he says. “The U.S. government is not going to be there to support exports even though all these trade groups have gotten used to telling you that you need to be thinking a little bit differently in terms of what your end markets are. I’m not saying that we’re not going to export anything. The more you can ascend the value chain, the more that maybe you can sell some of these things abroad. But I think we’ve been neglecting the domestic market to our own detriment.”

John Newton, executive head of Terrain, says one of the takeaways from that report is improving the quality of products from the U.S. agricultural industry.

“You’ve got to build domestic demand. You’ve got to improve the quality of the products that we have here in the United States. The beef industry is a perfect example. The quality of our beef has improved dramatically,” he says. “Farmers have invested in the genetics to have a high quality and consistent steak around the country. So I think we’re moving away from produce as much as we can to produce high quality products that the consumers are asking for. And then again, building that domestic demand.”

Per the Terrain analysis, nearly all U.S corn, sorghum, soybean and wheat exports go to countries in population decline by 2050.

Matt Clark, economist at Terrain, offers four options in a path forward for U.S. agriculture:

Deepening and broadening export markets strategically
Capturing growing demand for high-value products
Diversifying revenue streams
Developing new domestic demand

Clark writes, “If new demand sources are unable to be developed, the long-standing model in U.S. agriculture of continuous productivity expansion could yield surpluses that weigh heavily on the farm economy. A new reality of a future world population that stops growing will require new approaches in U.S. agriculture.”

He highlights how 2050 may seem to be far out in the future, however, a 30-year farmland loan taken out today would pay off in 2055.

The trade policies of today will have a long tail for U.S. agriculture.

Opinion: We Are One Step Closer to Fortress North America

Fri, 04 Apr 2025 16:00:27 GMT

“Turn your obstacles into opportunities and your problems into possibilities.” – Roy T. Bennett

I am not sure what your plans were for U.S. “Liberation Day,” but I was tied to a TV to listen to what U.S. President Trump was going to say about his tariff strategy.

Through a Canadian lens, I would say that of all the possible directions that President Trump could have gone, this was a real win for Canada. This is two weeks in a row where Canada can feel like it can breathe. And it was another step closer to the “Fortress North America” approach to trade.

There are still some grave concerns related to the auto tariffs, steel and aluminum tariffs, and other tariffs — Canada is still not out of the trade war crosshairs of President Trump. The April 2nd announcement, however, seems to signal that Mexico and Canada are different than the rest of the countries the U.S. is dealing with.

Canada has felt serious heat since President Trump entered the White House for the second time, being treated similarly to nefarious trade actors China and India. In the last two weeks, Canada has fallen back to a more comfortable position of not being an enemy, but an ally in some respects.

It will be a serious gut check for Canadians at a time when the country has “elbows up” and anti-American sentiment is at a generational high. Again, the Trump announcement on Wednesday was a step towards Fortress North America, to borrow the term Doug Ford likes to use, but I am not sure Canadians understand what is potentially in play.

Fortress North America is a concept where Canada and Mexico are more entrenched with the United States than they have ever been. It involves deeply integrated supply chains, shared trade and security interests, regional self-reliance on critical commodities and goods, and mutually aligned trade protections versus economic foes. Whether it is regulatory alignment, stronger border enforcement, or parallel tariff strategies, Canada and Mexico are going to be pushed to think more about North America over the European Union, Asia, or South America over the next four years, and possibly beyond.

Not everyone will agree with this strategy, I am well aware of that. I would put the RealAg audience into four buckets of thought on who Canada should be seeing as its true economic partner.

The United States and Mexico: We are already in USMCA, but President Trump’s approval is very low in Canada.
Europe: Europeans are polite, nice, and care about similar social issues, plus our government is follows British/European tradition vs American.
China: Could be the new largest economy in the world and buys very large volumes of ag commodities.
Inter-provincial trade barriers just need to be dropped and then we don’t need to worry about exports as much.

Canada can attempt all four, but there is one clear priority in my opinion.

This may be the first you have heard this “Fortress North America” term, but it has been around for a while. For many of you, tying Canada into a deeper U.S. relationship fresh off of the 51st state threats seems counterintuitive, but the numbers speak for themselves.

Canada exports just under $600 billion a year to the U.S., while EU buys $35 billion and China buys $30 billion per year — it’s not anywhere close, in dollars. Canada’s first economic priority is securing its strong economic ties to the United States.

Canada is on a trajectory where it is about to be more tied to the United States economically than less. At a time when some Canadians are pushing for deeper trade diversification, Canada is propelling itself toward a decision that will alter its relationship with China and others. In a multipolar world, Canada cannot ride the fence and will be forced, due to its American adjacency to choose its economic partner.

Put simply, Canada must choose: China or the United States, it can’t be both.

I have been talking about this scenario in many of my keynotes when I share this slide.

If Fortress North America is the reality, there are going to be some moments of adjustment and uncomfortableness for Canadians.

For example, Canadian farmers are upset about the canola meal, canola oil, pea, and pork tariffs placed on Canada by China in response to Canada’s EV tariffs. These tariffs placed by Canada on China are a prelude of what is to come where Canada and Mexico are in step with the U.S. against China. Sorry canola growers, expect more tariffs on China and not less. The Americans already pushed Canada to apply a 100% tariff on Chinese EVs. Consider that after today’s announcement by the President the effective tariff rate for Chinese goods into the United States will be 54%. Will the Americans ask Canada to do the same? Will Canada be asked to charge a docking fee on Chinese ships if the U.S. does? Time will tell, but a theoretical fortress requires walls.

There are risks to Canada in this strategy: a loss in autonomy, a weak U.S. economy or recession that would impact Canada in greater amounts, and possible deterrents to some Canadian trade diversification efforts with U.S. economic foes. To the latter point, this kind of language was written into the USMCA deal in Article 32.10, which requires USMCA countries to notify each other three months in advance if they intend to negotiate a trade agreement with a non-market country, such as China.

Canada is in the middle of an election and no matter which party wins, the new Prime Minister will be charged with the task of maintain Canada’s access in the U.S. economic fortress along with Mexico before any other challenge. It’s the number one election issue and it will be post election as well. Canadians need to be prepared for “Fortress North America.”

Founder of RealAgriculture and RealAg Radio, Shaun Haney manages one of the leading ag media companies for Canadian farmers and ranchers.

Your Next Read — Cross-Border Tensions: Canadian Farmers Fear No One Will Win In A Trade War

Tariff Uncertainty: Challenges and Opportunities Ahead for Agriculture

Thu, 03 Apr 2025 23:34:16 GMT

The exclusion of products compliant with the United States-Mexico-Canada Agreement (USMCA) helps soften the blow of the sweeping reciprocal tariffs President Donald Trump announced on Wednesday , but reaction has been mixed.

The nation’s soybean farmers are concerned about the Trump administration’s tariff plan and possible retaliation from China, their largest customer, says Caleb Ragland, a Kentucky farmer and president of the American Soybean Association (ASA),

“Exports are right at 50% of our markets, so we use half of the soybeans produced in the United States domestically, and the other half are exported,” he says.

Soybean producers are still dealing with the fallout from the trade war in 2018, and they say tariffs make them less competitive, causing customers to shift to other sources.

“We were exporting one third of the U.S. soybean crop to China before the previous trade war,” Ragland says. “Last marketing year, we exported about 24% of our production.”

Soybeans prices are down 40% from three years ago and the cost of production is high, he adds, so farmers can’t withstand another trade war.

Like soybeans, market access and exports are important to the corn sector, with 15% of U.S. corn exported overseas, says Kenneth Hartman Jr., president of the National Corn Growers Association and an Illinois farmer.

“Trump is a negotiator. We’re hoping the President, through this process, can come out where we can actually see more products going into exports, and hopefully that will drive higher prices,” he says.

Referencing USMCA, Hartman says the agreement, negotiated by Trump during his first term as president, has been beneficial for corn growers because Mexico is now the No. 1 market for U.S. corn and Canada is the No. 1 market for ethanol.

“We have some great trade partners, and we want to keep them,” he adds. “We’re hoping under these negotiations, everybody takes that into consideration.”

The National Cattlemen’s Beef Association (NCBA) welcomes President Trump’s move as a way to slow beef imports and level the playing field in world markets, citing Vietnam’s 30% tariff on U.S. beef, Thailand’s 50% tariff and even Australia’s $29 billion in beef sales to the U.S.

“They have played games, they have stonewalled and they have come up with endless non-science-based reasons to not reciprocate access for our producers into their market,” says Ethan Lane, senior vice president of government affairs for NCBA.

Creek’s up this morning!

As an American rancher I’m pleased we can start to see fair trade! We raise a quality product and the people of America deserve to know where their beef comes from!
Let’s get Country of Origin Labels on our product now that we’re getting tariffs fixed🇺🇸 pic.twitter.com/79Mz0PA1OD
— Cattleman🪓 (@cattleguy92) April 3, 2025

Lane, who attended the Rose Garden announcement, says they’re in the camp of short-term pain for long-term gain with tariffs a negotiating tool for better trade deals.

“While we’re not a big fan of tariffs, generally, we do think what the president is trying to do using this tool could achieve some real benefits for U.S. cattle producers as far as being treated more fairly in those foreign markets,” Lane says.

Will Farmers Receive Aid to Offset Tariff Impact?

One question that remains: Will farmers be compensated if tariffs impact their bottom line?

Agriculture Secretary Brooke Rollins said on Fox News on Thursday the Trump administration is “months away” from deciding to make payments to farmers to offset any impact from tariffs.

In the case of any economic loss from tariffs, Rollins has said the administration would consider making payments to farmers , which occurred during Trump’s first term as president when he compensated farmers to offset losses from a trade war with China.

From fertilizer to machinery, everything I, as a farmer, need to stay afloat will now be more expensive.......we can expect the same retaliation we saw during the last trade war—foreign tariffs aimed squarely at the United States' soft underbelly - which is American farmers and… pic.twitter.com/mb1VQwOG2I
— Christopher Gibbs (@ChrisRGibbs) April 2, 2025

Are They Really Reciprocal Tariffs?

Meanwhile, market analysts say the announced tariffs are not by definition reciprocal.

“It turns out what they’ve really done is taken the gap in goods, the amount of traded goods we get from a country and the amount of goods that country gets from us, and when there’s a deficit, they do some math and come up with the tariff rate,” says Kent Beadle, DTN market analyst. “So it’s certainly not reciprocal.

On Thursday, most ag markets had a negative reaction on fear of retaliation, leaving many to wonder how long it will take for markets to stabilize?

“I think if we continue to see strong export sales … a lot of this might start to fade away a little bit,” Beadle adds.

A silver lining is a lower U.S. dollar index can offset some of the blow of tariffs, he says.

How Will U.S. Trading Partners React?

Based on history, Dan Basse, AgResource Company president, says if tariffs are in effect longer than a quarter or two — three to six months — they tend to stick around.

“Look back to 2018 and what Trump put on China, it’s still in place today and stayed through the Biden administration,” Basse says. “The message is, if you’re an importing country, try to get [the tariff] off as fast as you can. Negotiate your way out of it, because once the United States starts to enjoy the income flow, it’s hard to get them off of that position. That’s why I say, I think we’ll know in the next three to six months where this all goes and if Trump really is the negotiator and deal maker we hope he is. If it’s longer than six months, I’m afraid these tariffs are going to be with us for quite a while, and that’s probably not good for industry or agriculture.”

Here’s a list of several U.S. trading partners and how Basse thinks the tariffs might affect trade going forward.

Canada: “They just put 25% tariffs on U.S. auto, which was expected. I don’t think there’ll be any additions based on what happened [Wednesday]. We kind of had Mexico and Canada get a free pass for a while. For agriculture, I think this was a really big deal, and the reason the corn and wheat markets didn’t sell off. China’s out there, and that’s a bean story, which is why beans fell hard. The grains held together, though, and I think it’s because of Trump’s willingness to look at USMCA and say, OK, for now, we’re going to keep it where we’re at.

“I really do think [Canada] should take it as a win. I was just up there in Edmonton doing meetings, and I know the hostility toward America at the moment, but I still believe with the new prime minister and the direction Trump gave us yesterday, it was a win, and there’s still ability to work together.”

Europe: “I think Europe is going to come out with guns blaring. I believe they’re angry. I believe the countries have come together a little bit like Canada, on a nationalistic standpoint against the United States, so look for some hostility toward us. The EU has shipped most of its corn, so we’re happy about that. But going forward, I don’t see the EU market as being important again, unless there can be some negotiation, some solution going forward.”

Brazil: “I think the Brazilians biggest concern is the value of the real. The real sank [on Thursday] to 560, which is down a bunch. As the dollar continues to weaken and the real rallies, that’s a win for U.S. agriculture. I believe the dollar is the key going forward, so as I’m watching it, if indeed the tariffs produce a liquidation of dollar holdings, that’s not bad for American agriculture, and it could really slow the expansion down in Brazil.”

Australia: “We get roughly 32% of our grind [hamburger] from Australia. The fast-food chains love Australian beef because of its lower fat content. With the tariffs, I think we’re going to be paying more for our lean beef grind.

“The restaurant chains I’ve been talking to are concerned about trying to source such lean hamburger in the United States.

“I think [tariffs] are a win for the U.S. cattle industry in general. What is concerning is the economic impact and what U.S. consumers will do. I do believe recession chances have doubled since the tariff announcements, and we are going to see firms laying people off and trying to understand margins going forward. That’s not helpful. But how we balance trade and domestic demand will be key for the beef market and the cattle market over the next couple of months.”

Russia: “I think [President Vladimir Putin] is going to keep marching with the war. He’s going to be difficult to deal with. The ruble is strengthening, giving them a little more fortitude. I imagine the Russian farmers are not happy about [the reciprocal tariffs], and maybe they won’t plant as much grain going forward. But other than that, I think it will be status quo, and [Putin] is kind of teaming up, if you will, with China and that BRIC alliance to somehow show their strength against the United States.”

Vietnam: “They’re an important importer of world corn. My question is, will the Trump administration use tariffs to somehow boost U.S. export of grains to Vietnam, or is this really just a tactic to raise revenue? I think that’s key in the next three or four months. Is there some negotiating position such that it benefits U.S. agriculture?

Your Next Read: CNH Halts Farm Equipment Shipments From North America, Europe To Assess Tariff Situation

Mexico's President Says the Country Won't Retaliate with More Reciprocal Tariffs on U.S. Products

Wed, 02 Apr 2025 18:06:06 GMT

In what President Donald Trump is calling Liberation Day, the White House plans to officially roll out a plan to combat what he calls unfair trade policies in an effort to bring industrial jobs back to the U.S., the other major unknown is how other countries will retaliate. On Wednesday, the United States’ top trading partner announced it won’t go toe to toe with the president on trade.

Mexican President Claudia Sheinbaum says Mexico won’t retaliate with a long list of reciprocal tariffs. In her daily morning press conference, Sheinbaum says instead, Mexico will “announce a comprehensive program, not a tit for tat on tariffs” on Thursday. She adds Mexico’s leadership is still waiting to see what exactly Trump announces on Thursday, but added “we have a plan to strengthen the economy under any circumstance.”

Trump is slated to hold a press conference at 4 p.m. EST at the White House, saying “It’s going to make our country rich again .... We’re basically going to take back the money — a lot of the money that we’ve given away over many decades.”

