President elect Trump's repeated threats to impose tariffs on goods imported from other countries is concerning many agricultural organizations. To lay the groundwork for today’s report, when it comes to trade, the U.S. has three major trading partners for manufactured goods, energy, and agricultural products. In 2023, Mexico was our top trading partner, sending us $ 475 billion in goods, including about $20 billion in agricultural products. The U.S sent $323 billion in goods to Mexico. Canada was our second largest trading partner with about $418 billion in energy products and some manufactured goods, while the U.S. shipped $354 in goods to Canada. China is the United States’ third-largest trading partner, sending us about $427 billion in goods, while the U.S. sent about $148 billion in in return.
A study commissioned by the National Corn Growers and the American Soybean Associations points out that tariffs levied against China could result in that country retaliating with tariffs on U.S. farm goods. For example, those tariffs could result in a loss of 25 million metric tons of U.S. soybean exports and 90% of corn exports. Considering exports, Mexico and Canada are by far the top two suppliers of farm products to the United States, with imports of agricultural goods valued at nearly $86 billion last year, according to U.S. Department of Agriculture and U.S. Customs data. Economists point out that duties on food shipments from these two countries could negatively affect U.S. food supplies, since we’ve become reliant on both Canada and Mexico to help feed our population. According to USDA data, about two-thirds of all U.S. vegetable imports and half of fruit and nut imports come from Mexico. Also, the U.S. relies on Mexico for about 90% of the avocados, 35% of the orange juice, and 20% of the strawberries consumed in the U.S.
There is also concern that another U.S. trade war with China could encourage that country to deepen trade relations with Brazil, which has become one of their top trading partners. If China can’t economically source corn and soybeans from the U.S., they may tap into Brazil’s supply, since in 2023, Brazil’s agriculture exports to China reached a record $60 plus billion, which amounted to almost 37% for the country’s total farm trade. While the loss of the Chinese market would likely depress corn and soybean prices for U.S. farmers, a World Agricultural Economic and Environmental Services study, points out that increased demand for Brazilian corn and soybeans may result in the unintended consequences of accelerating conversion of woodlands to cropland in South America. This could result in stiffer competition for U.S. Corn and soybean exports worldwide, while also damaging the environment in the Cerrado region in central Brazil. If Brazil were to supply China with their grains, U.S. corn and soybean corn growers would bear the burden of lower prices, since Brazilian farmers can grow two crops a year, while U.S. farmers are limited to one corn or soybean crop annually.
On the home front, according to the USDA, Americans are consuming increasing amounts of imported fruits, vegetables, wine, alcohol, coffee, and beef, which is driving the food and ag trade deficit to a record $45.5 billion this fiscal year. In 2025, food imports are projected to be $9.3 billion larger than in fiscal year 2024, while food and ag exports are expected to decline for the third year in a row due to lower commodity prices.
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