President Trump has been calling attention to the disaster falsely marketed as "free trade" for decades.

In reality, foreign countries have gotten rich at the expense of the American worker.

Today, he finally levels the playing field. 🇺🇸 pic.twitter.com/XS0ZAiZS6p
— Rapid Response 47 (@RapidResponse47) April 2, 2025

Can Mexico Afford to Retaliate?
As AgWeb reported in March , the question leading up to April 2 was not only what the president would ultimately decide to do, but also if countries like Mexico could even afford to retaliate.

Here’s why. According to the Federal Reserve Bank of Dallas, Mexico’s GDP grew only 0.9% year over year in fourth quarter 2024, after expanding 2% in 2023 and 4.6% in 2022. Economic growth slowed, mainly due to lower investment, slowing consumption and a contracting energy sector.

The other issue? Mexico is extremely reliant upon demand from the U.S., exporting $41.9 billion worth of agricultural products to the U.S.

In 2023, Mexico accounted for 16.3% of U.S. agricultural exports and 23.3% of U.S. agricultural imports.

By the numbers:

Mexico is the largest source of horticultural imports to the U.S., supplying 63% of vegetables and 47% of fruit and nuts in 2023.
The top agricultural exports from Mexico to the U.S. in 2024 included beer, tomatoes, tequila, avocados, strawberries, raspberries and peppers.

Another important piece is Mexico is now the top ag export destination for the U.S.

According to Krista Swanson, chief economist for National Corn Growers Association (NCGA), Mexico is a huge destination for U.S. corn. More than 40% of U.S. corn exported last year went to Mexico. Not only does that mean the U.S. relies on Mexico, but Mexico is also reliant upon the U.S. due to the strong demand.

“That’s the other key piece here when we think about a Mexico situation, you know, will they retaliate on corn because it’s so important to the consumers in their country,” Swanson told Farm Journal during Commodity Classic this week. “And it’s such a big part of their diets and consumption. It’s a commodity that they consume way more of than what they produce. So they’re going to have to get it from somewhere.”

According to USDA’s Economic Research Service , between 1993 (the year before NAFTA’s implementation) and 2023, U.S. agricultural exports to Mexico expanded at a compound annual growth rate (CAGR) of 7%, while agricultural imports from Mexico grew at a rate of 9.7%.

“With the economic recovery in the United States and Mexico that followed the pandemic, U.S. agricultural exports to Mexico increased at a CAGR of 15.7% between 2020 and 2023, and U.S. agricultural imports from Mexico grew at a CAGR of 11.3%,” according to the USDA report. “In 2023, however, U.S. agricultural exports to Mexico decreased by 0.3% compared with the previous year, as the prices of major agricultural exports (such as corn and soybeans) declined.”

‘Farmers for Free Trade’ Speaks Out
Trump will announce his full plan at 4 p.m. EST on Wednesday, and Farm Journal will continue to follow this story as it evolves.

Ahead of Wednesday’s announcement on global tariffs, Farmers for Free Trade Executive Director, Brian Kuehl released a statement condoning the president’s use of tariffs.

“Farmers don’t want tariffs. In the midst of an already struggling farm economy, new tariffs threaten to raise input costs, close off key markets, increase uncertainty—and push more family farms to the brink of bankruptcy,” said Kuehl in a statement.

However, not all farmers agree with that. Iowa farmer Ben Riensche is hoping getting tough on trade will address the record ag trade deficit.

“We’re going to go through an adjustment period. We’re going make things a little less than comfortable for a while here while we make our trade partners be fair trading partners. It could be hard in the short term on farmers,” Riensche says.

You can read more about Rienche’s take on trade here.

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Cross-Border Tensions: Canadian Farmers Fear No One Will Win In A Trade War

Tue, 25 Mar 2025 18:55:12 GMT

As President Donald Trump continues to use tariffs to negotiate, the relationship between the U.S. and Canada is growing more tense. And farmers fear if they’re caught in the middle of another trade war, it will impact not only the commodities they sell, but the inputs they rely on each year.

“As you’re heading into this planting season, what are you most concerned about?” I asked Maurine Chauvin, a farmer who goes by ‘Moe” in Essex County, Ontario.

“Tariffs, I think, are the No. 1 issue between our nations, and you know, all we want is to get back to our friendly trading that we’ve always had as neighbors,” he said.

Chauvin farms in a province of Canada situated in the southwestern corner of Ontario. It’s basically just on the Canadian side of Detroit, which means much he relies heavily on what comes from the U.S.

His current focus should be on planting and nurturing his wheat that’s sprouted in the field, but instead, he’s concerned about trade. As for the wheat, it’s benefited from a steady dose of winter weather this year.

“It looks pretty good; there was some low spots. You’re wondering how it’s going to turn out when it sits under water and ice for so long, but as farmers, I think we always have to be hopeful come spring,” Chauvin said.

That’s what farmers do. They remain hopeful, even when the reality of farming through another trade war seems bleak.

“As a farmer, are you concerned about the current dynamic,” I asked Chauvin.

“Absolutely. How can you not be? It’s very concerning,” Chauvin said. “As Ontario farmers, we rely on a lot of inputs and important pieces to put our crop in the ground, and you know, from the seed, fertilizer, chemicals, farm equipment — it can all be affected.”

It’s not just the tariffs possibly placed on the crops he grows this year, as retaliatory tariffs could also cause the cost of inputs he relies on from the U.S. to rise.

“In my eyes, nobody wins,” he said. “I think all we’d like to see is to have free trade come back and have some good long trade between our nations like we’ve always had.”

The concern is being echoed by farmers all across Canada.

“It’s the unknown and getting my crop on my own farm in in a timely manner without any surprises as far as added costs. Margins are slim, commodity prices are low, so there’s no room for error,” said Jeff Harrison, who’s a farmer and the current chair of the Grain Farmers of Ontario (GFO).

Harrison thinks this trade war could be more devastating than the last.

“There is more on the table. Costs have gone up tremendous post-Covid. We all see what’s happened in our own lives with inflation, everything costs more. So, there’s more on the table for a farmer, more on the line, more risk,” Harrison said.

That risk is something GFO is stressing to Canadian policymakers.

“If we look at trade war between Canada and the U.S., what we’re coming from is decades of one of the best trading relationships anywhere in the world,” said Crosby Devitt, CEO of GFO. “And so when we look at it, it’s quite alarming to us that we’re even in the situation, first of all, but certainly I think the risk is that we could erode decades of great relationships.”

As CEO of GFO, Devitt leads an organization that represents 28,000 barley, corn, oat, soybean and wheat farmers across Ontario. He says for Ontario farmers, it’s the unknown causing so much angst.

“Certainly, when we look at what we bring into Canada from the U.S. in terms of our farming supplies — a lot of our inputs, like fertilizers, phosphorus and nitrogen, for example — there’s a lot of uncertainty there,” he said. “Seed definitely flows both ways, but one of the big areas of concern that I hear from farmers is machinery and machinery parts. So there’s certainly a lot of machinery production in the U.S. that we rely on [for] buying that equipment into Canada, but also parts. And so there’s a lot of uncertainty around where the supply chain might go and how that’s going to be affected.”

Secretary Rollins Defends Trump’s Use of Tariffs
During a recent interview with Fox News’ Maria Bartiromo, Agriculture Secretary Brooke Rollins defended the president’s use of tariffs, saying he’s holding Canada accountable.

“This president’s vision of tariffs [is] such an important part of his toolkit as he begins to realign the economy to put America first, to put our men and women, our families first. Everybody knows, and when they voted in November of 2024, they knew that’s what they were voting for. And so as we see the president begin to rollout, as we see him hold accountable Canada with their 250% tariffs on our dairy products, as they see him hold accountable, Mexico, China, all these countries where we have a 5% on our end when our products go out. They’ve got 15%, so three times, this is on average, on their end when their products come in. It’s not fair. And it’s got to be equalized as we move toward more free trade,” said Rollins.

Rollins pointed out the president has been very clear that there will be an interim period where the economy readjusts.

“Real transformation takes these harder decisions, and no one’s willing to do that, except now President Trump is,” Rollins said during the interview. “So, obviously 100 % behind it. I am talking to farmers every single day. They know that the president has their back. They know and are prepared for potentially, you know, an interim period as we move toward what the president has said is the greatest age of prosperity not just for all Americans, But for our farmers in our ranchers as well.”

No Compensation for Canadian Farmers
One major difference between the U.S. and Canada is that during the last trade war, U.S. farmers received Market Facilitation Program payments, or MFP. Those were designed to help compensate farmers for the market losses they suffered. In Canada, commodity prices were hit just as hard, but there were no payments to farmers.

“We have a very different system in Canada in terms of farm support or our business risk management programs we call them,” said Devitt. “We do have, you know, a crop insurance program for example that’s really just a yield-based insurance program. That’s the main one, but there are other programs, but nothing that would be specifically designed to handle a system disruption like this in our marketplace.”

Farmers Are On the Front lines
It’s farmers who were on the front lines of the last trade war, and GFO is concerned farmers will get hit hard again.

“We don’t know how to win a trade war, but we do know that Ontario and Canadian farmers will pay the price for that trade war, along with our United States counterparts,” said Miller. “But we need our government to know that retaliatory tariffs will hurt our own farmers. Good decisions need to be made.”

Farmers like Chauvin hear all the noise but are trying to focus on controlling what they can — and that’s planting and harvesting this year’s crop. But out of the three crops Chauvin grows — corn, soybeans and wheat — he doesn’t know which crop will be caught in the middle of a trade war this time around.

“Nobody really knows. I’ve been asking that question, and all crops are concerning, because Ontario farming is a $6 billion export business to the U.S. Those are big numbers, and it’s concerning,” Chauvin said.

But this Canadian farmer says, in his mind, one things for certain: No one wins in a trade war.

“I mean our concerns are the same and we all live to put the crop in the ground, and farming runs in your blood, and it doesn’t matter if you’re American or Canadian, we all want to put the crop in the ground and feed the world,” Chauvin said.

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Take Our Poll: Do You Agree With President Trump's Use of Tariffs?

Wed, 19 Mar 2025 17:07:04 GMT

Tariff whiplash is consuming the commodity markets — and the possible impact is stirring up quite the debate. At present, President Donald Trump says he’s sticking to his plan to impose additional tariffs on the United States’ top three trading partners starting April 2.

In early February, President Trump announced a 25% additional tariff on imports from Canada and Mexico , a 10% additional tariff on imports from China and a 10% tariff on energy resources from Canada.

Those tariffs were scheduled to go into effect in early March. However, President Trump made the decision to exempt goods from Canada and Mexico under the U.S.-Mexico-Canada Agreement (USCMA) from the 25% tariffs for another month.

What we know today is those exemptions for goods from Canada and Mexico covered under USMCA are scheduled to expire on April 2.

As agriculture waits to see what happens, the commodity markets continue to trade headlines and concerns are mounting about possible retaliatory tariffs. Tariff talk is already impacting input prices for farmers heading into spring.

Share Your Thoughts on Tariffs
In light of the ongoing tariff battle, we have two questions for you:

Do you support President Donald Trump’s use of tariffs as a negotiation strategy?
Do you believe USDA will compensate farmers for losses if agriculture is affected by a trade war, similar to the compensation provided through the Market Facilitation Program?

Click here to share your answers.

NOTE: We appreciate your input. The poll has been closed. Check back on Monday, March 24 for results and analysis.

After a Volatile Week on the Tariff Roller Coaster, Will Ag Markets Stabilize?

Fri, 07 Mar 2025 20:52:15 GMT

Corn, cattle and hogs close higher Friday, with weakness in soybean and wheat markets.

Oliver Sloup, Blue Line Futures, says it was roller coaster week in both grain and livestock futures due to on again, off again tariff talk.

On Thursday the Trump administration once again delayed tariffs on Canada and Mexico until April 2 for non compliant products under USMCA and then renewed the threat of reciprocal tariffs on Canadian dairy and lumber on Friday.

However, on Friday President Donald Trump said he may implement reciprocal tariffs on Canadian lumber and dairy products at any moment.

The volatility in the markets has been ramped up on the uncertainty.

When does the market start to stabilize?

Sloup likens this to the 2018 trade war and the more recent Russian invasion of Ukraine the spring of 2022.

He says at some point the market will get numb to the headlines and go back to trading its own fundamentals but predicting an exact date that occurs is difficult.

Sloup says the grain markets are generally choppy in March and ahead of the USDA Prospective Plantings Report end of the month.

For producers looking to protect themselves and sleep at night, Sloup recommends options.

Live and feeder cattle futures were sharply higher with help from higher cash.

Light cash cattle trade broke in the North at $200 to $202 live and $315 dressed, up $2 from last week’s weighted average.

Some light scattered business was also reported in parts of Kansas at $198, $1 higher than last week’s weighted average.

Sloup says cattle had an impressive week closing above key moving averages and in the face of the melt down in the financial markets.

This should keep the long funds interested in defending that position.

Lean hog futures ended higher on Friday and look and Sloup says they look like they’re bottoming.

When Do Ag Markets Quit Trading Tariffs and Start Trading Their Own Fundamentals?

Fri, 07 Mar 2025 15:42:49 GMT

Cattle, hogs and corn see early strength Friday with wheat and soybeans lower.

Scott Varilek with Kooima Kooima Varilek says it has been a roller coaster ride on tariffs all week on the markets including yesterday’s delay to Mexican and Canadian tariffs on USMCA compliant products until April 2.

So when do the markets become numb to the ever changing tariff news and go back to trading their own fundamentals?

Varilek says black swan events like the Black Sea war that broke in May of 2022 lead to highly volatile markets but in that case the news and uncertainty became priced in after a few weeks and even today news out of that region rarely moves the market.

The cattle market looks like it could close higher for the week despite the lack of cash news and melt down in the stock market.

Cash has been very light this week but some cattle have sold in the South at $196 to $197, steady to $1 lower than last week and Northern trade has been light at $310-$312 dressed and $198 live.

Shortly after this broadcast some $200 was traded in the North with bids being raised to $201 and passed on.

Packers have been able to pull formula cattle at the start of this new month.

The charts look more constructive according to Varilek with April live cattle able to get above the 100 day moving average at $198.75, so he is hopeful for additional recovery.

Lean hog futures are up this morning with a reprieve on Mexican tariffs and counter taxes that may have targeted pork.

Funds have liquidated a chunk of their length in the lean hogs but are holding together with decent demand as exports yesterday were strong and included Mexico and China as the top two buyers.

Grain futures are mixed with corn trying to extend gains but soybeans and wheat struggling.

Grain markets rebounded nicely the last two sessions on the tariff delays and corrective the oversold market status.

Can Mexico Afford to Retaliate Against the U.S.?

Wed, 05 Mar 2025 19:46:38 GMT

President Donald Trump followed through on his threats of imposing a 25% tariff on most imports from Canada and Mexico, along with an additional 10% on goods from China. While China and Canada released their list of retaliatory tariffs the same day, Mexico’s president, Claudia Sheinbaum, says they won’t release their list until the weekend.

Sheinbaum said the country will also respond with a 25% tariff on U.S. goods but will announce the products it will target on Sunday.

But can Mexico afford to retaliate? That was one of the questions asked by USDA chief economist Seth Meyer during Commodity Classic this week. The reason is Mexico’s economy is struggling, due to a number of factors, which includes a large informal sector, high budget deficit and unstable infrastructure.

According to the Federal Reserve Bank of Dallas, Mexico’s GDP grew only 0.9% year over year in fourth quarter 2024, after expanding 2.% in 2023 and 4.6% in 2022. Economic growth slowed, mainly due to lower investment, slowing consumption and a contracting energy sector.

(Federal Reserve Bank of Dallas)

The Dallas Fed says lower investment and consumption was the main driver behind the slow growth.

“Investment contributed three percentage points less to GDP growth in 2024 compared with 2023,” the Federal Reserve Bank of Dallas said in a recent report. “The major drop was in nonresidential construction investment, while purchases of imported machinery and equipment also slowed noticeably as the Mexican peso continued to weaken against the dollar. In addition, consumption was impacted by sluggish growth in remittances, high interest rates and flat employment. However, net exports boosted growth in 2024 after dragging it down the previous two years.”

Extremely Reliant Upon Exports
The other issue? Mexico is extremely reliant upon demand from the U.S., exporting $41.9 billion worth of agricultural products to the U.S.

In 2023, Mexico accounted for 16.3% of U.S. agricultural exports and 23.3% of U.S. agricultural imports.

By the numbers:

Mexico is the largest source of horticultural imports to the U.S., supplying 63% of vegetables and 47% of fruit and nuts in 2023.
The top agricultural exports from Mexico to the U.S. in 2024 included beer, tomatoes, tequila, avocados, strawberries, raspberries and peppers.

Mexico is the Biggest Customer of U.S. Ag Exports

The other important piece is Mexico is now the U.S.'s top ag export destination.

According to Krista Swanson, chief economist for National Corn Growers Association (NCGA), Mexico is a huge destination for U.S. corn. More than 40% of U.S. corn exported last year went to Mexico. Not only does that mean the U.S. relies on Mexico, but Mexico is also reliant upon the U.S. do to the strong demand.

“That’s the other key piece here when we think about a Mexico situation, you know, will they retaliate on corn because it’s so important to the consumers in their country,” Swanson told Farm Journal during Commodity Classic this week. “And it’s such a big part of their diets and consumption. It’s a commodity that they consume way more of than what they produce. So they’re going to have to get it from somewhere.”

Bigger Picture
According to USDA’s Economic Research Service , between 1993 (the year before NAFTA’s implementation) and 2023, U.S. agricultural exports to Mexico expanded at a compound annual growth rate (CAGR) of 7%, while agricultural imports from Mexico grew at a rate of 9.7%.

“With the economic recovery in the United States and Mexico that followed the pandemic, U.S. agricultural exports to Mexico increased at a CAGR of 15.7% between 2020 and 2023, and U.S. agricultural imports from Mexico grew at a CAGR of 11.3%,” the USDA report said. “In 2023, however, U.S. agricultural exports to Mexico decreased by 0.3% compared with the previous year, as the prices of major agricultural exports (such as corn and soybeans) declined.”

Trump Sows Confusion on Tariffs for Canada and Mexico, Floats 25% Duty for EU Goods

Wed, 26 Feb 2025 21:25:22 GMT

U.S. President Donald Trump on Wednesday raised hopes for another month-long pause on steep new tariffs on imports from Mexico and Canada, saying they could take effect on April 2, and floated a 25% “reciprocal” tariff on European cars and other goods.

A White House official, however, said Trump’s previous March 4 deadline for the 25% tariffs on Mexican and Canadian goods remained in effect “as of this moment,” pending his review of Mexican and Canadian actions to secure their borders and halt the flow of migrants and the opioid fentanyl into the U.S. Trump sowed confusion during his first cabinet meeting on Wednesday, when he was asked about the timing for the start of the duties for Canada and Mexico and replied that it would be April 2.

“I have to tell you that, you know, on April 2, I was going to do it on April 1,” Trump said. “But I’m a little bit superstitious, I made it April 2, the tariffs go on. Not all ofthem but a lot of them.”

Trump’s comments prompted jumps in the value of the Canadian dollar and Mexican peso versus the greenback.

Canada’s Finance Ministry and Mexico’s Economy Ministry both declined to comment on Trump’s remarks.

U.S. Commerce Secretary Howard Lutnick said the fentanyl-related actions were paused for 30 days but referred to “overall” tariffs on April 2. He did not specify whether the March 4 deadline was still in effect.

“So the big transaction is April 2, but the fentanyl-related things, we’re working hard on the border,”
Lutnick said during the cabinet meeting. “At the end of that 30 days, they have to prove to the president that they’ve satisfied him in that regard. If they have, he’ll give them a pause, or he won’t.”

EU Tariff Rate

Trump has targeted early April for imposing reciprocal tariffs that would match the import duty rates of other countries and offset their other restrictions. His trade advisers consider European countries’ value added taxes to be akin to a tariff.

Trump, asked whether he has decided on a tariff rate for goods from the European Union, replied: “We have made a decision, and we’ll be announcing it very soon, and it’ll be 25%, generally speaking, and that’ll be on cars, and all of the things.”

He said the EU is a “different case” from Canada and takes advantage of the U.S. in different ways.

“They don’t accept our cars. They don’t accept, essentially our farm products,” Trump said, adding that the EU was formed “in order to screw the United States.”

Roberta Metsola, president of the European Parliament, is in Washington and will meet U.S. lawmakers on Wednesday, a spokesman said. She is not slated to meet with any Trump administration officials.

New U.S. Trade Representative Confirmed

Also on Wednesday, the U.S. Senate voted 56-43 to confirm Jamieson Greer as Trump’s new U.S. Trade Representative, putting a veteran of the Republican president’s first-term trade wars fully on the job.

Greer, who served as chief of staff to former USTR Robert Lighthizer, won the support of five Democrats, including both senators from Michigan, the center of the U.S. auto industry.

Trade groups welcomed Greer’s confirmation, lauding his commitment to consulting with industry and standing up for U.S. businesses, farmers and workers. “We share Ambassador Greer’s desire for an active and pragmatic trade policy that creates

U.S. jobs and more resilient supply chains,” said Jake Colvin, president of the National Foreign Trade Council.

Greer told senators during his Senate confirmation hearing that he wanted to quickly renegotiate the U.S.-Mexico-Canada Agreement on trade to ensure China does not use it as a back door to the U.S. market to avoid other tariffs.

“Right out of the gate, I expect that we’ll be taking a second look at the USMCA,” Greer said.

Asked what changes he would like to see in the pact, Greer zeroed in on further tightening automotive content rules.

“I think we should look at the rule of origin for automobiles and aerospace and other things to look and see if we need to have any kind of restriction on content or value added from foreign countries of concern, or non-market economies,” he said, using language that U.S. trade officials often use to describe China.

(Reporting by David Lawder and Andrea Shalal; additional reporting by Bo Erickson and Ryan Jones in Washington, Brendan O’Boyle in Mexico City and Ismail Shakil in Ottawa; Editing by Dan Burns, David Gregorio and Paul Simao)

Mexico’s Sheinbaum Pushes for USMCA Deal as Tariff Deadline Nears

Tue, 25 Feb 2025 19:02:30 GMT

Mexican President Claudia Sheinbaum reaffirmed her commitment to securing a deal with the U.S. to prevent the imposition of 25% tariffs on Mexican exports, set to take effect on March 4. She emphasized Mexico’s dedication to addressing the U.S. fentanyl crisis and maintaining strong trade relations under the USMCA.

Sheinbaum also noted that Mexico is considering additional tariffs on imports from countries without free trade agreements, particularly China. Bloomberg reported this week that if Mexico imposes tariffs on Chinese imports the direct impact will be limited, as Mexico accounts for only 2.4% of China’s total exports.

Economy Minister Marcelo Ebrard remains in Washington for negotiations, as Sheinbaum expressed willingness to speak directly with President Trump if necessary.

Trump said Monday that his planned 25% tariffs on all Mexican and Canadian exports to the U.S. “are going ahead on time, on schedule,” meaning the duties would take effect on March 4 at the conclusion of a one-month suspension.

“This is an abuse that took place for many, many years,” Trump said in justification of the decision to impose tariffs on the United States’ neighbors and North American trade partners. “And I’m not even blaming the other countries that did this, I blame our leadership for allowing it to happen. I mean who can blame them if they made these great deals with the United States, took advantage of the United States on manufacturing, on just about everything,” he said at a joint press conference with French President Emmanuel Macron.

Are Tariff Threats Trump’s Way to Reach a New USMCA Deal?
As the Trump administration decides whether to impose tariffs or not, some argue this negotiation is a precursor to renegotiating USMCA, and this is actually President Trump’s way of renegotiating that agreement.

Is that the case? That’s what Farm Journal asked Gregg Doud who served as the Chief Agricultural Negotiator in the Office of the United States Trade Representative (USTR) during the Trump administration.

“I think you will intentionally never know the answer to that. That’s what I think,” said Doud. “You saw was it at CPAC last week where the Vice President, J.D. Vance, explained the art of President Trump and the way he negotiates. He never takes anything off the table.... it’s all negotiable. That’s the way he views the world. And he’s never going to let you know really where you’re at until the bottom line. He’s a master at it, I think.”

Parts of Mexico Face Growing Drought
One factor that could impact demand for imports is Mexico’s intensifying drought. Mexico’s northwest region is grappling with extreme drought conditions, with parts of Sinaloa, Sonora, Chihuahua, Durango, and Coahuila classified under the highest drought severity level, “exceptional,” according to the National Water Commission (Conagua).

The ongoing dry spell, exacerbated by the La Niña climate phenomenon, has led to widespread crop failures, dwindling reservoir levels, and looming water shortages.

Mexico’s current drought map.

(Conagua)

Water storage in Sinaloa’s dams has hit a 30-year low, with key reservoirs like Adolfo López Mateos and Huites at critically low levels. The drought has severely impacted agriculture, leaving nearly half of Sinaloa’s farmland unplanted.

In response, the government has launched a cloud seeding initiative, allocating 13 billion pesos ($636 million) to stimulate rainfall. Governor Rubén Rocha assured farmers of continued support for fertilizers, seeds, and price stabilization measures but urged cost reductions in agricultural production. With little to no rain expected before July, water rationing and supply cuts are anticipated in the coming months.

USDA's Rollins: 'Let's Go Barnstorm The World And Find New Partners' For Trade

Tue, 18 Feb 2025 18:04:15 GMT

On Brooke Rollins’ first full week on the job as Secretary of Agriculture, she addressed the 600 farmers, ranchers and industry leaders in Kansas City for the 2025 Top Producer Summit.

High on Rollins’ list of priorities was the topic of trade and President Donald Trump’s vision for U.S. agriculture moving forward.

While Rollins did not shy away from addressing the administration’s decision to implement trade tariffs, noting “farmer and rancher concerns are legitimate,” she focused on what she sees as her role ahead.

“My job is to ensure that as President Trump and our trade representatives are making their decisions that I am in the room and advocating on behalf of our people, on behalf of all of you,” she told Top Producer Summit attendees.

One of her key objectives, she says, is to find and expand market access for U.S. agricultural products domestically and abroad.

“Let’s go barnstorm the world, and let’s go find some more trade partners and access [to market opportunities],” she says.

Rollins says her goals for trade are a reflection of Trump’s vision and his determination to make agriculture part of the “golden age” he sees ahead for the U.S.

Trump is the consummate deal maker, Rollins notes, able to side-step bureaucracy and red tape in the process to work with world leaders.

“I don’t know that in the last 250 years, we’ve had anyone in office like President Trump,” she says. “He is a very unusual, remarkable and fearless man, and he wants to make a deal, and in the best way, and put America first.”

Agriculture Secretary Brooke Rollins spoke to a crowd of 600 farmers, ranchers and industry leaders at the 2025 Top Producer Summit.

(Jim Barcus)

Making Headway With Trade
Sen. Roger Marshall of Kansas, who moderated the conversation with Rollins, highlighted Trump’s work to build trade during his first term.

“He redid USMCA, and now that’s our largest ag partnership, with Mexico and Canada,” Marshall says. “He gave us South Korea and Japan, which has been so important to Kansas and our cattle industry, as well as trade 1.0 with China.”

Marshall then mentioned the headway he believes Trump and team have made with India.

“I see India replacing China as our major trade partner, as well that China is growing right now,” Marshall says. “I think there’s huge opportunities in India.”

U.S. ethanol, cotton and tree nuts are three of the top agricultural exports to India, a country that has in the past impeded agricultural trade with tariffs and non-tariff barriers alike. Trump called out the barriers to trade following recent conversations with India’s Prime Minster Modi.

A joint statement after the Trump-Modi meeting said Washington welcomed New Delhi’s recent steps to lower tariffs on select U.S. products and increase market access to U.S. farm products, while seeking to negotiate the initial segments of a trade deal by the fall of 2025.

Rollins says the progress underway with India was just one step forward to address what she described as a trade crisis for the U.S.

“Our exports are down $37 billion this year and likely to be down $42 billion in the months to come. This is a crisis, and this is something that I understand inherently,” Rollins says.

“We have a tremendous amount of work to do,” she adds. “But my promise to you is this, and my commitment will never waver, that every minute of every day for the next four years, I will do everything within my power with hopefully God’s hand on all of us and our work to ensure that we are not just entering the golden age for America, as my boss, President Trump, likes to say, but that we are entering the golden age for agriculture.”

Secretary Rollins joined Chip Flory on AgriTalk. Listen to their discussion about trade policy and tariffs; avian flu; and disaster and economic aid.

Your next read: Senate Overwhelmingly Confirms Brooke Rollins as 33rd Secretary of Agriculture

Trump Imposes Sweeping Steel and Aluminum Tariffs, Sparking Trade War Risks

Tue, 11 Feb 2025 15:55:51 GMT

President Donald Trump as expected raised tariffs on steel and aluminum imports to a flat 25% without exceptions , aiming to support struggling domestic industries but escalating trade tensions worldwide. The measures, effective March 12, eliminate country-specific exemptions and extend to downstream steel and aluminum products, affecting key suppliers such as Canada, Mexico, Brazil, and South Korea.

The move expands Trump’s 2018 Section 232 tariffs, justifying the action on national security grounds.

“It’s 25% without exceptions,” Trump emphasized, adding that reciprocal tariffs on countries taxing U.S. goods will be announced soon.

According to the White House fact sheet , the move is to restore fairness into the steel and aluminum markets, while also strengthening the manufacturing industry in the U.S. The White House fact sheet states:

Foreign nations have been flooding the United States market with cheap steel and aluminum, often subsidized by their governments.
A report from the first Trump Administration found that steel import levels and global excess were weakening our domestic economy and threatening to impair national security.
While the domestic steel industry briefly achieved 80% utilization in 2021, subsequent trade pressure following the COVID-19 pandemic has depressed domestic production. In 2022 and 2023, capacity utilization fell to 77.3% and 75.3%, respectively. High import volumes from sources exempt from Section 232 tariffs are a major factor in depressing domestic production volumes.
For aluminum, there was an increase in the capacity utilization rate between 2017 and 2019, from 40% to 61% during that period. But since 2019, the aluminum capacity utilization has once again seen a steady decline, falling from 61% to 55% between 2019 and 2023.
The United States does not want to be in a position where it would be unable to meet demand for national defense and critical infrastructure in a national emergency.

Criticism from Canada

Canada criticized the action as unjustified, citing its critical role in U.S. supply chains. The European Commission, South Korea, and other affected nations expressed concern, with retaliatory measures and negotiations expected in the coming days.

U.S. steel and aluminum producers saw stock gains, while foreign steelmaker shares fell.

Trump Considers Exemption for Australia on Steel, Aluminum Tariffs

President Trump agreed to consider exempting Australia from newly reinstated steel and aluminum tariffs, following a call with Australian Prime Minister Anthony Albanese. Trump reintroduced a 25% tariff on imports after previously allowing duty-free quotas. The decision could escalate trade tensions globally.

Citing Australia’s trade surplus with the U.S. and the strategic Indo-Pacific partnership, Trump acknowledged the exemption request, saying he would “give great consideration” due to the strong bilateral ties and Australia’s minimal share of U.S. steel (1%) and aluminum (2%) imports. Albanese described the call as constructive, expressing confidence in a favorable outcome. Australian officials highlight the importance of steel exports for U.S. defense supply chains, especially under the AUKUS pact.

South Korea Seeks Talks with President Trump

South Korea’s acting President Choi Sang-mok said the government would seek talks with the Trump administration on the tariffs Washington is imposing to reflect the interests of domestic companies. The CEOs of 20 major South Korean conglomerates plan to visit the U.S. in the near future, while the government intends to discuss response measures with Japan and the European Union, Choi said.

EU Expected to Respond Strongly

The European Union pledged a robust response to the U.S.’ recent imposition of 25% tariffs on steel and aluminum imports, a move that has reignited transatlantic trade tensions. European Commission President Ursula von der Leyen warned that “unjustified tariffs” will trigger “firm and proportionate countermeasures.”

The EU is exploring several options, including:

Targeted tariffs: Imposing reciprocal tariffs on U.S. goods, focusing on politically sensitive sectors.
WTO challenge: Filing a complaint with the World Trade Organization.
Safeguard measures: Protecting European industries from potential surges in imports redirected from the U.S. market.

German Chancellor Olaf Scholz and French Industry Minister Marc Ferracci have both emphasized the need for a unified EU response. The European Commission has convened an emergency meeting of trade ministers to discuss next steps, signaling the potential for a broader trade conflict if the U.S. does not reconsider its tariff policy.

Trudeau Slams U.S. Tariffs on Canadian Steel and Aluminum as “Unjustified”

Canadian Prime Minister Justin Trudeau criticized U.S. tariffs on steel and aluminum as “entirely unjustified,” according to a CBC video posted on X. Trudeau emphasized that Canada’s response “will be firm and clear” while the government engages with Donald Trump’s administration to underline the tariffs’ negative impact on both nations. When asked about the possibility of retaliatory tariffs, Trudeau expressed hope that escalation could be avoided.

Trump Confirms Speaking with China’s Xi Since Taking Office

President Donald Trump revealed in a Fox News interview that he had spoken with Chinese President Xi Jinping since his inauguration on Jan. 20 but did not disclose details of the conversation.

“We have a very good personal relationship,” Trump said, though he did not specify when the call took place or what was discussed.

Despite rising tensions between the U.S. and China over trade, cybersecurity, Taiwan, and other issues, Trump previously stated he was in no rush to contact Xi regarding the ongoing trade conflict. The Chinese Foreign Ministry did not confirm the latest conversation, instead referring to a scheduled call on Jan. 17 before Trump officially took office.

Meanwhile, China recently responded to U.S. trade tariffs with targeted duties on American imports and potential sanctions on several U.S. companies, including Google.

Trump’s plan to call Xi following his latest round of tariffs on China has been delayed, with no contact yet made.

Trump says he’s “in no hurry,” but the Wall Street Journal says insiders suggest that Beijing hasn’t proposed a concrete plan to curb China’s role in the U.S. fentanyl crisis — a key demand behind Trump’s decision to impose an additional 10% tariff on Chinese goods.

A U.S. administration official noted that the tariffs could be paused if “serious headway” is made on fentanyl during the next Trump-Xi conversation. Unlike the quick deals reached with Mexico and Canada that resulted in suspended tariffs, China has yet to offer a concession.

“The Chinese should just offer to crack down on fentanyl once and for all,” an American executive told the WSJ, highlighting Beijing’s proven efficiency in suppressing dissent and private enterprise. But President Xi appears in no rush. Instead, he’s pursuing a broader agreement that could shape long-term U.S./China relations.

Beijing’s initial proposal, according to the Wall Street Journal, involves reinstating elements of the 2020 trade deal, a renewed pledge not to devalue the yuan, and commitments for increased U.S. investments. For now, however, Xi seems willing to absorb the additional tariffs, relying on Chinese companies’ ability to reroute exports through third countries.

In response to the U.S. tariffs, China has imposed modest retaliatory measures, avoiding full escalation while keeping leverage on the table. Actions include new tariffs on U.S. energy imports and an investigation into Google for potential antitrust violations.

Of note:
1.36 billion shipments entered the U.S. in fiscal year 2024 using the de minimisprovision. The provision allowed bargain platforms Shein and Temu to skirt import duties on low-value packages from China.

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Tariffs and trade: CPMA president shares what’s at stake for fresh produce

China Strikes Back With Tariffs on U.S., North American Trade War On Pause

Tue, 04 Feb 2025 19:45:11 GMT

As of Monday evening, Trump paused tariffs on Canada and Mexico, China tariffs continued to be discussed with China countering with tariffs on the U.S.

President Donald Trump agreed to pause tariffs on Mexican and Canadian goods after negotiations with Mexican President Claudia Sheinbaum and Canadian Prime Minister Justin Trudeau. The duties, originally set to take effect today, Feb. 4, will be postponed for at least 30 days while further discussions take place.

The notices on public review at the Federal Register on tariffs against Canada and Mexico are still shown as being on public inspection with a scheduled publication date on both being Feb. 5. It appears, at least for now, that Treasury Secretary Scott Bessent’s previous comments about Trump’s tariffs have proven correct. He described Trump’s strategy as “escalate to de-escalate,” implying levies are a negotiation tool.

Trump’s trade wants from Canada & Mexico include accelerated USMCA renegotiation.

Tariff suspension with Mexico.

“Tariffs will remain like Schrodinger’s cat, dead and alive at the same time. We believe the endgame is a USMCA renegotiation, to get a USMCA 2.0,” said Carlos Capistran, chief Canada and Mexico economist at Bank of America. “That is when the threat of tariffs really end.

Trump announced via social media that Sheinbaum agreed to deploy 10,000 Mexican soldiers to the U.S.-Mexico border to combat fentanyl trafficking and illegal migration. In exchange, the U.S. will hold off on imposing 25% tariffs on Mexican goods during a one-month negotiation period led by Secretary of State Marco Rubio, Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and himself. The U.S., in return, will strengthen efforts to stop the flow of weapons, including high-powered rifles, into Mexico, according to Sheinbaum. “For the first time, the government of the United States says we will work together to avoid high-caliber weapons from entering Mexico,” she said, referring to how cartels acquire many of their weapons illegally from the United States. Confirming the deal, Trump said the arrangement is mutually beneficial. Sheinbaum also announced Mexico would establish three joint working groups with the U.S. government. “We already have a working group with the U.S. State Department, where the undersecretary is actively engaged in defending our Mexican brothers and all immigration-related matters,”

Sheinbaum said. “Now, two new groups will be formed — one dedicated to security and another to trade,” she added, emphasizing the importance of the tariff pause. “We now have a month to work and convince everyone that this is the best path forward.”

U.S./Canada tariff freeze.

“The deal Trudeau agreed to yesterday was “virtually the same” as the one Canada’s prime minister had offered weeks ago, wrote Campbell Clark in the Globe and Mail, a Canadian newspaper. “Mr. Trump just loves making those threats and making everyone dance.” And he will “keep on doing it”. “What,” Clark asked, “will Canada do next time?”

Trump and Trudeau agreed to a 30-day tariff suspension while they explore a broader economic deal. Trudeau confirmed Canada’s commitment to bolstering border security with $1.3 billion in funding, the assignment of 10,000 border personnel, the creation of a “Fentanyl Czar” to combat drug-related crime. The border protection plan will use new technology, personnel, helicopters, and enhanced cooperation with American law enforcement agencies. The nation is also investing $200 million in intelligence operations, appointing a fentanyl czar, designating cartels as terrorist organizations, and establishing a partnership with the U.S. Joint Strike Force to fight fentanyl trafficking, organized crime, and money laundering, Trudeau said. Talks with Trudeau also included discussions about regulations that prevent American banks from doing business in the northern nation, according to Trump.

China tariffs under discussion, but China reacts with tariffs on U.S. products.

The 10% U.S. additional tariffs on Chinese goods went into effect today. However, Trump will speak with Chinese leader Xi Jinping in the next few days, White House Press Secretary Karoline Leavitt told reporters. Some speculate discussions could revisit the Phase 1 trade deal from Trump’s first term, which included commitments from China to increase U.S. agricultural imports.

“China will be dealt with,” Trump said. “China hopefully is going to stop sending us fentanyl, and if they’re not, the tariffs are going to go substantially higher.”
On Feb 3, China’s U.N. envoy suggested a meeting between Chinese Foreign Minister Wang Yi and U.S. Secretary of State Marco Rubio at an upcoming United Nations Security Council meeting in two weeks, stressing the need for cooperation because “so much is at stake.” China announced strong retaliatory measures against the U.S., imposing punitive tariffs of 10-15% on American products starting Feb. 10. This follows President Trump’s decision to levy 10% additional tariffs on Chinese goods, citing fentanyl controls. Beijing will apply:

15% tariffs on U.S. coal and natural gas
10% on petroleum, agricultural equipment, and high-emission vehicles

China’s Ministry of Finance condemned the U.S. move as a WTO violation that disrupts economic cooperation. Additionally, China introduced export controls on key minerals like tungsten and molybdenum and launched an anti-monopoly probe into Google. It also placed PVH (owner of Calvin Klein) and Illumina on its unreliable entity list, accusing them of discriminatory practices. Of note, despite the U.S. imposing a 10% tariff on Chinese goods and China retaliating with import taxes of up to 15%, the Chinese yuan remained stable, even returning to its previous Friday level. This unexpected resilience suggests that investors still hold hope for a potential last-minute negotiation or compromise, similar to the trade deferrals seen in Canada and Mexico. Trade with China has been falling since the first Trump administration, so the new U.S. tariffs may have only a limited effect on the economy.

Next on Trump’s trade radar

President Donald Trump has renewed his criticism of the European Union, accusing it of exploiting the U.S. on trade, particularly in autos and agriculture. “The European Union has abused the United States for years, and they can’t do that,” he said. In response, European leaders, including French President Emmanuel Macron, signaled their intent to push back. Given that the U.S. and the EU are each other’s largest sources of foreign direct investment, a trade battle between them could have serious economic consequences.

Trump Agrees to Delay Tariffs on Goods From Mexico and Canada for 30 Days

Mon, 03 Feb 2025 16:13:32 GMT

The U.S. has agreed to delay tariffs on goods from Mexico and Canada for one month to allow for more time for negotiations. The agreement from both sides happened on Monday, just hours before the tariffs were set to take effect.

Sostuvimos una buena conversación con el presidente Trump con mucho respeto a nuestra relación y la soberanía; llegamos a una serie de acuerdos:

1.México reforzará la frontera norte con 10 mil elementos de la Guardia Nacional de forma inmediata, para evitar el tráfico de drogas…
— Claudia Sheinbaum Pardo (@Claudiashein) February 3, 2025

President Claudia Sheinbaum said U.S. tariffs against Mexico will be delayed for one month after a conversation with President Donald Trump on Monday. Trump then confirmed the news on Truth social.

Mexico’s president said she had reached several agreements with Trump during the phone call and that both countries will start working on trade and security.

Sheinbaum also said her government agreed to reinforce the border with the U.S. with 10,000 National Guard officers to prevent the trafficking of drugs, particularly fentanyl, from Mexico to the U.S.

Trump had announced plans to hold discussions with the leaders of Canada and Mexico on Monday following his recent declaration of imposing significant tariffs on imports from these countries and China.

“I don’t expect anything very dramatic,” Trump said before he held any of the calls. “We put tariffs on. They owe us a lot of money, and I’m sure they’re going to pay.”

Tariffs Also Delayed At Least One Month on Goods from Canada

Just hours after Mexico’s president said Trump agreed to pause tariffs for at least 30 days, Canadian Prime Minister Justin Trudeau made a similar announcement on X.

I just had a good call with President Trump. Canada is implementing our $1.3 billion border plan — reinforcing the border with new choppers, technology and personnel, enhanced coordination with our American partners, and increased resources to stop the flow of fentanyl. Nearly…
— Justin Trudeau (@JustinTrudeau) February 3, 2025

In his tweet, Trudeau wrote, “I just had a good call with President Trump.”

Trudeau also committed to appointing a “Fentanyl Czar” and better patrol the border.

Executive Order Over the Weekend Hit Mexico and Canada With Tariffs

Before and after Trump singed the executive order over the weekend, Mexican President Claudia Sheinbaum vowed to counter with retaliatory measures. On Saturday, Sheinbaum announced Mexico would issue its own retaliatory measures to Trump’s 25% tariffs, but no specifics were unveiled.

Sheinbaum said last week she had told her economy minister “to implement Plan B” which she said “includes tariff and non-tariff measures” though it was not clear what those measures were exactly.Sheinbaum said: “We have Plan A, Plan B, Plan C, depending on what the government of the United States decides. It’s very important that Mexicans know that we will always defend the dignity of our people, respect for our sovereignty and a dialogue among equals [with the U.S.], not with subordinates.”

Sheinbaum noted that Mexico has been open to receiving its citizens sent back under Trump’s plan for mass deportation of unauthorized migrants and that it was prepared to take some from other countries, which represented a concession. Deputy Economy Minister for Trade Luis Rosendo Gutierrez is expected to travel to Washington on Monday, according to reports. But he can’t meet with U.S. trade or Commerce Department officials until they’re formally ratified, they said. Instead, he’ll talk to business leaders and associations. Sheinbaum has also pointed to Foreign Minister Juan Ramon de la Fuente as a key interlocutor to US Secretary of State Marco Rubio.

High-level teams from Mexico’s foreign ministry and the State Department are in frequent communication working on security and migration, Mexico is the No. 1 trade partner of the United States, and sends 80% of its exports north. Mexico supplies around half of America’s imported fruit and two-thirds of imported vegetables, in dollar terms — tomatoes, berries, bell peppers, cucumbers. And it’s the largest source of imported beer. Mexico also is the No. 1 provider of medical devices to American hospitals and doctor’s offices, from surgical gloves to scalpels. Mexico emerged last year as the top market for American agricultural exports, totaling $30 billion.

Trump announced general tariffs at his Mar-a-Lago, Florida estate. White House spokesperson Karoline Leavitt said the tariffs would be implemented immediately, but as noted, Canada said tariffs would be implemented on their goods on Tuesday. It typically takes weeks for tariffs to take practical effect.

Key points:

Sector-specific tariffs: New duties will target high-tech and industrial sectors, potentially covering more imports by dollar value than previous tariffs on China. Trump also suggested Friday he’d consider new tariffs on oil and gas, potentially by Feb. 18, though it wasn’t clear what he was referring to.
The duties come on top of existing tariffs on those products. The first Trump administration imposed tariffs on more than $300 billion worth of Chinese goods to respond to an array of unfair trade practices, including intellectual property theft. The Biden administration kept all of them in place and increased rates on $18 billion in goods, including electric vehicles, solar panels, medical equipment, lithium-ion batteries, steel, and aluminum.
A second wave of tariffs could follow a comprehensive review of the trade relationship among the three countries (Canada, Mexico and China) that Trump has ordered completed by April 1.
Exemptions and negotiations: There are ongoing discussions about potential carve-outs for critical industries (like oil and automobiles) amid intense lobbying by U.S. business and labor groups. Some hope for exemptions to mitigate domestic economic risks. Trump told reporters in the Oval Office on Friday that there was nothing Canada, Mexico and China could do to avoid the tariffs before Saturday. “Not right now,” he said, telling reporters that his tariff threat wasn’t a negotiating tool. “It’s a pure economic [decision],” he said. But he did say he was considering a lower tariff on Canadian crude oil — 10% instead of 25% (and that it was he announced on Saturday). At nearly $100 billion in 2023, imports of crude oil accounted for roughly a quarter of all U.S. imports from Canada, according to U.S. Census Bureau data. The tariff on China would be for what Trump said was failing to stop the manufacturing of fentanyl precursor chemicals.

Reasons for the tariffs”

Trump on Friday said, “We’ll be announcing the tariffs on Canada and Mexico for a number of reasons. Number one is the people that have poured into our country so horribly and so much,” he said about migrants that have entered the United States via its southern and northern borders. “Number two are the drugs, fentanyl and everything else, that have come into the country and number three are the massive subsidies that we’re giving to Canada and to Mexico in the form of [trade] deficits,” Trump said. “I’ll be putting the tariff of 25% on Canada and separately 25% on Mexico and we will really have to do that because we have very big deficits with those countries. Those tariffs may or may not rise with time,” he said.

During a Friday press conference in the Oval Office, Trump criticized the previous administration’s handling of trade agreements. During his previous term, Trump initiated trade disputes, particularly with China, which significantly impacted U.S. agricultural exports. He stated that China had committed to buying $50 billion a year in farm products, but claimed that former President Joe Biden didn’t enforce this commitment. Trump said, “We’re going to enforce it,” referring to this $50 billion annual purchase agreement with China. His recent statements suggest a continuation of this aggressive stance on trade, framing it as necessary to protect American farmers and correct perceived imbalances left unaddressed by the Biden administration.

Trump’s team was initially considering a grace period between the announcement of the tariffs on Saturday and when they would be imposed, but White House press secretary Karoline Leavitt played down that possibility on Friday. Leavitt said that a Reuters report stating that the tariffs wouldn’t be implemented until March 1 was “false.”

Your Next Read: Trump Officially Signs Three Executive Orders Imposing 25% Tariffs on Canada and Mexico, 10% Tariffs on China

Canada, Mexico Hit Back with Retaliatory Tariffs on U.S. Imports

Sun, 02 Feb 2025 13:56:53 GMT

In response to President Donald Trump’s decision to impose 25% tariffs on Canadian and Mexican goods , Canada announced its own 25% tariffs on $155 billion worth of U.S. imports. Mexican President Claudia Sheinbaum also announced its own retaliatory measures to Trump’s 25% tariffs, but no specifics were unveiled.

Canada Strikes Back
Prime Minister Justin Trudeau stated that the tariffs will roll out in two phases, starting Feb. 4 on $30 bil. targeting American products such as alcohol, produce, household goods, and industrial materials, the same day the American tariffs are set to begin.

The tariffs on the other $125 billion worth of goods will come in 21 days, to allow impacted Canadian companies to adjust their supply chains. Trudeau emphasized that Canada’s response would be “strong but appropriate,” while also considering non-tariff measures like restrictions on critical minerals.

The move has drawn mixed reactions within Canada, with provincial leaders urging strategic countermeasures while ensuring minimal harm to the domestic economy. Meanwhile, the White House justifies the tariffs as a measure against drug trafficking and illegal border crossings, further straining trade relations between the two countries.

American items that Canadians tariffs will be applied to include:

Beer, wine, and bourbon
Fruits and fruit juices including orange juice, as well as vegetables
Perfume, clothing, and shoes
Major consumer products such as household appliances and furniture
Sports equipment
Other materials such as lumber and plastics

The government of Canada says a more detailed list of impacted products will be released soon.

More Tariffs Coming
Foreign Affairs Minister Mélanie Joly said on Jan. 31 that Canada’s retaliatory tariffs would be coming in rounds. “There would be a first round of measures, second round of measures, and a third round of measures,” Joly said at a press conference in Washington. “And we’ll keep ourselves also some leverage.”

When asked if Canada would be shutting off oil exports to the U.S., Trudeau said he will be ensuring Canada’s response will be “equitable” and won’t be damaging to one part of the country more than the others. Energy-rich Alberta has strongly opposed any export tariffs on oil, or for Canada to stop oil exports altogether. Trump said on Jan. 31 that the U.S. tariffs will be lower on Canada’s oil and gas exports, at 10%, while other goods will have a tariff of 25%.

Canada’s trade surplus in merchandise with the U.S. was around $100 billion (US$59 billion) last year, according to a report by TD Bank. If Canadian oil exports to the U.S. are removed from the figure, the “scales tip to America’s favor,” the report says, meaning the United States would have a $60 billion (US$41 billion) trade surplus.

Canada and U.S. Conduct Two-way Trade Worth $1.3T Every Year

According to the Canadian Chamber of Commerce, 2.3 million Canadian jobs are supported by exports to the U.S., and 1.4 million American jobs are supported by exports to Canada. A Bank of Canada analysis says that under a mutual 25% tariffs scenario, Canada’s GDP would take a 2.4% hit.

Mexico Announces Plans for Retaliation
Mexican President Claudia Sheinbaum announced its own retaliatory measures to Trump’s 25% tariffs, but no specifics were unveiled. Sheinbaum said she had told her economy minister “to implement Plan B” which she said “includes tariff and non-tariff measures” though it was not clear what those measures were exactly.

China Reacts
China’s Ministry of Commerce denounced Trump’s tariffs, saying they undermine “the normal economic and trade cooperation” between the U.S. and China.

The ministry said it would challenge the U.S. action at the World Trade Organization (WTO) and take countermeasures “to firmly safeguard its own rights and interests.” The WTO dispute settlement mechanism has been dysfunctional for years amid U.S. opposition to the appointment of new judges.

Your Next Read:
Trump Officially Signs Three Executive Orders Imposing 25% Tariffs on Canada and Mexico, 10% Tariffs on China

Trump Officially Signs Three Executive Orders Imposing 25% Tariffs on Canada and Mexico, 10% Tariffs on China

Sat, 01 Feb 2025 23:01:54 GMT

Big tariffs, big risks, big impacts: When populism and commercial agriculture collide.

President Donald Trump signed three executive orders for tariffs Saturday, the first time a president has used powers granted under the International Emergency Economic Powers Act of 1977. The orders also include retaliation clauses that would ramp up tariffs if the countries respond in kind. Trump cut the levy on imports of Canadian energy to 10%.

Trump officially announced plans to impose new tariffs on imports including computer chips, pharmaceuticals (without specifying which, at what level or when it would take effect), steel, aluminum, copper, oil, and gas by mid-February, expanding his administration’s trade war strategy. He said he would put new taxes on imported oil and gas on Feb. 18 and aimed to do the same for steel and aluminum this month or next month. This move is separate from scheduled tariffs — 25% on Canadian and Mexican goods and 10% on Chinese products set for Saturday, Feb. 1 — and aims to pressure Mexico, Canada, and China to address issues such as border security, drug trafficking, and migration.

Here’s the detailed Fact Sheet from the White House .

Of note: Canadian officials were told by U.S. officials on Saturday that the tariffs would be implemented on their goods on Tuesday, according to people familiar with the situation. Senior figures on Capitol Hill were briefed on the decision.

Trump also hinted at additional tariffs on EU products, citing poor treatment of the United States, though details remain vague. The president said he “absolutely” would impose tariffs on their shipments to the United States. “We are treated so badly: They don’t take our cars, they don’t take our farm products; essentially, they don’t take almost anything. And we have a tremendous deficit with the European Union. So, we’ll be doing something very substantial with the European Union,” he said.

Related News: Canada, Mexico Hit Back with Retaliatory Tariffs on U.S. Imports

Big impact. Such levies targeting imports from America’s top three trading partners — which together accounted for more than 41% of the U.S.’ goods trade in the January-November period of 2024 — potentially affect trillions of dollars in merchandise, like cars and farm products.

Trump said there was nothing the three countries could do now to stop the tariffs.

Trump announced general tariffs at his Mar-a-Lago, Florida estate. White House spokesperson Karoline Leavitt said the tariffs would be implemented immediately, but as noted, Canada said tariffs would be implemented on their goods on Tuesday. It typically takes weeks for tariffs to take practical effect.

Key points:

Sector-specific tariffs: New duties will target high-tech and industrial sectors, potentially covering more imports by dollar value than previous tariffs on China. Trump also suggested Friday he’d consider new tariffs on oil and gas, potentially by Feb. 18, though it wasn’t clear what he was referring to.
The duties come on top of existing tariffs on those products. The first Trump administration imposed tariffs on more than $300 billion worth of Chinese goods to respond to an array of unfair trade practices, including intellectual property theft. The Biden administration kept all of them in place and increased rates on $18 billion in goods, including electric vehicles, solar panels, medical equipment, lithium-ion batteries, steel, and aluminum.
A second wave of tariffs could follow a comprehensive review of the trade relationship among the three countries (Canada, Mexico and China) that Trump has ordered completed by April 1.
Exemptions and negotiations: There are ongoing discussions about potential carve-outs for critical industries (like oil and automobiles) amid intense lobbying by U.S. business and labor groups. Some hope for exemptions to mitigate domestic economic risks. Trump told reporters in the Oval Office on Friday that there was nothing Canada, Mexico and China could do to avoid the tariffs before Saturday. “Not right now,” he said, telling reporters that his tariff threat wasn’t a negotiating tool. “It’s a pure economic [decision],” he said. But he did say he was considering a lower tariff on Canadian crude oil — 10% instead of 25% (and that it was he announced on Saturday). At nearly $100 billion in 2023, imports of crude oil accounted for roughly a quarter of all U.S. imports from Canada, according to U.S. Census Bureau data. The tariff on China would be for what Trump said was failing to stop the manufacturing of fentanyl precursor chemicals.

Why a lower tariff on China? Trump’s threats on tariffs are clearly not all bark and no bite, said Wendy Cutler, vice president of the Asia Society Policy Institute in Washington and a former acting deputy U.S. trade representative in the Obama administration. “He’s clearly in an action-oriented mode and wants to use these tariffs to pressure the three countries to address serious U.S. concerns,” Cutler said. “This is the beginning of the story, this is the first salvo in what’s going to be a long four years,” she said. On why the tariff on Chinese goods will be 10% and not 25%, Cutler said this shows that Trump “may be more interested in seeking a trade deal” with Beijing.

Trump said the Biden administration had not enforced trade deals beneficial to U.S. farmers. During a Friday press conference in the Oval Office, Trump criticized the previous administration’s handling of trade agreements. During his previous term, Trump initiated trade disputes, particularly with China, which significantly impacted U.S. agricultural exports. He stated that China had committed to buying $50 billion a year in farm products, but claimed that former President Joe Biden didn’t enforce this commitment. Trump said, “We’re going to enforce it,” referring to this $50 billion annual purchase agreement with China. His recent statements suggest a continuation of this aggressive stance on trade, framing it as necessary to protect American farmers and correct perceived imbalances left unaddressed by the Biden administration.

· Trump’s team was initially considering a grace period between the announcement of the tariffs on Saturday and when they would be imposed, but White House press secretary Karoline Leavitt played down that possibility on Friday. Leavitt said that a Reuters report stating that the tariffs wouldn’t be implemented until March 1 was “false.”

· Reasons for the tariffs. Trump on Friday said, “We’ll be announcing the tariffs on Canada and Mexico for a number of reasons. Number one is the people that have poured into our country so horribly and so much,” he said about migrants that have entered the United States via its southern and northern borders. “Number two are the drugs, fentanyl and everything else, that have come into the country and number three are the massive subsidies that we’re giving to Canada and to Mexico in the form of [trade] deficits,” Trump said. “I’ll be putting the tariff of 25% on Canada and separately 25% on Mexico and we will really have to do that because we have very big deficits with those countries. Those tariffs may or may not rise with time,” he said.

· International reactions: Leaders from Canada, Mexico, and China are preparing responses. The scale of their responses will depend on whether Trump’s actions match his rhetoric, according to officials in Canada and Mexico.

Canada comments. “You will find when we do respond, at least initially, that we will focus on tariffing American goods that actually are sold in significant quantities in Canada, and especially those for which there are readily available alternatives for Canadians,” Natural Resources Minister Jonathan Wilkinson said in an interview cited by Bloomberg on Friday ( link ), hours after Trump reiterated his plan to bring in tariffs on Canada, Mexico and China.
Of note: Canadian officials were told by U.S. officials on Saturday that the tariffs would be implemented on their goods on Tuesday, according to people familiar with the situation.

Canadian Prime Minister Justin Trudeau warned of economic fallout, and Canada even weighed an export tax on oil to undercut Trump’s ability to exclude gasoline price hikes from his tariff fight. Mexican and Canadian officials have expressed frustration that they don’t know what actions would satisfy Trump’s demands, despite weeks of meetings between senior officials. A Canadian contact said Trump “keeps on moving the goal post… If Trump was trying to build anti-American sentiment in a country like Canada (who get mad about little except for hockey), he is executing well.” Trudeau’s government won’t unveil its retaliation list until it sees what the Trump administration moves forward with. After Trump tied tariffs to what he called an “invasion” of migrants and fentanyl, Canadian officials in December unveiled a $900 million border plan, to add helicopters, drones and other surveillance capacity. “Canada’s border is strong and we’re making it stronger,” said Public Safety Minister David McGuinty, speaking to reporters. “When our largest ally raises concerns, we take it seriously.” McGuinty was in Washington Friday to meet with U.S. border czar Tom Homan. Bloomberg reports that Canadian officials come to the discussions armed with documents, charts and even time-lapse videos of certain border crossings. Only 1.5% of migrants apprehended by U.S. Customs and Border Protection in the 2024 fiscal year and 0.2% of fentanyl seized at U.S. borders came from Canada.

Ontario Progressive Conservative Leader Doug Ford spoke in anticipation of Trump’s tariffs on Canadian imports, which are set to be implemented on Saturday, calling them “reckless… I wish I had better news to share but Donald Trump couldn’t have had been more clear. He’s moving forward with these reckless tariffs. He’s chosen to tear up decades of good will that has made life better for workers on both sides of the border, for businesses on both sides of the border, for families on both sides of the border,” Ford said at a campaign event in Brampton.”

Mexican President Claudia Sheinbaum vowed to counter with retaliatory measures. Sheinbaum said: “We have Plan A, Plan B, Plan C, depending on what the government of the United States decides. It’s very important that Mexicans know that we will always defend the dignity of our people, respect for our sovereignty and a dialogue among equals [with the U.S.], not with subordinates.” Sheinbaum noted that Mexico has been open to receiving its citizens sent back under Trump’s plan for mass deportation of unauthorized migrants and that it was prepared to take some from other countries, which represented a concession. Deputy Economy Minister for Trade Luis Rosendo Gutierrez is expected to travel to Washington on Monday, according to reports. But he can’t meet with U.S. trade or Commerce Department officials until they’re formally ratified, they said. Instead, he’ll talk to business leaders and associations. Sheinbaum has also pointed to Foreign Minister Juan Ramon de la Fuente as a key interlocutor to US Secretary of State Marco Rubio. High-level teams from Mexico’s foreign ministry and the State Department are in frequent communication working on security and migration, Mexico is the No. 1 trade partner of the United States, and sends 80% of its exports north. Mexico supplies around half of America’s imported fruit and two-thirds of imported vegetables, in dollar terms — tomatoes, berries, bell peppers, cucumbers. And it’s the largest source of imported beer. Mexico also is the No. 1 provider of medical devices to American hospitals and doctor’s offices, from surgical gloves to scalpels. Mexico emerged last year as the top market for American agricultural exports, totaling $30 billion.

· USMCA impact. While the U.S., Canada and Mexico have a standing free-trade agreement, it isn’t clear that the expected tariff action would immediately violate that pact. The U.S.-Mexico-Canada Agreement (USMCA), like most trade pacts, includes a provision that allows for the imposition of tariffs on national-security grounds.

One of Trump’s tariff goals is to push Canada and Mexico to accelerate a renegotiation of USMCA, now slated for July 2026. President Trump and his supporters believe that imports of cars and steel from Mexico (and China’s involvement in such activity) are weakening U.S. manufacturers. And they say the USMCA, the trade deal Trump signed in 2020 to replace the North American Free Trade Agreement, needs to be updated — or perhaps, scrapped.

Of note: According to economists at S&P Global, of the imports coming into the United States from Canada and Mexico, more than 18% of their value was created in the United States, before being sent to those countries. That’s far more than the proportion for other countries, and a sign of how closely the economies are integrated.

One out of three cars sold in Mexico last year came from China. That means Chinese exports are now meeting Mexican demand for cars, rather than exports from the United States, a blow to the U.S. auto industry.

· Economic impact concerns: “I think there could be some temporary, short-term disruption and people will understand that,” Trump said. Trump said the tariffs “will reinvigorate industry. “The way you bring it back to the country is by putting up a wall. And the wall is a tariff wall,” he said. “The tariffs are going to make us very rich and very strong.” He dismissed concerns that placing steep taxes on many foreign goods would lead to renewed inflation in the United States, where prices are still rising faster than the Federal Reserve’s target. “Tariffs don’t cause inflation. They cause success,” the president said.

Although Trump dismissed worries about inflation and supply chain disruptions, critics warn that broad tariff applications could disrupt trade and lead to higher prices for consumers, especially in border regions heavily reliant on imports from North America. Tariff-related price increases would hit consumers’ wallets at a time when beef prices are near record highs and costs for eggs have climbed after bird flu eliminated millions of egg-laying hens. “Any increase in expenses in the form of a tariff subsequently serves as a ‘food tax’ on consumers for imported products and is not a workable solution,” National Grocers Association spokesman David Cutler said.

Tariffs are paid by American importers and borne by consumers, though offset potentially by price reductions abroad. The burden will fall disproportionally on low-income households who spend more of their income on physical goods relative to higher income households who spend more of their income on services and experiences, which aren’t subject to tariffs.

A new analysis from the Budget Lab of Yale estimated that the proposed tariffs could raise annual costs on households by roughly $1,300. Researchers at the Peterson Institute for International Economics in Washington estimate that a 25 percent tariff on all exports from Mexico and Canada would lower U.S. gross domestic product by about $200 billion for the duration of the second Trump administration. A model gauging the economic impact of Trump’s tariff plan from EY Chief Economist Greg Daco suggests it would reduce U.S. growth by 1.5 percentage points this year, throw Canada and Mexico into recession and usher in “stagflation” at home. “We have stressed that steep tariff increases against U.S. trading partners could create a stagflationary shock — a negative economic hit combined with an inflationary impulse — while also triggering financial market volatility,” Daco wrote on Saturday.

Facts and figures: 17% of U.S. goods exports go to Canada, 16% go to Mexico and 7% go to China and totaled $763 billion in the first 11 months of 2024.

Of note: For many items, there is roughly a three-month wait until the tariffs impact consumer prices as retailers sell their existing inventory that are not subject tariffs. Getting a firm impact assessment of tariffs is difficult because some exporters will absorb some of the additional costs, and currency changes by some countries will temper the impacts. There will also mean changes to trade flow patterns as buyers seek alternatives sources and sellers look for other importers.

Mexican Economy Minister Marcelo Ebrard said a 25% duty on Mexican goods would have a multibillion-dollar impact on U.S. consumers, affecting millions of households. “Mexico is the main exporter of finished products like automobiles, computers, TV screens and refrigerators,” he said, adding that tariffs would also raise prices of fresh fruit and vegetables, meat and beer. “This impact will be greater in border states and cities that are big consumers of Mexican goods, like California, Texas, Florida and Arizona,” Ebrard said.

A Wall Street Journal opinion item ( link ) was headlined: The Dumbest Trade War in History; Trump will impose 25% tariffs on Canada and Mexico for no good reason.

House Ag Committee Chairman GT Thompson (R-Pa.): Trump’s tariff policy is a crucial tool. Following the imposition of tariffs on Mexico, Canada, and China by the United States, House Ag Chairman GT Thompson issued the following statement: “President Trump’s tariff policy has been an effective tool in leveling the global playing field and ensuring fair trade for American producers. Look no further than Colombia’s about face on accepting repatriated criminal migrants at the mere threat of tariffs. After four years of the Biden/Harris administration’s failure to expand foreign markets, which led to an inflated agricultural trade deficit of $45.5 billion, America’s producers deserve an administration that will fight for them. I look forward to working alongside of President Trump to support our hardworking producers and to make agriculture great again.”

House Ag Committee Ranking Member Angie Craig (D-Minn.) released the following statement ( link ): “No one wins in a trade war. The last time President Trump started a trade war, costs went up for America’s family farmers and consumers. The same will happen today. The cost of imported goods like oil, lumber, avocados, tomatoes, bell peppers, lettuce, broccoli, cucumbers, onions and mushrooms and other fresh food are likely to go up for Americans. At a time when farmers are struggling with high input costs and the American people continue to struggle with the cost of groceries, these tariffs will make it more expensive for farmers to grow food and for consumers to buy it. Additionally, when American farmers face the inevitable retaliatory tariffs from our trading partners, their profits take a hit. This action is especially questionable since President Trump’s previous administration negotiated our last trade agreement – USMCA — with Canada and Mexico.”

Imported goods.

(Bloomberg)

Tariffs coverage. Depending on carve-outs, this round of Trump tariffs could cover more trade in dollar value than his first-term duties on China. Trump’s four tranches of tariffs on Chinese goods in 2018-19 covered imports valued at around $360 billion at the time. New tariffs on Canada and Mexico plus additional tariffs on China would — if all items are subject to the action — cover imports valued at more than $1.3 trillion in 2023. Canada and Mexico combined supplied about 28% of U.S. imports in the first 11 months of 2024, according to Census Bureau data. China accounted for an additional 13.5%.

Price hikes: From Tonka trucks to tequila. While cars and lumber are obvious price hike targets, some unexpected items could see increases, too, according to the Wall Street Journal ( link ):

Cherry tomatoes: Canada and Mexico supply much of the U.S. market.
Tonka trucks: Made exclusively in China, these toys may see a price jump from $29.99 to nearly $40.
Maple syrup: With most commercial production coming from Canada, costs could rise. Canada and the U.S. are the only two countries that produce this at commercial scale, according to Canada’s agriculture department. More than 60% of Canada’s production is exported to the U.S.
Tequila & avocados: Mexico is the top supplier, meaning Super Bowl snacks and drinks could cost more.
Smartphones: Previously spared, they may now be hit with new tariffs.
Sledgehammers: Already taxed at 25%, additional tariffs could push prices even higher.

Securing the U.S. border and dealing with fentanyl are the two major goals of the Trump tariffs. According to Robert Marbut, former homelessness czar for the first Trump administration, fentanyl has killed more Americans in the past five years than all wars combined in the past 100 years. Marbut criticized Canada’s liberal drug policies and Mexico’s unstable regions, where cartels control the drug trade. He said that if the U.S. government is going to tackle fentanyl, it needs to recriminalize drugs domestically, stop China from sending precursors, get the biker gangs in Canada under control, and force Mexico to rein in the cartels. “Fentanyl is a hundred times more powerful than morphine,” he said. “Fentanyl dusts will kill children, fentanyl dusts will kill adults. So just three grains of salt equivalent will kill anybody.”

Tariffs as a revenue raiser. Peter Navarro, a Trump trade adviser, told CNBC on Friday that the tariff effort can replace the revenue of tax cuts. “Tariffs can easily pay for that,” Navarro said. “President Trump wants to move from the world of income taxes and countless IRS agents to the world where tariffs, like in the age of McKinley, will pay for a lot of government that we need to pay for and lower our taxes.” Perspective: The non-partisan Congressional Budget Office has put the cost of extending the 2017 tax cuts — Trump’s top legislative priority — at $4.6 trillion over 10 years. A 25% tariff on the more than $900 billion in annual imports from Canada and Mexico would raise roughly $225 billion annually or $2.3 trillion over 10 years if the tariffs had no impacts on trade, which many economists see as unlikely.

Of note: Navarro thinks corn exports haven’t been entirely benign. Navarro said that NAFTA had kick-started America’s illegal immigration problem, because when the United States began exporting corn to Mexico after the trade pact took effect, that put Mexican agricultural workers out of jobs, sending some of them into the United States. “That’s where that began, our illegal immigration problem,” he said.

Tariffs impact on the U.S. ag sector. American Farm Bureau Federation President Zippy Duvall wrote ( link ) to President Trump Friday urging him to consider U.S. farmers before proceeding with tariff action. “American farmers and ranchers rely heavily on export markets for their business success, especially during these times of economic distress across rural America,” Duvall wrote. A targeted approach to tariffs, with specific exemptions for fuel and fertilizer imports, Duvall added, could “minimize negative repercussions” for farmers. Mexico and Canada account for around a third of all U.S. agriculture exports, buying $30 billion and $29 billion, respectively. China received around $26 billion of ag products last year, Duvall said.

U.S. farmers face rising costs amid proposed Canadian import tariff. The proposed 25% tariff on Canadian imports is expected to have significant repercussions for U.S. farmers, particularly in their access to potash and fertilizers. Key Impacts:

Increased fertilizer costs: U.S. farmers rely on Canada for 85-86% of their potash. The tariff could raise fertilizer prices by $50 to $75 per ton, cutting into profit margins and potentially reducing crop yields.
Short-term supply challenges: With spring planting nearing, farmers may struggle to meet urgent fertilizer needs, as domestic production accounts for less than 10% of U.S. demand. Many farmers have already purchased and applied fertilizer for the 2025 crop season, potentially mitigating immediate impacts, but farmers are unclear as to whether their undelivered fertilizer from Canada will be impacted.
Long-term market shifts: Importers may seek alternative suppliers, and Canadian producers could absorb some costs, but a more significant price increase is expected for the 2026 crop season.
Broader economic consequences: Higher fertilizer costs may lead to rising food prices, strain U.S./Canada agricultural ties, and provoke potential retaliatory trade measures from Canada.

Survey quantifies Canadian farmers’ concern about impact of tariffs, potential trade war. New data from Real Agriculture’s RealAgristudies ( link ) confirms and quantifies the level of concern in Canada’s agriculture sector if the U.S. implements 25% tariffs on Canada on Feb. 1. Farmers who primarily produce livestock are slightly more likely to expect an impact on their farm business than mixed or primarily crop-focused farmers. Interestingly, there wasn’t much difference in how farmers see the potential impact when you compare age, farm size and geography.

Results of a survey of 660 Canadian farmers between Jan. 23 and Jan. 29 showed: 59% of respondents expect the proposed Trump tariffs will negatively impact their business. Only 7% feel there will be no effect. Another 7% don’t know if there will be an impact, while 27% see a possible impact of the Trump tariffs on their farm business.

When it comes to the likelihood of a trade war that significantly decreases Canadian agricultural exports, 29% of respondents feel that scenario is very likely, while 46% say it’s likely; 11% feel a trade war that hurts ag exports is unlikely.

Livestock producers tend to see a trade war as more likely (88%) than mixed (72%) or primarily crop producers (75%).

In terms of how Canada should respond to the tariffs, 34% of respondents said “all of the above” to including export tariffs on key items to the U.S., dollar for dollar retaliation and cutting off certain U.S. imports into Canada; 23% of farmers see an export tariff on key items like potash and energy as the best response as the best singular option.

· Tariff impact support for some industries. Canadian government officials have said that they would consider bailing out businesses and supporting workers who are most affected. Some industries would be swiftly disrupted: Agriculture, automobiles and energy suppliers, pillars of all three economies, would be upended by blanket tariffs.

Tariff aid for U.S. farmers. During her Senate confirmation hearing on Jan. 23, USDA Secretary nominee Brooke Rollins addressed concerns regarding potential tariffs and their impact on U.S. farmers. She acknowledged the possible adverse effects of such tariffs on the agricultural sector and emphasized her preparedness to implement support measures to mitigate these impacts. Rollins stated that she had consulted with former USDA Secretary Sonny Perdue, who oversaw $23 billion in trade aid to farmers during the previous Trump administration, and expressed readiness to execute a similar approach if necessary. She affirmed her commitment to working with the White House to ensure that any negative consequences of tariff implementations on farmers and ranchers are effectively addressed. While acknowledging the potential challenges posed by the proposed tariffs, Rollins conveyed confidence in Trump’s understanding of the agricultural community’s concerns. She described Trump as “the consummate dealmaker” who recognizes the significant support he has received from rural America and the agricultural sector.

U.S. farmers and various trade groups are very apprehensive about not only the potential negative impacts of tariffs on the U.S. ag sector, but what they do to garner new trade agreements, especially as they see China, Brazil, Russia and Ukraine announcing new trade accords or in the process of inking new ones.

Upshot: This latest tariff announcement underscores the escalating tensions in international trade policies and the potential for significant economic consequences if the disputes deepen. The tariff moves will test (1) the limits of Trump’s honeymoon period in his second term in the White House; (2) the U.S. economy and its tentative victory over inflation; (3) American consumers’ appetite to swallow fresh price increases; and (4) the patience of allies. The move against allies Canada and Mexico is a signal that no country is safe from his push to reshape global trade. Big experiment, big impacts, big risks, both economically and politically.

Trump Moves Forward With Plans to Impose 25% Tariffs on Canada and Mexico Starting Saturday

Thu, 30 Jan 2025 22:59:42 GMT

President Donald Trump announced that his administration will impose 25% tariffs on imports from Canada and Mexico starting Feb. 1, citing concerns over trade deficits, illegal immigration, and the fentanyl crisis.

Speaking from the Oval Office, Trump justified the tariffs as a response to what he described as excessive migration, drug trafficking, and unfair trade practices. While he suggested the tariff rate could rise further, he indicated that a decision on whether oil imports would be exempted would come soon.

“Mexico and Canada have never been good to us on trade. They’ve treated us very unfairly on trade,” Trump said, pointing to the huge trade deficits between those countries and the United States. Trump also complained about fentanyl entering the country, especially from Mexico.

Trump also reiterated plans to impose tariffs on China over its alleged role in fentanyl trafficking and suggested additional sectoral tariffs on industries such as pharmaceuticals, semiconductor chips, and steel. The policy shift signals a potentially disruptive turn in North American trade relations, threatening key industries like automotive and energy.

Market Reacts
Market reactions were immediate, with oil prices rising above $73 a barrel, the U.S. dollar strengthening, and the Canadian dollar and Mexican peso dropping. The move has triggered warnings of economic fallout, with both Canada and Mexico vowing to respond with retaliatory measures.

Five Key Questions to Ask

There are five key questions regarding tariff situation:

Will they be announced Sat., Feb. 1?
Will there be a last-minute agreement with Canada and/or Mexico?
What authority will be used to implement any tariffs?
Will there be any exemptions? Ongoing negotiations suggest a possible shift toward targeted measures, particularly affecting steel and aluminum, while oil may receive exemptions.
Will there be an implementation grace period to enable more negotiations?

Tariffs as a Tool to Pressure Canada and Mexico
The proposed tariffs are intended to pressure the two countries into negotiating on migration, drug smuggling, and reforms to the USMCA. The strategy reflects Trump’s preference for using tariffs as a tool to secure compliance with U.S. demands, as seen in a recent, albeit reversed, threat against Colombia.

While both Canada and Mexico have made overtures to address U.S. concerns, Trump’s administration remains unsatisfied. Canadian officials have prepared a list of retaliatory measures and expressed frustration over unclear demands and limited communication. Mexico, meanwhile, has stepped up efforts to curb migration and drug trafficking but faces similar obstacles in negotiating directly with Trump’s yet-to-be-confirmed economic team.

If enacted, the tariffs could disrupt key industries, particularly the ag sector and automotive manufacturing, where supply chains depend on cross-border collaboration. Critics warn of potential economic fallout, including higher consumer prices and a possible recession in Canada.

Despite these risks, Trump’s advisers, including Commerce Secretary nominee Howard Lutnick, advocate for a “tariffs-first” approach to bring trade partners to the table.

If tariffs going into effect on Feb. 1 and the tariff threats materialize, it potentially triggers a new trade war on the continent.

Too Soon?
Some feel Feb. 1 will be too early for any serious tariffs action. Reasons: Trump wants his top trade officials (Commerce Secretary, U.S. Trade Representative, Treasury Secretary, etc.) at their desks. That may take beyond Feb. 1, depending on Senate confirmations.

Also, Trump’s 23 trade executive orders assigned a review of prior trade agreements, trade deficits, practices, etc., with an April 1 deadline. One task involves the White House Office of Management and Budget assessing how foreign government subsidies impact U.S. procurement, with that report due by April 30.

Trump’s Pick for Commerce Secretary Back Tariffs, Slams Canada on Dairy
Howard Lutnick, President Trump’s nominee for Commerce Secretary, strongly defended tariffs and criticized Canada over dairy trade during his Senate confirmation hearing.

Lutnick accused Canada of treating U.S. dairy farmers “horribly” and vowed to secure better trade conditions under the USMCA, which President Trump wants a renegotiation on an accelerated timeline.

Of note: Canadian Pacific Kansas City says it expects shipments in North America to grow this year despite the looming threat of tariffs from the Trump administration.

Lutnick dismissed concerns that tariffs drive inflation, citing China and India’s policies, and expressed support for broad-based tariffs over a selective approach.

Lutnick also linked Trump’s proposed 25% tariffs on Canada and Mexico to border security and fentanyl concerns.

Lutnick said he prefers an “across-the-board” approach to imposing tariffs on foreign goods to put pressure on other countries to lower their own barriers to U.S. exports.

“Our farmers, our ranchers and our fishermen are treated with disrespect” by countries around the world, Lutnick said. “We need the disrespect to end.”

To accomplish that, Lutnick said he favors using across-the-board tariffs on all imports from a particular country, rather than a much more targeted approach.

“I think when you pick one product in Mexico, they’ll pick one product,” Lutnick said. “You know, we pick avocados, they pick white corn, we pick tomatoes, they pick yellow corn. All you’re doing is picking on farmers, which is just not going to happen.”

Canada Gears Up for Potential Trade Tensions with Trump

Tue, 07 Jan 2025 17:41:23 GMT

As expected, Prime Minister Justin Trudeau announced his resignation after more than nine years in office, citing declining approval ratings and internal party discord.

Trudeau, currently the longest-serving leader among G7 nations, plans to step down as head of the Liberal Party within months but will remain prime minister until a successor is chosen. Parliament is suspended until March 24 as the leadership transition unfolds.

“Canadians deserve a real choice in the next election, and it has become obvious to me, with the internal battles, that I cannot be the one to carry the Liberal standard,” Trudeau said.

The incoming Liberal leader will become Canada’s 24th prime minister but faces an uphill battle, with the Conservative Party currently favored to win the next election.

Meanwhile, Mark Carney, the former governor of the Bank of Canada and Bank of England, said he’s considering entering the race to replace Justin Trudeau as Canada’s prime minister. Canada’s currency strengthened after Trudeau said he plans to resign.

Bottom line:

Trudeau’s resignation reflects a culmination of long-standing issues, including declining popularity, internal party dissent, and external political pressures. Conservative leader Pierre Poilievre amplified demands for Trudeau’s resignation and early elections.

Gearing Up for Trade Tensions

As President-elect Donald Trump’s inauguration nears, Canada is preparing for potential trade challenges following Trump’s threat of a 25% tariff on Canadian imports. The Canadian government is considering a proactive approach, including the possible early release of a retaliatory tariff list.

A report from The Globe and Mail reveals that Canada might unveil a list of American goods subject to retaliatory tariffs ahead of time. This strategy was deliberated during a Canada/U.S. cabinet committee meeting on Jan. 6, 2025, though no final decision has been made.

Outgoing Prime Minister Justin Trudeau and his cabinet have been holding strategic meetings, emphasizing the importance of the issue. Canadian officials, including Trudeau, have engaged with Trump’s team to mitigate tensions. Ontario Premier Doug Ford proposed restricting energy supplies to certain U.S. states as a retaliatory option.

Says a Canadian contact: “This retaliatory list idea is very similar to past Canadian strategies and will likely strategically target certain states to influence reaction.”

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Trudeau to Resign as Prime Minister After Nine Years, Blames Party Infighting

Mon, 06 Jan 2025 20:08:49 GMT

Canadian Prime Minister Justin Trudeau on Monday said he would step down in the coming months after nine years in power, bowing to pressure from lawmakers alarmed by his Liberal Party’s miserable showing in pre-election polls.

A subdued Trudeau, among the most prominent progressive leaders in the world, told a press conference that he would stay on both as prime minister and Liberal leader until the party chooses a new chief within months.

“This country deserves a real choice in the next election, and it has become clear to me that if I’m having to fight internal battles, I cannot be the best option in that election,” Trudeau said.

He also announced parliament would be prorogued, or suspended, until March 24.

That means an election is unlikely before May at the earliest, so Trudeau will remain in charge - at least initially - of dealing with the threat of crippling tariffs once U.S. President-elect Donald Trump takes office on Jan. 20.

The next election must be held by late October and polls show voters angry over high prices and a shortage of affordable housing will elect the opposition Conservatives and hand the Liberals a resounding defeat, no matter who leads the party.

Unhappy Liberal Lawmakers
In recent weeks unhappy Liberal lawmakers openly called on Trudeau to quit after his finance minister resigned and accused him of “political gimmicks” to win back voters. “I am not someone who backs away from a fight, particularly when a fight is as important as this one is,” Trudeau told reporters outside his residence as temperatures dipped to minus 15 degrees Celsius (5 degrees Fahrenheit).

“But I have always been driven by my love for Canada ... and it has become obvious to me with the internal battles that I cannot be the one to carry the Liberal standard into the next election.”

Fatigue Factor
Trudeau, 53, took office in November 2015 with a message of hope and “sunny ways” and won reelection twice, becoming one of Canada’s longest-serving prime ministers and winning plaudits from progressives for his focus on gender parity policies.

But his popularity started dipping two years ago as prices of groceries and housing rose in the post-COVID period, and his fortunes never recovered.
Prorogued Parliament
Parliament was originally due to resume on Jan. 27 and opposition parties had vowed to bring down Trudeau’s minority government as soon as they could. But with parliament returning only on March 24, the earliest they could present a non-confidence motion would be some time in May.

Trudeau said he had asked the Liberal Party to set in motion a leadership contest but did not say how long it would take. A new party leader would become prime minister immediately, and lead the Liberals into the next election.

Shachi Kurl, president of pollster Angus Reid, said that while a new leader might be able to stem losses, the Liberal party was still in trouble.
“There is a fatigue factor. This is a government in its 10th year - at some point the milk just expires,” Kurl said in a phone interview. “I think the milk has turned pretty sour.”

Although proroguing parliament would allow the Liberals to choose a leader without worrying about an election derailing the process, the move could still hurt them with voters, said Philippe Lagasse, an associate professor and constitutional expert at Ottawa’s Carleton University.
“I think people are ready for an election. They want to move on - this is just delaying it,” he said.

Liberal infighting has alarmed business groups and the premiers of the country’s 10 provinces, who say Ottawa has to focus on possible tariffs from the Trump administration.

“Canada needs to demonstrate stability and strength at this critical moment, and the federal government must urgently explain to Canadians how they will avoid tariffs that could have devastating effects,” said Doug Ford, premier of Ontario, the most populous province.

Trudeau had until recently been able to fend off Liberal legislators worried about the poor showing in polls and the loss of safe seats in two special elections last year.

But calls for him to step aside soared since last month, when he tried to demote Finance Minister Chrystia Freeland, one of his closest cabinet allies, after she pushed back against his proposals for more spending. Freeland quit instead and penned a letter accusing Trudeau of “political gimmicks” rather than focusing on what was best for the country.

Freeland and former central banker Mark Carney, two potential candidates in the race to replace Trudeau, both issued short statements thanking him for his service.

The Conservatives are led by Pierre Poilievre, a career politician who rose to prominence in early 2022 when he supported truck drivers who took over the center of Ottawa as part of a protest against COVID-19 vaccine mandates.
“While leaderless Liberals focus on saving their jobs and fighting each other for power, the country spirals out of control,” Poilievre said in a statement, reiterating calls for an immediate election.
Trump Reacts
Trump, speaking on Monday before Trudeau’s announcement,said he was looking forward to working with Poilievre if he won the next Canadian election.

“It would be very good. Our views would be more aligned, certainly,” Trump told the Hugh Hewitt radio show.

(Additional reporting by Fergal Smith and Anna Mehler Paperny in Toronto, Promit Mukherjee in Ottawa and Susan Heavey in Washington; Editing by Caroline Stauffer, Alistair Bell and Deepa Babington)

In a Victory for U.S. Corn Growers, USMCA Panel Rules Against Mexico's GM Corn Ban

Fri, 20 Dec 2024 21:37:52 GMT

In a significant development for the U.S. agricultural sector, a dispute panel has ruled that Mexico violated its commitments under the United States-Mexico-Canada Agreement (USMCA) by issuing a decree banning genetically modified (GM) corn imports in early 2023. This decision marks a crucial win for American corn growers and has been met with enthusiasm from industry advocates.

The National Corn Growers Association (NCGA) and other agricultural organizations have praised the ruling, viewing it as a vindication of their persistent advocacy efforts. NCGA President Kenneth Hartman Jr. hailed the decision as “an incredible development for the nation’s corn growers and rural communities,” attributing the outcome to the collective voice of corn grower leaders across the country.

The dispute traces back to December 2020, when Mexican President Andrés Manuel López Obrador first announced plans to ban GM corn by the end of 2024. This move immediately raised concerns in the U.S. Corn Belt, prompting the NCGA to initiate outreach to both the Trump and Biden administrations.

Mexico’s position intensified in early 2023 with the issuance of a decree banning GM white corn, effective immediately. This action spurred the NCGA and state corn grower groups to push for a formal dispute settlement under the USMCA, which the U.S. Trade Representative ultimately pursued.

The ruling carries substantial economic implications, given that Mexico is the largest export market for U.S. corn. Over 90% of corn planted in the United States is biotech, and between January and September 2024, the U.S. exported $4.25 billion worth of corn to Mexico. The ban threatened to disrupt this crucial trade relationship and potentially cause significant losses for U.S. farmers.

Next Steps

With this favorable ruling, NCGA leaders have indicated they will work closely with the U.S. Trade Representative and the incoming administration to ensure the decision is enforced.

Mexico’s economy ministry on Dec. 20 said that while it disagreed with the decision, the country would respect the decision as the dispute resolution system is a key component of the trade deal.

Potential Consequences

If Mexico does not follow the USMCA panel decision regarding its ban on genetically modified (GM) corn imports, it could face several significant consequences:

Trade retaliation. The United States would be allowed to suspend trade benefits with Mexico equivalent to the damage caused by Mexico’s GM corn measures.

This could potentially involve:

Imposing punitive tariffs on specific Mexican products
Restricting imports from Mexico in other sectors

Mexico could experience substantial economic repercussions:

Increased costs for corn imports, as non-GM corn from alternative sources like Argentina and Brazil could cost an additional $571 million
Potential job losses, with estimates suggesting 56,958 annual job losses in Mexico
Higher food prices, particularly affecting the 55.7 million Mexicans living in poverty

Mexico’s agricultural sector may face challenges:

Decreased agricultural productivity if non-GM corn cannot meet demand
Higher costs for farmers and consumers
Potential threats to food security in Mexico

The ban could lead to significant disruptions in the corn market:

Shortages of yellow corn in Mexico
Price increases for non-GM corn, potentially by 19% over a 10-year period
Strained U.S./Mexico relations.

Failure to comply with the USMCA ruling could lead to:

Increased trade tensions between the United States and Mexico
Potential damage to diplomatic relations
Mexico’s decision could impact its attractiveness for foreign investment

Biden Administration Reacts to the Win

“The panel’s ruling reaffirms the United States’ longstanding concerns about Mexico’s biotechnology policies and their detrimental impact on U.S. agricultural exports,” said United States Trade Representative Katherine Tai. “It underscores the importance of science-based trade policies that allow American farmers and agricultural producers to compete fairly and leverage their innovation to address climate change and enhance productivity. We look forward to continuing our collaboration with the Mexican government to ensure a level playing field and provide access to safe, affordable, and sustainable agricultural products on both sides of the border.”

“We commend the dispute settlement panel for its thorough and impartial assessment, which affirms that Mexico’s approach to biotechnology was not based on scientific principles or international standards. Mexico’s measures ran counter to decades’ worth of evidence demonstrating the safety of agricultural biotechnology, underpinned by science- and risk-based regulatory review systems,” said Agriculture Secretary Tom Vilsack. “This decision ensures that U.S. producers and exporters will continue to have full and fair access to the Mexican market, and is a victory for fair, open, and science- and rules-based trade, which serves as the foundation of the USMCA as it was agreed to by all parties.”

Could Trump Actually Be Good for U.S. Ag Trade?

Tue, 19 Nov 2024 20:52:48 GMT

President-elect Donald Trump has released a slew of key cabinet and advisory picks at a historic pace the past two weeks, but the agriculture industry is waiting on two key selections — Secretary of Agriculture and the U.S. Trade Representative.

The Financial Times previously reported Robert Lighthizer could make an encore performance as the U.S. Trade Representative under Trump , but nothing official has been announced.

“Trump and Bob Lighthizer are two peas in a pod when it comes to using tariffs to get what they want in amongst our trading allies,” says Jim Wiesemeyer, Pro Farmer Washington correspondent.

If it’s a repeat of the last time, Lighthizer held that seat, there will be an increased focus on trade and using tariffs, which comes as no surprise since that was a major point on the campaign trail

“President-elect Trump was so strong on doing tariffs before that, it’s very likely that he’ll follow through now,” Mary Kay Thatcher, who’s the senior lead for federal government relations at Syngenta, told “AgDay’s” Michelle Rook. “I mean, he’s talked about at a minimum 20% tariffs on everybody. He’s talked about 60% on China, who will likely fall to two or three, but still a very important market. And he’s talked about putting them on Mexico. If Mexico doesn’t stop as many people coming across the border.”

Tariffs were the talk of the campaign trail, not just on commodities, but even ag equipment that’s imported on.

Ag groups want a focus back on trade, but they are also concerned it could come at a cost.

“Mexico, Canada, China are always our No. 1, No. 2 and No. 3 three ag markets,” Thatcher says. “And so, a lot of concern in agricultural circles about the fact that most likely that’s where the retaliation starts first.”

Reality of a Growing Ag Trade Deficit

As tariff talk heats up, there are still tariffs in place today, and a growing ag trade deficit that’s glaring for U.S. agriculture. The ag trade deficit is expected to balloon to $42 billion in 2025, under the current administration. And Indiana farmer Kip Tom, who served as the ambassador to the United Nations in the first Trump administration, argues the focus back on trade could bode well for ag.

“When Trump was president, we did nearly 50 trade deals around the world,” Tom told “AgDay’s” Clinton Griffiths in an interview. “He did the Phase One deal with China. And granted, we didn’t get to Phase Two or Phase Three, but the reality is he got to put together and he got started following the trade war that we had with him for a little bit. So, I think trade is going to be No. 1.”

Tom says Trump’s next four years will be looking at new trade deals, but today, groups like U.S. Meat Export Federation (USMEF) also want any trade negotiations to do no harm, especially considering some meat exports have actually grown this year, in spite of the widening U.S. ag trade deficit.

“I think if you look at 2024 pork exports, we’re pulling our weight. We’re going to have record volume and record value this year, approaching $8.5 billion or so on the pork side,” says Dan Halstrom, CEO of USMEF.

Mexico Becomes U.S. Top Buyer

Halstrom says record demand from pork is broad based, but the No. 1 buyer is Mexico.

“Mexico is being driven by everything,” Halstrom says. “I mean, food service, retail, convenience stores. The buying power of the Mexican trade has been record breaking but also a little bit amazing.”

Earlier this year, Mexico bumped out China as the top trading partner for the U.S. But in the final days of Trump’s presidential campaign, he threated to impose 25% tariffs on all Mexican imports if Mexico didn’t tighten the border. And Mexico’s economy minister said it’s considering retaliatory tariffs of its own.

“I think as long as we don’t have any disruption, then yes, I think the strong export pace is very well positioned to continue,” Halstrom says. “Of course, you have new administrations coming in with a lot of talk about the U.S.-Mexico-Canada Agreement (USMCA). But as long as we stay within the confines of the USMCA agreement and follow that, I think we’re well positioned to continue this momentum in Mexico.”

Dairy and the Importance of USCMA

Another protein seeing positive demand from Mexico through the USMCA is dairy.

“When the administration first negotiated USMCA, which was do no harm to what’s working well, and for us, dairy continues to be overall a really positive relationship. So, working to help preserve that,” says Shawna Morris, executive vice president of trade policy and global affairs at National Milk Producers Federation (NMPF) and the U.S. Dairy Export Council.

The relationship with Mexico within USMCA has been a positive for dairy, but it’s the Canadian side of the agreement that needs work, according to Morris.

“I mean, they’re flat out not doing what they promised to do. And I just don’t see any way around calling them on the carpet for that,” Morris says. “Yes, they eked out a win in the last dispute settlement case the U.S. brought against them, but if one judge had changed their mind, though, we would have been on the winning side. It’s just a three-person panel. This isn’t gospel here; we’re talking about what Canada’s doing is shady. It needs fixed.”

She says between the way Canada administers the dairy tariff rate quota quantities to U.S. competitors, to their excessive exports of dairy protein, dairy is a piece of USMCA that needs to be addressed.

“The last administration tried to deal with that in USMCA,” Morris says. “We had some disciplines to try to tackle it in the agreement. And Canada has found some workarounds that both of those issues are going to need to be on the table. I think just in terms of UCMCA, it’s clean-up and follow through.”

The Biggest Wild Card: China

Even with southeast Asia, Latin America and Mexico carrying the weight for dairy exports, China is still the biggest wild card. We asked Morris if China does retaliate against Trump’s threatened 60% tariffs, if it would have the same impact as it did during the last trade war.

“China, even though it has pulled back on its global dairy imports, it’s still our third-largest export market,” Morris says. “So, it’s a pretty sizable market and difficult to place out into other markets the volume of that production, but I think what we also saw the first time around, in addition to the pain and disruption caused by the retaliatory tariffs that were imposed, was at the end of the process progress having been made.

Phase One Trade Deal with China

Progress in the form of the U.S. China Phase One agreement, which as Tom noted, was negotiated under Trump’s first term. Morris describes that deal as useful for dairy.

“We had a number of different non-tariff barriers, issues that were a drag on our ability to be able to reliably export to that market. And the phase one agreement included progress and dealt with a whole handful of those,” Morris says. “So, I’d say, yes, there’s upheaval. We’ve also seen from the first time around that that can yield significant progress in certain respects, and we’re hopeful that that’s more of what we’ll see this time around.”

China has also scaled back on their buys of U.S. pork, with exports down 11% so far this year, but Halstrom points out even with increased tariffs now entering the picture again, tariffs the past four years never went away.

“The thing to remember on these tariffs is, we’ve had a tariff now for quite a few years on China, on both beef and pork, and it’s not the ideal situation, but it doesn’t it doesn’t eliminate trade,” Halstrom says. “We ended up doing $2 billion in sales on beef with a tariff in 2022, I believe was the year. A lot of that came as a result of the phase one agreement in 2020, but people sometimes forget that there was a tariff involved, and we still had a pretty good outcome.”

Two weeks after the election, and Trump’s playbook seems to be unfolding quickly with all his cabinet picks. But some argue those tariffs might just be threats at first.

“Here’s what the Republicans tell me,” Wiesemeyer says. “Trump isn’t going to invoke these across-the-board tariffs right away. He’s going to use that as leverage to countries looking at their trade relationship with the U.S., and his key word is ‘reciprocity.’ If you don’t treat us like we treat you, then I’m going to invoke tariffs.”

Those close to Trump seem to be in alignment: the U.S. needs fair trade.

“When we’re spending $500 billion in China, and they’re only spending $350 billion with us, we need to level that out a little bit. And maybe it means more agriculture trade going into China to balance that trade out,” Tom says. “I’m very optimistic on trade with Trump. I have no doubts that we’ll get things put together. He knows farmers don’t like to get their money from the government; they like to get it from the market. And so, I’m really excited about that when we talk about trade. But yet, I know everybody’s pretty edgy about it at this point in time.”

Your Next Read: Do Tariffs Work? The Answer Isn’t As Straightforward As You May Think

Mexico's Sheinbaum to Present Plan to Protect Country's Non-GMO Corn in Coming Days

Fri, 15 Nov 2024 20:40:18 GMT

Mexican President Claudia Sheinbaum said on Thursday that her government would in the coming days present a plan to protect the country’s non-genetically modified white corn under the constitution.

“We have an obligation to ensure that the white corn cultivated in Mexico is not genetically-modified,” Sheinbaum told a morning press conference. “This will be in the constitution as this is the best defense we have for biodiversity as well as for our health.”

Sheinbaum said her predecessor President Andres Manuel Lopez Obrador had sent a proposal to safeguard Mexico’s corn varieties and that she hoped this would be discussed in the lower house of Congress in the coming days.

Mexico is self-sufficient in white corn, used to make the country’s staple tortilla, but imports genetically-modified yellow corn from the United States which is used largely to feed livestock.

Sheinbaum’s predecessor, President Andres Manuel Lopez Obrador, had sought to limit imports of genetically-modified corn, sparking a dispute under the North American free trade pact.

The country counts has more than 60 native varieties of corn, a key ingredient in Mexican cuisine that was domesticated by indigenous people over thousands of years and has an important symbolic value dating back to pre-Hispanic cultures.

Sheinbaum said it was also important to safeguard the quality of seeds being used by farmers to protect the local agricultural capacity.

A dispute settlement panel under the United States-Mexico-Canada trade agreement (USMCA) is soon expected to rule on Mexico’s genetically-modified corn import restrictions, with a final report expected by Nov. 29.

Trump Threatens 200% Tariff If Deere Moves Manufacturing to Mexico

Tue, 24 Sep 2024 01:34:17 GMT

Former President Donald Trump on Monday made significant statements regarding John Deere and its plans to move some production to Mexico. Trump threatened to impose a 200% tariff on John Deere products if the company proceeds with its plan to relocate some of its manufacturing operations to Mexico. He made this announcement during a policy roundtable in Smithton, Penn., organized by the Protecting America Initiative.

Trump’s threat comes in response to John Deere’s recent announcement about moving some of its production to Mexico, which has already resulted in job cuts at certain facilities in Iowa. Trump expressed concern about the impact on American workers, stating, “It’s hurting our country. It’s hurting our workers.”

When contacted for a response, John Deere referred to a section on its website titled “Deere Commitment to U.S. Manufacturing,” which highlights its investments in American facilities and workforce. The company stated that to keep its U.S. factories focused on high-value activities, it sometimes needs to move less complex operations, such as cab assembly, to other locations.

Following Trump’s remarks, shares of Deere fell approximately 1.6% in after-hours trading shortly after the market closed on Monday.

This threat to John Deere appears to be an extension of Trump’s economic policy, which has consistently emphasized the use of tariffs. He has previously made similar threats to automakers producing vehicles in Mexico. Trump’s focus on protecting American manufacturing jobs is a key element of his campaign strategy, particularly in battleground states like Pennsylvania where he held this event.

Trump’s comments about John Deere seem to have been spontaneous, inspired by John Deere tractors displayed at the event venue. This marks the first time Trump has specifically targeted John Deere with such a threat, expanding his tariff warnings beyond the automotive industry to include agricultural equipment manufacturers.

A Look at the USMCA

Several aspects of the USMCA, negotiated by the Trump administration, help facilitate U.S. manufacturers like John Deere moving some production to Mexico:

Duty-free access: The USMCA maintains duty-free trade between the U.S. and Mexico for most goods, allowing companies to manufacture in Mexico and export back to the U.S. without tariffs.
Rules of origin: The USMCA has rules of origin requirements that goods must meet to qualify for duty-free treatment. Manufacturing in Mexico can help companies meet these requirements for North American content.
Increased regional content requirements: The USMCA raises the regional value content (RVC) requirement for automobiles from 62.5% under NAFTA to 75%. This incentivizes more production and sourcing within North America, including Mexico.
Labor Value Content (LVC) provision: The agreement requires 40-45% of auto content to be made by workers earning at least $16 per hour. This can make Mexico an attractive option for U.S. companies looking to meet this requirement while still benefiting from lower overall labor costs. While the USMCA includes stricter labor standards for Mexico, wages are still significantly lower than in the U.S. for most workers. Mexican workers often make 3-4 times less than U.S. counterparts. • Streamlined supply chains: The USMCA facilitates the movement of goods between the U.S., Mexico, and Canada by reducing trade barriers and tariffs. This makes it easier for U.S. companies to integrate Mexican operations into their supply chains.

Potential for Relocation

The USMCA rules may encourage some manufacturers to relocate certain production processes within North America to meet content requirements, which could involve significant upfront costs but potentially lead to long-term savings.

Your Next Read: EXCLUSIVE: John Deere Speaks Publicly For the First Time About Layoffs, New Challenges in the Ag Economy

A Better U.S.-Mexico Trade Relationship Is Coming, Ag Economist Predicts

Fri, 24 May 2024 18:31:26 GMT

Is the ongoing trade spat between the U.S. and Mexico regarding genetically modified (GM) corn about to end?

Dan Basse, an ag economist and president of AgResource Company, believes that could be the case, thanks to upcoming general elections scheduled in Mexico for June 2. That Sunday, voters in Mexico will elect a new president, who will serve a six-year term for the country.

Both of the presidential front-runners – Claudia Sheinbaum and Xóchitl Gálvez – are pro trade with the U.S., Basse told AgriTalk Host Chip Flory on Thursday.

“We’re encouraged that this GMO dispute that’s been ongoing will likely be dropped (after one of them is elected),” Basse said. “We believe that Mexico will be a strong demand driver for U.S. meats and grains going forward.”

Origins Of The Dispute
The current president of Mexico, López Obrador, had signed an executive decree in 2020 banning the use of genetically modified corn. Obrador has said GM corn threatens human health as well as Mexico’s agricultural traditions and cultural identity.

Roughly 90% of all U.S. corn is grown from genetically engineered seeds.

Because of the volume of corn exports, the U.S. initiated dispute settlement proceedings against Mexico, following Obrador’s decision.

The U.S. has maintained there is no science showing that genetically modified foods harm human health, according to the Food and Drug Administration.

Despite the decree, Mexico imported 15.3 million metric tons of corn in 2023, making the country the largest importer of U.S. corn last year.

Modifications To The Decree
Since 2020, “the executive decree has been modified multiple times, pushing back its effective date and narrowing the definition of GM corn in the human food system,” write Dewey J. Robertson, graduate research assistant, and Roman Keeney, associate professor of ag economics at Purdue University, in an online article published May 15.

“At current, the ban is not expected to be applied to corn intended for animal feed and industrial use, provided that heightened protocols for keeping corn out of food processing are maintained,” Keeney and Robertson write here .

“When you look at the drought that’s affected Mexico in the last 16 months, there’s no way for them to get around U.S. corn, and there’s not enough non-GMO in the world that they could source their supply from to really feed their population,” Basse told Flory. “I think Mexico now understands that, you know, U.S. corn is going to be very important to them going forward.”

Expectations For This Year
Mexico is set to import between 14 and 16 million metric tons of yellow corn in 2024, Víctor Villalobos, Minister of Agriculture for Mexico, has said in news reports.

Basse believes U.S. exports of corn to Mexico could be even higher than that, and that other commodities could follow suit in the years ahead.

“I think more and more U.S. companies are looking at the Mexican opportunity as they move away from China,” he said. “When you’ve got someone like Mexico in your backyard, it just seems to me that relationships like that will get worked out.”

The conversation between Basse and Flory moved on from trade opportunities with Mexico to what’s going on in the global vegetable oil markets. You can listen to their complete conversation on AgriTalk here: