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Economists Forecast Farm Economy to Stabilize, But High Costs and Policy Uncertainty Block a 2026 Rebound

Wed, 07 Jan 2026 18:26:38 GMT

As 2026 ushers in a fresh start, agricultural economists say the U.S. farm economy has stopped sliding, but it’s far from fully healed.

The December Ag Economists’ Monthly Monitor shows month-to-month sentiment is improving, but deep structural strain remains — especially in row crops. Meanwhile, livestock markets continue to provide strength. Crop producers face another year of tight margins driven by high input costs, weak prices and unresolved trade and policy uncertainty.

“There’s cautious optimism,” the economists say, “but very little belief that 2026 will bring a meaningful rebound without cost relief or stronger demand.”

Those themes mirror the perspective of Seth Meyer, former USDA chief economist and now director of the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri. In a recent interview, Meyer connected the dots between narrow margins, policy responses and what might actually move the dial for U.S. agriculture heading into 2026.

Stabilizing, Not Recovering

December Ag Economists’ Monthly Monitor

(Lori Hayes )

Economists see the ag economy holding its ground — but not gaining strength.

54% say the ag economy is somewhat better than one month ago.
Compared with a year ago:
- 42% say conditions are worse
- 33% say they are better
Looking ahead 12 months:
- 46% expect conditions unchanged
- 38% expect improvement
- 15% expect conditions to worsen

“Momentum has improved since mid-2025,” Meyer notes, “but tight margins have been with us for a long time. Turning that around requires demand growth, not just price stabilization.

Farm Journal’s December Ag Economists’ Monthly Monitor

(Lori Hayes )

Grant Gardner, assistant Extension professor at the University of Kentucky, tells AgriTalk’s Chip Flory: “I think as we move into kind of this next marketing year, you’re looking at what looks like a breakeven and not a loss, but breakeven still doesn’t look great after three years of breakeven or losses.”

He says even with the $11 billion in Farmer Bridge Program payments , it won’t drastically change the outlook for the farm economy.

“Purdue had a good survey about a month ago, where they looked at what were these payments going to go to, and research would show that a lot of these payments go into long-term assets, and so land tractors, but I think over 60% of producers right now are in such a tight cash crunch that you’re going to see a lot of these payments go into that short-term debt,” Gardner says.

Consolidation a Growing Threat

Economists are nearly unanimous that the crop sector remains under extreme financial stress. 83 percent say row crops are currently in a recession. That isn’t about production declines — acres and yields haven’t collapsed — but about persistently weak profitability.

“Negative returns for at least the third consecutive year across nearly all row crops,” one economist wrote in the survey.

Another said: “Margins remain below full costs of production for many producers.”

Farm Journal’s December Ag Economists’ Monthly Monitor

(Lori Hayes)

Meyer traces that back to how abruptly agriculture moved from the high prices of 2021 and 2022 into today’s tighter margins.

“We moved very quickly from a very high price environment and good profitability in 2022 to very tight margins,” he says. “That usually happens coming off price peaks, but this time it happened really rapidly.”

A minority of survey respondents argued farms are “treading water,” supported by strong land values and government aid rather than eroding further, which Meyer acknowledged aligns with how risk and safety nets have interacted this year.

But when you look at how the current stress in the farm economy could impact consolidation, the ag economists say it’s the economic pressure combined with demographic trends causing the acceleration. In fact, 92% of them say consolidation is underway and unavoidable.

“Markets go to the lowest-cost producers,” one economist wrote. “That sorting is consolidation on the production side.”

Aging producers exiting and rent-heavy operations under pressure only add fuel to that trend, with one economist saying: “Consolidation happens because producers have to exit, not because they want to.

What’s Driving the Farm Economy Right Now

When economists were asked to identify the two most important factors shaping agriculture’s economic health today, their responses clustered around a familiar, but increasingly sharp, divide: strong demand in livestock and the protein sector versus persistent oversupply and cost pressure in crops, all layered with trade and policy uncertainty.

Several economists pointed to continued strength in beef demand, both domestically and through export channels, as a key stabilizing force. While the dairy sector is an area that shows signs of weakness for 2026.

“Livestock revenues are a bright spot,” one respondent noted, underscoring why the livestock sector continues to outperform crops financially.

Looking to 2026, economists overwhelmingly point to input costs, not interest rates, as the biggest barrier to profitability. Nearly 70% cited input prices as the largest challenge as well, far ahead of trade concerns or capital availability.

Farm Journal’s December Ag Economists’ Monthly Monitor

(Lori Hayes )

“We have too much supply and not enough demand for row crops,” one economist wrote.

Another said: “Input costs are still too high.”

Trade remains a central wild card, especially relationships with China and uncertainty around global supply. Several respondents cited trade disputes and agreements as critical factors, along with questions about the size of South American crops and how that could shape global competition in the months ahead.

Policy uncertainty was also featured prominently, with economists pointing to domestic biofuels policy, government payments and broader market signals as factors influencing both short-term cash flow and longer-term demand growth.

Overall, economists say the ag economy is being pulled in opposite directions: strong livestock demand providing support, while crops struggle under high costs, oversupply and unresolved trade and policy questions — a dynamic that helps explain why the broader farm economy feels stable, but far from healthy, as 2026 approaches.

Livestock: A Continued Bright Spot

Livestock continues to stand out as the most financially healthy segment of the ag economy. Every economist surveyed rated beef as above average or excellent, supported by strong domestic demand and tight supplies. Dairy and pork were viewed as stable to moderately strong.

That success creates a stark contrast with row crops, where corn and cotton were cited by 38% each as the commodities most at risk financially in 2026.

What Could Move Crop Prices in the Next Six Months

Looking ahead to the first half of 2026, economists say crop prices will hinge less on domestic fundamentals and more on global supply, trade flows and policy clarity.

Across responses, South America emerged as the dominant influence, with economists repeatedly citing Brazilian weather, the size of the South American harvest and how those supplies compete with U.S. exports. Several noted that clarity around South American production will be critical in setting price direction for corn, soybeans and wheat.

Trade, particularly with China, remains another key swing factor. Economists emphasized not just the announcement of trade agreements, but whether purchases translate into actual shipments.

“China purchases of U.S. crops, but also if and when actual shipments occur,” one respondent noted, adding that details within any trade deal, including purchase commitments, will matter just as much as headlines.

Domestic factors still play a role, but economists see them as secondary in the near term. Input prices, early U.S. planting conditions and assumptions about 2026 acreage were all cited as important — especially as markets begin to trade expectations for next year’s crop mix.

Policy uncertainty also hangs over the outlook. Economists pointed to ongoing questions around trade policy, biofuels policy and broader economic conditions as variables that could amplify or mute price moves.

Economists say crop prices over the next six months are likely to be driven by how global supply unfolds, whether export demand materializes and how quickly policy uncertainty is resolved, rather than by any single domestic production shock.

Biofuels Policy: A Potential Turning Point?

One of the clearest themes Meyer highlights as a possible game changer for demand, and ultimately prices, is biofuels policy.

For economists, policy levers like year-round E15, Renewable Fuel Standard (RFS) volumes, 45Z investment tax credits and how small refinery exemptions are handled could meaningfully influence demand for corn and soybeans in 2026 and beyond.

“It’s one of the places where policymakers actually have levers to help with tight margins in the row crop sector,” Meyer says.

He emphasizes that final rules on RFS volumes and how biobased credits are implemented could impact feedstock demand.

“For the next couple of crop seasons, RVO (Renewable Volume Obligations) and how EPA reallocates small refinery exemptions are big factors,” Meyer says. “Should we raise the RVO to soak up that pool like a sponge? Should imported feedstocks get full 45Z credit? Those decisions could move demand.”

On year-round E15, a long-sought policy priority for corn growers, Meyer is cautiously optimistic.

“I do think it matters,” he says. “Maybe it’s not a huge swing this year, but offering certainty and building demand over multiple seasons is supportive. Other countries like Brazil are ramping up their biofuels production too, so this isn’t happening in a vacuum.”

Policy Uncertainty Still Looms

Economists also flagged top priorities for 2026 policy action:

Year-round E15 (row crops)
Trade policy clarity (row crops & livestock)
Labor reform and regulatory issues (livestock)

They also highlighted under-covered risks, which include pressure on land rents and values, labor shortages, biofuels policy details (such as 45Z credits) and slower population growth affecting long-term demand.

What Could Move Livestock and Dairy Prices in the Next Six Months

When economists look ahead to livestock and dairy markets in early 2026, they see a mix of strong demand signals, supply-side risks and policy uncertainty shaping price direction.

Consumer demand remains the cornerstone of the outlook, particularly for beef. Several economists pointed to continued buying interest from U.S. consumers as the primary support for cattle prices, even as affordability pressures rise. At the same time, some warned that a more “K-shaped” economy could begin to shift demand, pulling some consumers away from beef and toward pork.

Supply dynamics and herd trends are another major focus. Economists cited herd size, potential herd expansion and the availability of feeder cattle as critical variables. The expected resumption of feeder cattle imports from Mexico was highlighted as a key factor that could influence cattle supplies and pricing, depending on timing and volume.

Animal health risks also remain on the radar. Issues such as avian influenza, screwworm and other disease threats were mentioned as potential disruptors that could quickly alter supply conditions in both livestock and dairy markets.

Policy and trade uncertainty continues to hover over the sector. Economists pointed to ongoing questions around tariffs, restrictions on live animal trade with Mexico and the next steps under the USMCA as factors that could impact both imports and exports. Political uncertainty more broadly was also cited as a potential source of market volatility.

For dairy, economists noted that beef-on-dairy dynamics are likely to continue weighing on milk prices by increasing beef supplies while complicating dairy herd decisions.

Taken together, economists say livestock and dairy prices over the next six months will be driven by a delicate balance between strong consumer demand, evolving supply conditions and unresolved trade and policy questions, with any shift in one of those areas capable of moving markets quickly.

Acreage Expectations: Stress, Not Shock

Despite margin pressure, economists do not expect dramatic acreage pullbacks in 2026. Most expect:

Corn: 93 to 95 million acres
Soybeans: 84 to 86 million acres
Wheat: 44 to 45 million acres
Cotton: 9 to 10 million acres

Corn acreage expectations have edged lower since November, as economists backed away from another year above 95 million acres. At the same time, soybean acreage expectations have firmed, with 75% now targeting 84 to 86 million acres, suggesting stronger relative economics for beans.

“Export demand has helped keep corn acres supported,” Meyer says. “The question is whether that demand holds and whether policy supports it.”

As for acreage, the major impact on prices would be a large acreage reduction, which is unlikely.

“That’s what it comes down to, too. What I’ve been thinking about is what else can you use land for? And you’ve got the pushback on urban sprawl, you’ve got pushback on other uses for ag land. But right now, the simple fact is we’ve got way too much production. Without that slowing, or a drastic increase in demand, I don’t see prices improving to very lucrative levels,” Gardner says.

Overall, The Ag Economy Is a Grind, Not a Rebound

When you look at all the results from the December Ag Economists’ Monthly Monitor, economists paint a picture of an industry that has stopped getting worse, but has not yet found a path to durable profitability.

Crops remain mired in margin compression; livestock continues to outperform but remains sensitive to policy decisions. Government aid is buying time but not addressing structural challenges, but it’s policy outcomes, especially around biofuels, trade and E15, that could be decisive in shaping 2026 outcomes.

For now, the farm economy has found a floor. The tougher question, economists say, is whether policy can help lift it, or if it will continue to grind forward without a genuine rebound.

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China Slaps Tariffs on EU Dairy: Trade War Escalates, Reshaping Global Market

Mon, 22 Dec 2025 18:08:42 GMT

The latest developments in international trade have EU dairy producers treading in turbulent waters. The dynamics between China and the European Union (EU) have taken yet another retaliatory turn, triggering concerns for various industries, particularly the dairy market. This follows a series of retaliatory actions from Beijing in response to the European Union’s tariffs on Chinese electric vehicles (EVs) — a saga that has been unfolding since the EU’s anti-subsidy investigation into Chinese EVs in 2023.

The Trade Spat Heats Up
Imagine a chessboard, with China and the EU as the main players. The EU’s initial move was imposing tariffs on Chinese electric cars, but Beijing swiftly countered with tariffs on EU imports, starting with brandy and pork and now setting its eyes on dairy products. This tit-for-tat scenario is a classic example of a trade war where products, unfortunately, become pawns in larger political games.

The Impact on Dairy
China’s newly imposed tariffs make EU dairy products, such as cheese, substantially more costly for Chinese consumers. Consequently, these tariffs pose significant challenges for EU dairy exporters, with French cheese producers being particularly vulnerable to these economic changes. The shift could potentially divert Chinese buyers toward other dairy-exporting countries, such as New Zealand, due to the newfound competitive edge of their products.

Meanwhile, Chinese dairy companies, who are already faced with an overabundance of milk and reduced prices domestically, might find a silver lining. By making imported EU dairy less appealing due to heightened prices, these companies might experience relief from excessive competition.

Negotiations Continue
As China and the EU continue negotiations over the EV tariffs, core disagreements persist. Currently, the dairy tariffs are provisional, leaving room for possible adjustments based on the final decision expected around mid-February 2026.

According to Shawna Morris, executive vice president of trade policy and global affairs at the National Milk Producers Federation, if these tariffs on European cheeses stick, it could improve how competitive U.S. cheese exports are in China.

“The duties on EU products are simply provisional, though; they may be revised at the close of the investigation in mid-February 2026,” Morris says. “The biggest challenge for U.S. cheese exporters to China though remains the duty-free access enjoyed by New Zealand product due to its FTA with China.”

Matt Herrick, executive vice president and chief impact officer with the International Dairy Foods Association (IDFA), says the direct overlap between U.S. and EU dairy products shipped to China isn’t extensive. However, he emphasizes: “If there is a market opportunity created due to this action or any other bilateral actions taken by trading partners with our competitors, U.S. dairy exporters are ready and able to step into that space and be a reliable supplier of high-quality, competitively priced dairy.”

Herrick also highlights the critical need for U.S. dairy exporters to diversify their markets beyond China. Historically, China has been the third-largest export market for U.S. dairy, after Mexico and Canada, consistently accounting for 7% to 10% of annual U.S. dairy exports by value. However, China’s increasing drive for self-sufficiency means demand for imported dairy is expected to slacken, creating a direct competitive challenge for U.S. products.

To address this, the U.S. dairy industry is actively working to develop multiple new markets. Herrick points to collaborative efforts with the Trump administration that led to new framework deals and expresses enthusiasm for working with the USTR and the White House to explore opportunities in Southeast Asia, the Middle East, North Africa, Central America and South America. This strategic diversification aims to reduce the industry’s reliance on any single top market.

These points align with arguments effectively presented in this op-ed piece by Gregg Doud, president of the National Milk Producers Federation (NMPF), and Michael Dykes, CEO of IDFA.

Phil Plourd, president of Ever.Ag Insights, says at a high level, this all will make cheese from Europe more expensive in China.

“That’s not a bad thing from a U.S. perspective,” he says. “At the same time, I’m not convinced that the volumes in play would necessarily move the needle in a big way.”

In these uncertain and volatile times, the global dairy trade landscape is witnessing a realignment following the international maneuvers of economic chess. As the world awaits the outcome of ongoing negotiations, stakeholders from various sectors remain watchful, ready to adapt to the ever-shifting trade currents. For the EU dairy industry, the upcoming months will be pivotal in determining the consequences of these trade tensions and their broader impacts on global markets.

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Dairy's Ambitious Future: $11 Billion Processing Power by 2026

Fri, 21 Nov 2025 13:16:02 GMT

The dairy industry is at a pivotal moment, driven by growth, expansion and an unwavering dedication to innovation. During the Joint Annual Meeting hosted by the National Milk Producers Federation, the National Dairy Board, and the United Dairy Industry Association in Arlington, Texas earlier this month, Gregg Doud highlighted the industry’s strides forward, its present challenges and the promising path ahead.

A Vision for Expansion
Doud, president and CEO of the National Milk Producers Federation, opened with a commanding vision for the future. His address emphasized the dramatic growth trajectory of the dairy industry, projecting a staggering increase to $11 billion by 2026. This expansion is not just about numbers. Doud sees it as positioning the U.S. as a global leader in dairy production, challenging countries like New Zealand and Europe for supremacy.

“When I look at this chart, I look at this is our ability to be globally competitive,” he said.

Central to this vision is the industry’s ability to export 18% of its product, marking a hopeful run toward record-breaking dairy exports. Yet, Doud acknowledged the concerns about potential disruptions within the industry, urging stakeholders to remain optimistic about the opportunities for growth.

“I love where we are in this industry,” he said. “Right now, we are right where we want to be.”

Ensuring Competitiveness
Maintaining global competitiveness was a critical theme. Doud celebrated the bipartisan efforts leading to significant advancements like the tax reforms, which he argued have fortified the U.S.'s position in global markets. Such legislative advances, alongside strategic trade deals with Southeast Asian countries, are set to open unprecedented avenues for the dairy industry.

“Think about where the president was recently — those are all the countries that border China,” he said. “That is a really interesting thing in terms of strategy. The President said: ‘Well, I want to make sure that I go visit all these countries first before I talk to President Xi in China.’ That’s not by coincidence, having the opportunity to have duty free access into Southeast Asia is something that we wanted across all of agriculture, and in particular in the dairy industry for a long, long time. That’s going to make a huge difference for us.”

Overcoming Challenges
While growth is promising, Doud did not shy away from discussing the hurdles that remain. The challenge of securing milk in schools was a significant topic, illustrating the complexities of navigating political landscapes. Despite setbacks, progress has been made, showcasing teamwork across party lines.

“It’s like we’re in a dream,” Doud noted, expressing optimism about imminent legislative victories.

Moreover, labor remains a pressing issue, with farm labor shortages described as a pivotal concern for continued expansion. Doud emphasized that progress should not be delayed by political inertia, underscoring the urgency of addressing labor challenges.

“We’re kind of in no man’s land here on this topic of farm labor, it is, without question, our No. 1 issue in dairy, but across all of agriculture, in my opinion,” Doud said. “I think we need to remind our elected officials that; we’ve got to milk the cows every day. We don’t have time to wait for the inconvenience of an election to get things done in Washington.”

Leadership and Legacy
Brian Rexing, a fourth-generation dairy farmer, followed with personal insights into his journey and vision for the industry. His story is one of legacy and commitment. He stressed the significance of family and the future they represent for the dairy industry.

Organizationally, both leaders highlighted the strength of their teams. They acknowledged the dedication of individuals like Chris Galen, NMPF senior vice president, member services and governance, and Paul Bleiberg, NMPF, executive vice president, government relations, who both have significantly contributed to industry advancements. Their efforts have not gone unnoticed, serving as pillars of support and innovation as the industry navigates its future.

The future of the dairy industry is rife with opportunity. Doud’s remarks highlight a collective momentum aimed at harnessing growth while tackling the inherent challenges. The emphasis on strategic planning, trade, legislative advancements and labor solutions reflects an industry that is not only resilient but also proactive in its approach.

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Whey Adds Needed Support to Class III Prices

Wed, 05 Nov 2025 16:27:14 GMT

With most CME spot dairy prices declining, dry whey prices have started to help stem the pain of falling milk prices.

“While the prices of most dairy products have come under pressure in recent weeks, whey remains a glaring exception,” says Monica Ganley, analyst for the “Daily Dairy Report” and principal of Quarterra, an agricultural consulting firm in Buenos Aires.

Rising dry whey prices, which are providing critical support to Class III milk prices, could not be occurring at a better time — especially since cheese prices have been under pressure for weeks. For every penny increase in the dry whey price, the Class III price rises by about 6¢.

“Even though the impact of dry whey on the milk price is much smaller than that of cheese, it can nevertheless provide essential support to producer price, particularly during a period of slimming margins,” Ganley says.

For weeks, the CME spot price for dry whey has continued to move incrementally higher, hitting a recent high of 71¢ per pound on Friday, October 31 — the highest price since January. That means since late July, whey has added more than a dollar to the Class III price.

“Both supply and demand are working to keep whey prices supported. On the supply side, even though cheese production is robust, the amount of raw whey available to be dried into sweet whey remains limited,” Ganley says.

Demand for high-protein whey products, such as whey protein concentrates and whey protein isolates continues to be robust. seemingly insatiable.

“As a result of this seemingly insatiable demand, manufacturers are routing a majority of the raw whey stream to these high-protein products, leaving only nominal volumes to be dried into whey powder. As a result, dry whey inventories are tight, and spot loads are a challenge to come by.”

At the same time supply of dry whey has been limited, demand for the most part has remained upbeat — but needs are mixed across the country. “Dairy Market News” recently reported that in the eastern part of the country, suppliers have plenty of demand to meet. Demand is reportedly softer in the western United States, but limited production in this part of the country has, nevertheless, kept the market supported.

“Market participants indicate that export demand for U.S. whey powder was strong earlier this fall but has been starting to weaken. And even though a rapidly evolving trade policy environment — especially the conflicts between the United States and China — created challenges for dry whey exports for much of the year. Gobal buyers had been looking to the United States to fill their dry whey needs,” Ganley says. “More recently, though, demand from Asia has weakened because European whey prices have become more competitive.”

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Setting the Record Straight: What China Actually Agreed to Buy—And When Those Ag Purchases Will Happen

Mon, 03 Nov 2025 23:05:29 GMT

The White House announced a sweeping new U.S.–China trade agreement late last week that includes substantial commitments from Beijing to purchase U.S. agricultural products — marking what officials call a “breakthrough” in restoring and expanding trade flows between the two countries.

According to the White House fact sheet , China will buy 12 million metric tons of U.S. soybeans by the end of 2025 and 25 million metric tons annually through 2028. The deal also restores trade in sorghum, hardwood logs, and a range of other commodities while lifting retaliatory tariffs on U.S. beef, pork, dairy, wheat, corn, cotton, and other farm products.

Yet, with mixed messages from the White House and U.S. Treasury Secretary Scott Bessent, there was some confusion on whether China would purchase an additional 12 million metric tons of soybeans, of if it was 12 million total.

As AgMarket.Net’s Jim McCormick pointed out, the U.S. already sold China 5.9 million metric tons earlier this year, before the trade war broke out. Comments from Bessent made it sound like China would be 12 million metric ton total, which would have equated to only buy an additional 6.1 million metric tons yet this year.

However, the White House Fact Sheet released over the weekend cleared the air, saying, “China will purchase at least 12 million metric tons (MMT) of U.S. soybeans during the last two months of 2025 and also purchase at least 25 MMT of U.S. soybeans in each of 2026, 2027, and 2028. Additionally, China will resume purchases of U.S. sorghum and hardwood logs.”

What This Means for U.S. Farmers

For U.S. row-crop producers and livestock farmers alike, the agreement could spell renewed demand from one of the world’s largest agricultural importers. The 25 MMT annual soybean commitment alone represents a major market opportunity for U.S. producers, especially in key states such as Iowa, Illinois and Minnesota — and for U.S. sorghum growers in the High Plains. The lifting of tariffs on beef, pork and dairy also opens additional channels for livestock- and dairy-product exporters.

At Kansas State University, Dr. Allen Featherstone, head of the Department of Agricultural Economics, calls the deal an encouraging sign for U.S. farmers — especially after years of market turbulence.

“It certainly is a bright spot and big news,” Featherstone says. “Traditionally, China has been buying between 25 and 34 million metric tons. So certainly, the 25 million for the next three years will put that in the range of what historically has been done. The 12 million between now and January certainly is a heavy lift but also a big buy.”

Timing And The Broader Picture

According to the White House, the buys start immediately: 12 MMT in the last two months of 2025 and then on into each of the next three years. The scope of the deal also signals more than agriculture: China has agreed to suspend retaliatory tariffs on U.S. goods announced since March 4, 2025 and to remove its “unreliable entity” and end-user listing measures.

Featherstone says that timing matters, since late fall and early winter are when China typically turns to U.S. soybeans before switching to Brazil in February and March.

“Based on current prices, it’s about a $4.5 billion deal between now and January,” he explains. “If you look at where we are the next three years, it’s about a $10 billion deal — and that’s good news.”

He points out that soybeans remain the No. 1 U.S. export to China, making the commodity a central part of trade negotiations.

“For the last three years, soybeans are the number one import in China from the U.S.,” Featherstone says. “As they’re trying to get leverage over the U.S., the soybean market is one of the places where they can have leverage.”

The Next Hurdle? Tracking the Purchases Amid a Government Shutdown

While the commitments are substantial, Featherstone cautions that verifying China’s purchases will be more difficult due to the ongoing U.S. government shutdown, which has delayed USDA export reporting.

“Tracking will be important,” he says. “Last week they purchased three vessels — about 180,000 metric tons. There are sources besides the government, but certainly not having the government data is a problem.”

Without weekly USDA export reports, private-sector analysts are relying on commercial shipping data and trade wire confirmations to track shipments. Economists warn that these unofficial estimates often vary widely, adding uncertainty to market reactions.

Opportunities and Caveats

Agribusiness groups, U.S. exporters and farm economists will be tracking how the commitments translate into actual purchases and shipping logistics. The upside is clear: large volume commitments from China boost U.S. export potential, may help stabilize or raise soybean, sorghum and other commodity prices, and can provide relief to ag sectors hard-hit by prior trade disruptions.

But there are caution flags too. Commitments do not always guarantee immediate shipments. Market conditions, logistics, currency movements, and China’s domestic production may influence actual demand and timing.

Exporters will want to monitor how quickly China follows through, whether the buys are genuinely incremental (vs. simply re-directing existing purchases) and how U.S. logistics chain handles increased volumes.

How This Will Impact Farmers and Ranchers in the Months Ahead

According to the White House fact sheet, here’s how the trade and economic deal, reached between President Donald J. Trump and President Xi Jinping of China, China committed to buying large amounts of soybeans, but China also said it would start purchasing sorghum again. On the livestock front, tariffs were suspended on beef, pork, dairy and more.

So, what should farmers and ranchers watch in the months ahead?

Soybeans: Given the huge volume — 12 MMT in 2025, then 25 MMT annually — soybean exporters will want to watch new crop availability, global competition (e.g., Brazil, Argentina) and U.S. export origination points.
Sorghum & hardwood logs: These categories were specifically called out for resumption of trade, suggesting new or renewed market access in China.
Livestock, dairy & other ag products: With tariffs suspended on beef, pork, dairy, and aquatic products, U.S. meat and dairy exporters may gain longer-term access to Chinese markets.
Tariff & non-tariff measures: The removal of retaliatory tariffs and other counters means fewer barriers for U.S. ag exports, but exporters should still watch for regulatory or sanitary measures that often influence trade.
Supply chain & logistics readiness: Meeting large volume commitments will test U.S. export capacity, shipping, port access and coordination between exporters and farmers.

Looking Ahead

The China-U.S. deal marks a potentially significant turning point for U.S. agricultural exports in 2025: large-scale Chinese commitments, tariff relief, and expanded access could open new markets and relieve pressure in certain ag sectors.

But the real story will be how fast, how reliably, and how fully China follows through with purchases — and how U.S. producers, exporters, and logistics systems respond.

As Markets Search for Clarity, USDA Says NASS Will Issue Key Reports in November Despite Government Shutdown

Fri, 31 Oct 2025 16:30:12 GMT

The federal government’s continued shutdown is no longer just a Washington standoff — it’s becoming a real-world problem for farmers and ranchers. As the days drag on without resolution, three Kansas State University economists warn that even with FSA offices back open, the absence of key USDA reports is rippling through every corner of the ag economy, from commodity markets to cattle prices and farm-level business planning.

But on Friday, USDA-NASS issued a bit of surprise. The agency says NASS will release key data in November for the following reports , some with a delay:

Milk Production – Nov. 10 (previously scheduled for Oct. 22)
Crop Production – Nov. 14 (previously scheduled for Nov. 10)
Cattle on Feed – Nov. 21 (as previously scheduled)
Milk Production – Nov. 21 (as previously scheduled)
The World Agricultural Outlook Board will release the World Agricultural Supply and Demand Estimates (WASDE) in conjunction with the Crop Production report on Nov. 14.

With much of the agency still furloughed, there are questions regarding how NASS will have enough staff to provide those key reports. The release didn’t offer any additional details, only saying those key reports will be released in November.

However, there are a few key reports still missing, which includes daily flash sales reports and weekly export sales information.

A Data Blackout Hits the Heart of Agriculture

Until now, the shutdown has silenced the regular flow of government data that producers, analysts and traders depend on — reports like the weekly export sales, crop progress and Cattle on Feed updates, as well as the highly anticipated World Agricultural Supply and Demand Estimates (WASDE).

“The fact that the government is still shut down means we aren’t getting those weekly export sales reports,” says Allen Featherstone, head of the department of agricultural economics at Kansas State University. “That’s a real problem because we rely on that information to confirm what’s actually happening in the market.”

Is China Actually Buying? The Absence of Flash Sales Reports Creates Confusion

With the U.S. and China negotiating renewed agricultural trade commitments , there are fresh promises of more purchases in the weeks and months ahead. U.S. Treasury Secretary Scott Bessent said on Thursday that China has agreed to buy 12 million metric tons of American soybeans during the current season through January and has committed to buying 25 million tons annually for the next three years as part of a larger trade agreement with Beijing.

Featherstone notes that while China claims it is buying U.S. soybeans, the lack of USDA verification makes it difficult to gauge the truth and confirm those buys are happening. And in USDA’s announcement Friday, there was no indication the flash sales and weekly export sales will resume.

“Earlier this week, China reportedly purchased three vessels, about 180,000 metric tons, but not having official data from USDA is a major issue,” he says. “Tracking purchases becomes challenging when the normal reporting mechanisms are down.”

Despite some optimism around U.S.-China trade progress, Featherstone says markets are hesitant to believe much until concrete export numbers appear.

“If China doesn’t come through, that will lead to more negativity in prices given the size of this year’s crop,” he says. “China imports roughly 60% of the world’s soybeans, and if they don’t buy from us, that’s a big problem.”

Featherstone emphasizes the importance of diversifying U.S. export markets.

“We need to broaden who’s buying our products,” he says. “Relying too heavily on one trade partner makes us vulnerable, and this shutdown is a reminder of just how fragile that system can be when government data and diplomacy both stall.”

No November WASDE?

While some private companies attempt to replicate USDA’s data models, those efforts often fall short, according to Terry Griffin, K-State’s precision agriculture economist.

“We’re not likely to have a November WASDE because all the footwork that leads up to it hasn’t happened,” Griffin explains. “Even if the shutdown ends this weekend, that report won’t be ready. There’s just too much groundwork that hasn’t been done.”

He says the lack of USDA reports has forced brokers, trading firms and agribusinesses to depend on private estimates that vary widely.

“They’ve become so reliant on USDA’s National Ag Statistics Service that they’re struggling right now to do their business,” Griffin says. “It’s throwing off everything from national models to local crop forecasts.”

Griffin also points out the shutdown’s impact reaches beyond the boardroom and into academia.

“We have a graduate student working on a peanut production forecasting model, and she’s using crop progress data that come out every week,” he explains. “Without those reports, she can’t validate her model. The data blackout affects research, innovation and business planning all at once.”

Cattle Producers Face Growing Uncertainty

The shutdown’s effects extend deeply into the livestock sector, where missing data is already creating confusion and volatility. Glynn Tonsor, K-State livestock economist, says the absence of reports like Cattle on Feed and slaughter estimates makes it difficult to assess market fundamentals.

“The Cattle on Feed Report is something we normally get monthly. Historically, it has a steer and heifer breakdown, which would be quite useful at the moment as the most recent insight about whether we’re expanding the herd or not, and we’re not going to have that detail,” says Tonsor. “There’s also been a lot of discussion about beef prices and some accusations or desires to make those lower, and we’re actually already behind on what the beef price is in this country. So there’s lots of examples that we could give you that are not just livestock and not just crops. And the longer the shutdown goes, the longer those data gaps exist and build, the harder it is for anybody, whether it’s an academic like us up here or private sector or individual producers, to adjust.”

He notes while we did see life in the cattle market this week, if you look at what happened since President Trump made comments about cattle prices being too high , the cattle market has pulled back significantly in recent weeks.

“Roughly $200 per head has come off the value of cattle in just 10 days,” Tonsor says. “If you’re a cow-calf producer, you’re still positioned for 2025 to be a good year, but uncertainty is the biggest risk right now. Anything that elevates uncertainty delays long-term investments, whether that’s expanding the herd or making capital improvements.”

That uncertainty isn’t only about market data. Tonsor says the political noise out of Washington, including renewed calls for mandatory Country of Origin Labeling (MCOOL), adds to the confusion.

“Taste remains the main driver of beef demand,” he says. “Origin and traceability rank much lower for the average consumer. There are niche opportunities, but for most people, it’s not what decides their protein purchases.”

A Cloud of Uncertainty Over Rural America

For now, K-State’s economists agree on one thing: The shutdown’s ripple effects are growing with every passing day. From grain markets to livestock pricing, from academic research to on-farm decision-making, the absence of reliable government data leaves agriculture flying blind.

“The longer the shutdown goes, the more those data gaps build,” Tonsor says. “And the harder it becomes for anyone, whether you’re an academic, a trader or a producer, to adjust.”

Political Blame Game in Washington

The political blame game continues in Washington, and it’s creating a stalemate. The Democrats are blaming the GOP, and the GOP is blaming the Democrats, both claiming the other party doesn’t care about every day Americans, otherwise the other side would make concessions to reopen the government.

House Committee on Agriculture Chairman Glenn “GT” Thompson, R-Pa., released a statement on Friday, the day before SNAP benefits are set to expire, saying the prolonged government shutdown is caused by Democrats in the U.S. Senate.

“Because Senate Democrats insist on keeping the federal government shut down, more than 40 million Americans — including children, seniors, veterans and military families — will not receive their November SNAP benefits beginning this weekend. The No. 2 House Democrat acknowledged that suffering families are their ‘leverage’, confirming that this is a political choice.”

U.S. Representative Angie Craig, D-Minn., and Ranking Member of the House Ag Committee, says the onus falls on President Donald Trump and Congressional Republicans.

“Secretary Rollins said one honest thing today: The government is failing the American people. Republicans control the House, Senate and White House. The Trump administration has the legal authority and funds necessary to get November SNAP benefits out the door. They are illegally withholding food from 42 million Americans, and it is shameful,” said Craig in a statement on Friday.

USDA Deputy Secretary Stephen Vaden says the fallout extends well beyond the Capitol. From families losing access to food assistance to disruptions in beef and soybean markets, Vaden warns that the consequences are real and immediate.

In an interview on “AgriTalk,” Vaden accuses congressional Democrats of blocking a “clean continuing resolution” and says the resulting gridlock could harm both consumers and producers.

“If they don’t vote to reopen the government, then 40-plus million SNAP recipients see no extra money added to their benefit cards this weekend,” Vaden says. “We shouldn’t be playing politics with people’s lives and people’s dinner tables.”

SNAP and WIC Funding Hang in the Balance

Vaden says USDA manages to keep the Women, Infants, and Children (WIC) program funded for now by reallocating money from other programs. But the Supplemental Nutrition Assistance Program (SNAP), which costs about $9 billion each month, has no such cushion.

“When it comes to SNAP, we’re talking about more than 9 billion — with a B — dollars,” he explains. “We don’t have that kind of money lying around here at USDA. The contingency fund people talk about is nowhere close to that amount, and it’s meant for natural disasters. We surely don’t want to be spending that and then hoping there’s no hurricane while Congress continues this shutdown.”

Without congressional action, Vaden says 40 million Americans might not receive their grocery benefits at the start of November — a moment when both food demand and household strain typically rise ahead of the holidays.

“That’s 9 billion dollars of groceries,” Vaden emphasizes. “And those groceries include beef, pork and poultry. These are markets that are sensitive to even a 1% shift in demand.”

“A Lump of Coal” for the Holidays

As the shutdown looms, Vaden says the timing is especially painful.

“We’re heading into the holiday season; it’s supposed to be a time of good cheer,” he says. “Unfortunately, Senator Schumer and Representative Jeffries are giving everybody a lump of coal. This needs to stop. We shouldn’t be playing games with people’s lives.”

He adds that USDA can move quickly once Congress passes appropriations.

“You want people to receive their SNAP benefits? It’s real simple,” Vaden says. “Give us our normal appropriations, and USDA will do what it does so well: get those benefits onto people’s cards quickly and efficiently.”

Despite Economic Uncertainty, China Continues to Buy Dairy

Thu, 30 Oct 2025 12:59:28 GMT

China continues to import significant volumes of butter and cheese despite ongoing economic concerns and growing domestic milk production, but imports are still not as strong as they were years ago, according to Betty Berning, analyst with the Daily Dairy Report.

“China has been working toward dairy self-sufficiency by investing in dairy farms, which has been bringing import values down. In addition, Chinese consumers could also be shifting their preferences to other products, which also could be cutting into imports of some dairy products,” Berning says.

Offering evidence for the changing consumer preference theory, Berning notes 2025 butter and cheese imports to China through September were on pace to set record highs for the year. According to data from Trade Data Monitor, China’s cheese imports climbed 13.5%, relative to September 2024, to 31.5 million pounds, and for the first nine months of the year, they were 8.7% ahead of the same period in 2024. Butter imports also topped 23.7 million pounds for the year, 8.8% larger compared to the first nine months of 2024.

Whole milk powder (WMP) imports to China, which are sourced mostly from New Zealand, grew 41% in September to 32.3 million pounds, against a weak comparison in the same month in 2024. Year to date through September, China imported 724.2 million pounds of WMP, the ninth largest volume since 2016, with only 2024 lagging in the data set. Skim milk powder imports of 18.6 million pounds sank 3% from September 2024 and were the lowest September figure since 2011. Meanwhile, whey imports fell slightly, down 3.1% compared to September 2024, to 117.4 million pounds.

“Surprisingly, China’s imports of U.S. whey products only dropped 0.5%, despite ongoing trade tensions between the two nations,” Berning says. “Earlier this year, China announced plans to reduce its hog population by 1 million breeding sows. As a result, whey imports, including those from the United States, with or without tariffs, could continue to dwindle in coming months.”

The uncertainty surrounding the Chinese economy also continues to cloud the dairy import forecast.

“Even though growth in China’s third-quarter GDP of 4.8% met analysts’ expectations, it was the smallest increase in a year,” Berning says. “Of concern was a year-to-date decrease of 0.5% in fixed-asset investment, which includes real estate. Economists had expected this area to grow modestly, and the decline underscores ongoing issues in the Chinese real estate market.”

This ongoing economic uncertainty has spurred cautiousness in Chinese consumers. While year-over-year retail sales rose 3% in September, they were down compared to August.

Berning says: “Given the uncertain economy and the ongoing trade dispute, huge sales of U.S. dairy products to China seem unlikely until the Chinese economy shows lasting signs of strength.”

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Dairy Trade: The Good and The Ugly

Wed, 29 Oct 2025 12:35:18 GMT

Historically, China has been a vital part of the U.S. export demand for dairy products. They are ranked third among U.S. agricultural export markets according to USDA, and have been third in dairy — behind Mexico and Canada — in purchases from the U.S.

In 2024, China purchased $583.6 million in U.S. dairy products, over $30 million more than their 10-year average, with a total volume of 385,609 metric tons. They have grown their demand of U.S. dairy products 29% in the last 10 years.

When comparing 2024 to 2025, January to July purchases have been slightly higher in 2025 than 2024, solely on the back of whey, casein, and “other dairy products”, while cheese, non-fat dry milk and ice cream are all significantly behind last year.

While in line with the 10-year average, China has drastically reduced U.S. dairy product demand since the highs they imported in 2021 and 2022 — nearly $220 million less in 2024 than the high of $802.8 million reached in 2022. The growth from the Phase I Trade Deal can be tracked from 2020 through 2023, with many dry products, such as milk powder, peaking in 2021 then sharply falling off in 2024 due to an oversupply of product in China as well as tensions flaring between the two countries, eventually leading to tariffs and retaliatory tariffs announced in early 2025.

To put this in perspective, we exported $8.25 billion worth of dairy products in 2024 with a total volume of 2.66 million metric tons. To Mexico, $2.47 billion worth of dairy products was exported and Canada purchased $1.18 billion. So while China is ranked third, the demand there is overshadowed by our neighbors.

Still, with the bleak outlook dairy markets have been stuck in for the last several months, should China return to volumes seen just three or four years ago, it would certainly help support dairy prices. Especially with the increase in demand from the EU as seen more recently.

Unfortunately, the possibility of a trade deal with China isn’t the only foreign affairs to keep an eye on, as we took a major step back last week in discussions with Canada, our No. 2 importer of dairy products. For dairy specifically, the formal review of the United States-Mexico-Canada Agreement is expected to happen in 2026. One of the concerns President Trump has called out in the past is the quota system, which has been deemed as unfair to the American dairy producer. The tensions are high as Trump called off trade talks last week over an anti-tariff advertisement featuring a Reagan-era clip opposing tariffs. The Ronald Reagan Presidential Foundation and Institute had an official statement, claiming the ad misrepresents the presidential radio address used from 1987 and the Government of Ontario did not have permission to use or edit the remarks. For now, it’s one step forward and one step back as negotiation results are still to be determined.

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'Everything’s a Game of 3D Chess': The Real Reason Behind U.S. Ties to Argentina

Fri, 24 Oct 2025 19:32:25 GMT

The U.S. is tightening ties with Argentina, and that’s raising eyebrows across farm country.

From a $20 billion bailout to plans to import Argentine beef, farmers and ranchers say the growing alliance feels like it’s coming at the expense of U.S. agriculture.

But according to Arlan Suderman, chief commodities economist with StoneX, there’s more to this story, and it has everything to do with China .

A Geopolitical Chess Match

“Everything’s a game of 3D chess,” Suderman explains. “At the center of it is China.”

For years, China has been strengthening ties with Argentina, investing heavily in infrastructure and agriculture to secure long-term supply lines and influence. Suderman says the U.S. sees an opportunity to pull Argentina away from Beijing’s orbit, using economic incentives to win its allegiance.

“The White House sees this as a way to create a split between Argentina and China,” Suderman says. “It’s not just about soybeans or beef. It’s about global positioning.”

The Beef Backlash

But for cattle producers, that strategy feels like betrayal. President Donald Trump’s recent talk of importing Argentine beef sparked anger across rural America. Many worry increasing imports will undercut domestic markets.

Suderman urges producers to stay calm. He points out the announced beef imports, around 80,000 metric tons, are only equal to about two day’s worth of U.S. beef production.

“It’s not enough to impact prices,” he says, “but it does show a disconnect between Washington and agriculture.”

He adds that advisers to the president might have misunderstood how ag markets work.

“These aren’t controlled industries like pharmaceuticals,” Suderman notes. “Ag markets are driven by supply and demand, and right now, we have record demand with tight supply.”

Soybean Farmers Feel Left Behind

While beef producers protest, soybean farmers are already bruised. Argentina’s temporary suspension of export taxes earlier in the year allowed them to undercut U.S. prices and quickly sell beans to China — a major blow to American growers. Suderman says it’s a reminder that the U.S. is no longer the world’s low-cost soybean producer.

“Argentina and Brazil have a cheaper currency and lower costs,” he explains. “And China has been investing there for decades.”

Suderman says he’s been warning the industry for years that the U.S. would eventually lose China as its top soybean buyer.

“This didn’t happen overnight,” Suderman says. “China has been building toward this for 20 years. The current administration may have sped it up, but it was coming.”

Beijing’s refusal to buy American and its pivot to Brazil could be less about economics and more to do with politics. “It’s a calculated decision about control and national leverage, not about getting the cheapest beans,” says one ag economist. Read more here.

Caught in a Bigger Battle

Beyond agriculture, Suderman says the real fight isn’t over soybeans — it’s over rare earth minerals. China currently controls about 90% of the world’s processed rare earths, which are essential to making electronics and advanced defense systems.

“That’s the real leverage,” he says. “Soybeans are small compared to the rare earth battle.”

The Trump administration is now trying to expand domestic rare earth supply chains, sourcing from Australia, Greenland and even within the U.S. But Suderman says it could take two to three years before those efforts meet national defense and economic needs.

What Farmers Need to Know

To many farmers, Washington’s global strategy feels like it’s coming at their expense. While the administration is playing the long game with China, rural America is paying the short-term price. Still, Suderman sees opportunity ahead if the U.S. can continue developing new markets, strengthen biofuel demand and tap into growing trade opportunities in Africa and beyond.

“We weren’t ready to give up China,” he admits, “but we need to look forward not backward.”

Dairy’s Balancing Act: Exports Boom, Beef-on-Dairy Surges, Milk Prices Drag

Fri, 03 Oct 2025 18:29:37 GMT

At World Dairy Expo in Madison, Wisconsin, the conversation among industry leaders highlighted the complex dynamics shaping today’s dairy and broader agricultural markets. From volatile milk prices to the rise of beef-on-dairy, and from export dependence to uncertainty with China, producers and analysts agree: resilience and adaptation are more critical than ever.

Milk Prices Under Pressure Despite Protein Craze

Milk prices are a few dollars lower than they were at this time last year. The slump is happening even as global demand for protein continues to climb.

“We have more cows, productivity per cow is rising, and butter fat prices have dropped,” said Dan Basse, founder and president of AgResource Company. “When dairy farmers see a profit, they expand their herds—it’s a cycle we’ve seen many times.”

While producers are benefiting from selling bull calves at higher prices, Basse noted that milk margins remain tough unless farms are operating at scale.

Domestic Demand Stalls, Exports Carry the Load

Mike North, principal at Ever.Ag, pointed to soft consumer demand as another factor holding milk prices back.

“We’re basically flat,” North said of domestic dairy demand. “Consumers aren’t going to restaurants like they have, and restaurant chains have had to push new value propositions to bring people in. Without that, demand is sour.”Exports, however, have hit record highs. North emphasized that without international sales, the U.S. dairy industry would be facing far worse price pressures.

Beef-on-Dairy Provides Major Boost to Farm Revenue

For producers like Ken McCarty of McCarty Dairy, one bright spot has been the rapid rise of beef-on-dairy, which has transformed once low-value Holstein bull calves into a significant revenue stream.

“We remember the days when we were trying to sell Holstein bull calves, two for five dollars, and you couldn’t get rid of them,” McCarty recalled. “Today, those sales can account for around 50% of our overall revenue.”

Basse predicted that strong beef-on-dairy calf prices will likely persist for at least the next two to three years, given the shortage of beef cow numbers in the U.S.

The Road Back to Higher Milk Prices

While beef-on-dairy is helping offset losses, producers remain eager for milk checks to rise. North stressed that recovery depends on stronger domestic demand and improvement across product categories.

“Butter is back to $1.60—we haven’t seen that since COVID—and cheese is about the same,” said North. “Until we get lift across all categories, we’re not going back to those $20-plus milk prices.”

He added that beef-on-dairy is effectively providing $3 to $4.50 per hundredweight in revenue to help fill the gap.

On-the-Ground Challenges: Labor and Rural Stability

Beyond markets, McCarty pointed to labor shortages and rural economic health as ongoing concerns.

“We don’t have the luxury of taking Christmas Day off,” McCarty said. “Accessing quality labor is a huge issue. But equally concerning is market volatility and what that means for our neighbors. When downturns hit, we worry about the long-term vibrancy of our rural communities.”

Trade, China, and Grain Markets Add More Uncertainty

The discussion also touched on broader ag markets. Basse expressed skepticism about any major new trade deal with China, noting that the country views the U.S. as an unreliable supplier.

“I’m doubtful of a deal with China,” Basse said. “It does tell us that we’ve had short coverings with China, I think we don’t need to think of China as the phase one agreement that was done before. That will not happen. This may be somewhat off some some modest deals, if you will. But I think when you think of China, it sees the United States as an unreliable supplier. “We came to them, beat them up at 18 and 19. They began paying back, you know, with a phase one deal. And then the Biden administration said. Nothing. And here we are negotiating again. So when I think about China, I am not optimistic they’re going to come back in a big way for U.S. corn, soybeans or other products.”

North added that without Chinese demand, soybean markets remain capped, especially as Argentina re-emerges as a competitive supplier with the elimination of its export tax. Meanwhile, bearish grain stocks reports continue to pressure corn markets.

A Balancing Act for the Future

Taken together, the dairy industry sits at a crossroads: global exports are providing a lifeline, beef-on-dairy is reshaping farm economics, but stagnant domestic demand, volatile grain markets, and persistent labor issues are limiting growth.

For dairy farmers like McCarty, survival means not just managing milk margins, but also navigating the ripple effects on their communities.

“We depend on our neighbors for feed, and they depend on us,” he said. “If rural America can’t stay strong, neither can the dairy industry.”

Dairy’s Moment, Policy Hurdles, and Global Trade: A Case for Dairy's Undeniable Momentum

Thu, 02 Oct 2025 11:41:07 GMT

Gregg Doud, president and CEO of the National Milk Producers Federation , sat down with us during World Dairy Expo to talk about what’s driving momentum in dairy, the challenges ahead, and why he believes U.S. producers are well-positioned globally.

Q: When you look at the dairy sector today, what are the biggest opportunities and challenges?

A: I see three big things. First is investment. We’re looking at nearly $10 billion in new U.S. dairy processing capacity from 2023 through 2026. There’s nothing like it in the history of U.S. agriculture—of any commodity. That reflects the reality that the U.S. is where dairy has room to grow.

Second, it’s all about protein demand. Globally, the appetite for protein—beef, pork, poultry, and dairy—is remarkable. Just look at the resurgence of cottage cheese. It’s everywhere right now. Domestically and internationally, demand is rolling. This year, U.S. dairy exports are up 2% in volume and 16% in value.

Third, we’re seeing strong efficiencies on the farm—better genetics, better feed, longer-living cows. U.S. milk production is up around 3%. The limiting factor, though, is the rise of beef-on-dairy, which is both a revenue stream for producers and a governor on overproduction.

Q: With tariffs still in place in some markets, is export demand holding?

A: The only country retaliating against us right now is China. Everywhere else is normal. And even with China, that’s more about geopolitics than dairy. The weaker dollar this year has also been a big help to U.S. ag exports overall.

Q: Where are you seeing the most expansion in production?

A: Texas, South Dakota, Kansas—the middle of the country is leading the way. But New York is also interesting. They’re building processing capacity that outpaces their current cow numbers, which means longer-term we’ll see expansion there, too.

Q: Let’s turn to policy. We hear the term “dairy cliff” every time the farm bill deadline looms. Is that a real concern?

A: Honestly, no. The so-called dairy cliff—milk at $70 per hundredweight—isn’t realistic. Congress has always extended farm bill authority when needed, and I expect they will again. The bigger challenge is the broader dysfunction in Washington—we can’t seem to get 60 votes in the Senate. That stalls everything.

Q: How would a government shutdown affect dairy?

A: My biggest concern was USDA’s role in price discovery. Fortunately, USDA confirmed they’ll continue collecting the data needed to set milk prices, even in a shutdown. So that’s a relief.

Q: Labor remains a major challenge. Any progress on a fix?

A: Yes, conversations are happening. Short-term, the administration is looking at adjustments to the H-2A program. But dairy needs year-round labor, so that doesn’t really help us. Long-term, Congress must act. Chairman G.T. Thompson is working on it, but immigration reform always runs into the 60-vote problem in the Senate. Still, I’m hopeful. Former Ag Secretary Mike Johanns recently told me the political stars are aligning like they did in the late ’80s when big reforms last happened. That gives me optimism.

Q: You’ve been at the table in trade negotiations. Can the U.S. still strike a new deal with China?

A: I think every effort will be made. But let’s be clear: a deal isn’t real until U.S. Trade Representative says it’s real. They’re working hard right now—not just with China but also Vietnam, Indonesia, and others. The challenge is that China today isn’t the China of 2019. Brazil has surged in soy and corn production, becoming a formidable competitor. Meanwhile, China’s own economy has slowed, which is softening demand, including for dairy.

Q: Longer term, what are NMPF’s policy priorities?

A: At the top of the list is “Whole Milk for Healthy Kids.” We’re down to one senator away from making it a reality in schools. That’s huge. We’re also watching the new dietary guidelines, which I think will be favorable to dairy. Combine that with the processing investments underway, and I believe the future looks very bright.

Q: Final thoughts?

A: We’re hitting on all cylinders—processing investment, protein demand, exports, beef-on-dairy. Yes, we’ve got challenges with labor and policy gridlock, but the momentum for U.S. dairy is undeniable.

Mixed Signals Persist, But so Does Optimism

Tue, 19 Aug 2025 14:00:00 GMT

Despite ongoing geopolitical tensions, economic uncertainty, and escalating tariffs, the past several months has been reasonably profitable for U.S. dairy farmers. They continue to benefit from adequate milk prices, elevated non-milk revenue, and lower feed costs compared to recent years. Overseas, particularly in the EU and New Zealand, many dairy commodities have seen prices surge in recent months, with some products reaching multi-year highs in mid-Q2, followed by slight price easing at recent GDT auctions. While similar price behavior has not been observed in the U.S., most products have at least established a price floor, keeping milk prices above on-farm production costs. As long as demand holds in the coming months, RaboResearch remains optimistic about the near-term future of the dairy industry.

Recent milk production data suggests that farmers have responded swiftly to capitalize on positive margins. Production was up 1.6 percent year-over-year in both April and May, the strongest growth since 2021. A larger herd, combined with improved yields (with only one new avian influenza case reported in the past 30 days), has contributed to this output strength. Despite a tight supply of replacement animals and the continued financial appeal of breeding dairy cows to beef bulls, farmers have managed to expand herd sizes to take advantage of favorable margins. The USDA revised the April herd size data upward by 15,000 cows and reported an additional 5,000 head were added in May, resulting in a net increase of 20,000 animals. At 9.445 million head, the herd size is now at its highest level since July 2021. 2025 is expected to deliver the first full-year production growth since 2021, with RaboResearch projecting an output gain of 1.5 percent to 2 percent over 2024.

Trade remains a double-edged sword. While exports to Mexico thankfully continue to flow freely under the USMCA, tensions with China have negatively impacted sales. U.S. dairy products faced a 125 percent retaliatory tariff increase from April through mid-May. Although the tariff has since been eased, the threat of re-escalation remains. Shipments of lower-protein dry whey and permeate to China fell 40 percent year-over-year in April and were down 70 percent in May. As China is the top destination for these products, such significant declines could lead to weaker dry whey and Class III prices in the coming months.

Looking ahead, RaboResearch anticipates a softening in global prices as milk production increases in most key exporting regions and demand remains fragile. To some countries, exports in some products could remain elevated as the U.S. remains price competitive, especially in cheese and butter. While the U.S. dairy sector remains generally healthy, it must navigate a complex landscape of shifting trade policies, inflationary pressures, and evolving consumer behavior to ensure continued profitability for dairy farmers this year.

RaboResearch F&A North America provides dynamic insight and value to dairy industry members, and other Rabobank clients and stakeholders. Learn more about the research reports for a competitive edge here .

Dairy Exports Strong Despite Lingering Trade Negotiations

Tue, 22 Jul 2025 15:09:11 GMT

Recently, dairy has been a beacon of shining light when it comes to exports especially when looking at the massive trade deficit U.S. Agriculture is facing as reported by the USDA in the latest Outlook for U.S. Agricultural Trade. In 2024 alone, the U.S. dairy industry bolstered a $2.8 billion trade surplus. In 2025, as of the May U.S. Dairy Trade report rang in new records in cheese exports and strong gains in butterfat up 150% from this time last year. The USDA has forecasted an over $3 billion trade surplus for 2025 and it appears like we are on the right track to make that happen.

There are a few factors that have caused so much demand in U.S. cheese and butterfat products. Mainly, price is a huge determining factor. The U.S. is one of the most competitively priced products in the world right now. The U.S. is the lowest priced product among the top three dairy exporters, under the EU and New Zealand currently. Mostly because U.S. herds have chosen to cull fewer cows based on USDA slaughter data. This causes a surplus in butterfat availability or supply. There has also been a recent decline in usage in the United States, most notably in pizza sales resulting in a surplus of cheese available for export. On the other hand, the EU has struggled to maintain herd size, losing more than 700,000 head from 2023 to 2024 from varying factors but disease has been an issue.

This positive trade balance has not come without struggle. The recent trade negotiations with China have left a massive hole in Dry Whey product demand. India is in turmoil over proposed trade agreements and it makes one wonder what the U.S. dairy export program could have been without hostilities from the Asian market. China is the world’s number one dairy product importer and has been a long standing importer of U.S. Dairy products, accounting for a monthly total varying from 14 to 22% of export volume of U.S. dairy products. In the month of May, we saw low protein whey drop nearly 70% on volume shipped to China compared to May of last year. Skim solids and NDM have been hit hard. In 2024, China accounted for 43% of low-protein why exports alone and 14% of all U.S. dairy products exports.

India’s dairy farmers are concerned with negotiations as the proposed trade deal could lead to a drastic drop in milk prices and a surplus of product in their country. Protestors believe there could be as much as a 15% drop in local milk prices due to an increase in milk imports by over 25 million tonnes. While positive for the U.S. dairy, this is a major hold up of the U.S./India trade deal. India also sites help concerns over GMO’s being introduced to their market. The U.S. in turn has raised formal objections at the World Trade Organization over the dairy certification system India uses. The belief is they cause unfair and unnecessary trade barriers.

Another pain point for U.S. trade, Mexico saw a decline in demand, reducing purchases 12% year-over-year. But increases in cheese demand in Japan and South Korea have more than made up for the deficit.

The future of the U.S. dairy export program has a lot to look forward to. Despite hostile relations with some of our major consumers, we have managed to diversify our availability of markets, shipping more butterfat and cheese in history and to countries we have not seen this type of volume before. Should a trade deal with India or China be accomplished, we have a lot of look forward to but with an air of caution. The reward from high exports has been derived from low U.S. prices compared to the rest of the world and a surplus of whey with no demand is weighing on the farmer’s bottom line. Without a trade deal especially with China, we could see a drop in milk price due to a massive amount of low protein whey, clogging the pipeline with nowhere to go, caused by the huge production of cheese. Luckily, the U.S. dairy industry in innovative and much like us diversifying our exports to new frontiers when faced with the hurdle of trade wars, who knows what solution we will find to the looming whey problem.

Sarah Jungman is a commodity broker with AgMarket.Net and AgDairy, the dairy division of John Stewart & Associates Inc. (JSA). JSA is a full-service commodity brokerage firm based out of St. Joseph, MO. Sarah’s office is located in Winterset, Iowa and she may be reached at 515-272-5799 or through the website www.agmarket.net .

The thoughts expressed and the basic data from which they are drawn are believed to be reliable but cannot be guaranteed. Any opinions expressed herein are subject to change without notice. Hypothetical or simulated performance results have certain inherent limitations. Simulated results do not represent actual trading. Simulated trading programs are subject to the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. There is risk of loss in trading commodity futures and options on futures. It may not be suitable for everyone. This material has been prepared by an employee or agent of JSA and is in the nature of a solicitation. By accepting this communication, you acknowledge and agree that you are not, and will not rely solely on this communication for making trading decisions.

USDA Takes 'Bold Action' to Crack Down on Foreign-Owned Farmland, Targets China

Tue, 08 Jul 2025 19:04:07 GMT

The Trump administration is focusing on national security in agriculture, which includes action to help eliminate foreign-owned farmland. USDA unveiled the National Farm Security Action Plan this week, a strategy that is aimed at protecting and securing American farmland from foreign influence, as well as defending innovation.

The plan is the next pillar of Agriculture Secretary Brooke Rollins’ Make Agriculture Great Again initiative. USDA calls it a “historic plan” that “elevates American agriculture as a key element of our nation’s national security, addressing urgent threats from foreign adversaries and strengthening the resilience of our nation’s food and agricultural systems.”

The Trump administration has been facing increased pressure to crack down on the amount of foreign-owned farmland in the U.S., especially surrounding U.S. military bases.

“We feed the world. We lead the world. And we’ll never let foreign adversaries control our land, our labs, or our livelihoods,” said Rollins. “This Action Plan puts America’s farmers, families, and future first — exactly where they belong. Under President Trump’s leadership, American agriculture will be strong, secure, and resilient. He will never stop fighting for our farmers and our ranchers.

“Too much American land is owned by nationals of adversarial countries, and more than 265,000 acres in the United States are owned by Chinese nationals, much of which is located near critical U.S. military bases ,” Rollins also told reporters Monday.

USDA's National Farm Security Action Plan, announced today under @SecRollins' Make Agriculture Great Again initiative, safeguards our food supply, strengthens infrastructure, & defends U.S. ag innovation from foreign adversaries.

🔗https://t.co/8wl5YfIzju pic.twitter.com/cqRv4PU6Th
— Dept. of Agriculture (@USDA) July 8, 2025

In what USDA calls “aggressive action,” the agency says it is addressing seven critical areas, which include:

Secure and protect American farmland — Address U.S. foreign farmland ownership from adversaries head on. Total transparency. Tougher penalties.
Enhance agricultural supply chain resilience — Refocus domestic investment into key manufacturing sectors and identify non-adversarial partners to work with when domestic production is not available. Plan for contingencies.
Protect U.S. nutrition safety net from fraud and foreign exploitation — Billions have been stolen by foreign crime rings. That ends now.
Defend agricultural research and innovation — No more sweetheart deals or secret pacts with hostile nations. American ideas stay in America.
Put America first in every USDA program — From farm loans to food safety, every program will reflect the America First agenda.
Safeguard plant and animal health — Crack down on bio-threats before they ever reach American soil.
Protect critical infrastructure — Farms, food and supply chains are national security assets — and will be treated as such.

Rollins wasn’t alone in unveiling the new plan. Along with Secretary of Defense Pete Hegseth, Attorney General Pam Bondi and Secretary of Homeland Security Kristi Noem and several state governors, Rollins says the Trump administration is creating a united front to address foreign threats.

FARM SECURITY IS NATIONAL SECURITY: Today, the Trump Administration launched the National Farm Security Action plan to protect our farmland and food supply from foreign threats. 🧵 pic.twitter.com/hUwxknmGYK
— Rapid Response 47 (@RapidResponse47) July 8, 2025

“Getting an understanding of why foreign entities, companies and individuals buy up land around those bases. That’s something I should be paying attention to,” said Defense Secretary Pete Hegseth during the press conference this week.

Agriculture Secretary Brooke Rollins conducts a news conference to announce the National Farm Security Action Plan and “discuss actions being taken to protect American agriculture from foreign threats,” outside the USDA Whitten Building on Tuesday, July 8, 2025. Attorney General Pam Bondi, left, Defense Secretary Pete Hegseth, and Homeland Security Secretary Kristi Noem, also appear.

((Tom Williams/CQ Roll Call/Sipa USA))

USDA says it’s launching a new online portal for farmers, ranchers, and others to report possible false or failed reporting and compliance with respect to Agricultural Foreign Investment Disclosure Act of 1978 (AFIDA).

“Further, the portal will receive and review claims of adversarial foreign influence on federal, state, and local policymakers with respect to purchases of U.S. farmland and business dealings in other facets of U.S. agricultural supply chains. Submissions may be accepted anonymously or contact information may be provided for appropriate follow up by USDA.”

As background, USDA explained AFIDA requires foreign investors who acquire, transfer, or hold an interest in U.S. agricultural land to report such holdings and transactions to the Secretary of Agriculture. USDA says In January 2024, the Government Accountability Office published a report on foreign investments in U.S. agricultural land, which provided recommendations for enhancing efforts to collect, track, and share key information to identify national security risks.

Increasing Biosecurity Threats

Rollins specifically mentioned increasing biosecurity threats from China.

As AgWeb reported in June , another Chinese national is accused of smuggling biological materials related to roundworms into the U.S. for work at a University of Michigan laboratory. According to the U.S. attorney’s office, Chengxuan Han is charged with smuggling goods into the U.S. and making false statements.

That followed two Chinese nationals charged with trying to smuggle a fungus , Fusarium graminearum, into the U.S. just a week prior.

USDA says those recent events highlight the critical need for this action.

“Last month, the U.S. Department of Justice charged foreign nationals, including a Chinese Communist Party member, with smuggling a noxious fungus into the United States — a potential agroterrorism weapon responsible for billions in global crop losses. The scheme involved a U.S. research lab and highlighted a disturbing trend: America’s enemies are playing the long game — infiltrating our research, buying up our farmland, stealing our technology, and launching cyberattacks on our food systems. These actions expose strategic vulnerabilities in America’s food and agriculture supply chain,” USDA said in a release.

Foreign-Owned Farmland By the Numbers

The foreign-owned farmland piece drew this biggest coverage out of USDA’s announcement this week . As AgWeb reported last year , when you look at the numbers, China doesn’t own the most farmland in the U.S.. According to a USDA report, it’s actually Canada, which accounts for 32%, or 14.2 million acres. But as USDA said on Tuesday, the concern is the amount of farmland owned by China is growing.

Foreign-Owned Land by County

(USDA)

Rounding out the top five are the Netherlands at 12%, Italy at 6%, the United Kingdom at 6% and Germany at 5%. Together, citizens in those countries hold 13 million acres, or 29%, of the foreign-held acres in the U.S. China owns less than 1%, or 349,442 acres.

All told, 43.4 million acres of forest and farmland in the U.S., or 3.4% of all ag land, is foreign owned as of Dec. 31, 2022. Roughly 30 million of those acres are reported as foreign owned, with the remainder primarily under a 10-year-or-longer lease. Of the 30 million, 66% is owner-operated, 14% has a tenant or sharecropper as the producer and 12% report a manager other than the owner or a tenant/sharecropper as producer. The remaining 7% are “NA.”

USDA says the two biggest Chinese-owned companies with land holdings in the U.S. are Brazos Highland and Murphy Brown LLC, which owns Smithfield Foods. Brazos Highland reported owning 102,345 acres, and Smithfield owns 97,975 acres.

The top five states with the largest Chinese holdings are:

Texas at 162,167 acres
North Carolina at 44,776 acres
Missouri at 43,071 acres
Utah at 32,447 acres
Virginia at 14,382 acres

USDA reports those five states combined account for 85% of China’s farmland ownership. In Texas, USDA reports China has long-term leases associated with wind energy, and in North Carolina and Missouri, ownership is tied to Smithfield and producers who contract for pork production.

Unintended Consequences?

Foreign-held farmland has become a hot-button topic on Capitol Hill, but some warn unintended consequences could impact agriculture, especially for those industries who have companies that are Chinese owned. Just take Smithfield as an example. If Smithfield is targeted, some fear that could create more consolidation in the hog industry.

“It’s an emotional issue, and it’s not a simple issue either,” Jim Wiesemeyer, a long-time Washington analyst, told AgWeb. “I was recently in Missouri, and some commodity leaders worry about the negative consequences of going too far. No one’s saying China should not be watched relative to buying farmland near airports, national security is involved in that case, but more than a few farmers are looking at the potential downsides for pork producers who contract with Smithfield and the number of acres they own.”

While there isn’t a single, comprehensive ban on China owning farmland across all states, many states have introduced or enacted laws restricting or prohibiting foreign ownership of agricultural land, with a focus on China. That includes Texas, Florida and several Midwestern states that have enacted laws restricting or banning purchases by specific countries, including China.

One of those unintended consequences played out in Arkansas when Gov. Sarah Huckabee Sanders

In 2023, Arkansas became the first state to enforce a law banning certain foreign entities from owning agricultural land, specifically targeting those deemed “prohibited foreign parties.” This action was taken against a subsidiary of Syngenta Seeds , a Chinese-owned company, ordering them to divest their farmland.

“I’m announcing Syngenta, a Chinese state-owned agrichemical company, must give up its landing holdings in Arkansas,” said Sanders, referencing a 160-acre research site owned by Northrup King Seed, a Syngenta subsidiary.

Sanders was present as USDA rolled out the new plan this week.

“Arkansas led the nation in kicking Communist China off our farmland and out of our state because we understand that farm security is national security,” said Sanders. “I applaud President Trump and Secretary Rollins for putting America first with this bold USDA Action Plan to protect our food supply, our economy, and our freedom.”

It’s an issue that’s not going away. More states are considering addressing foreign-owned farmland with legislation, as well.

🇨🇳There’s a troubling correlation between Chinese-owned farmland in America and the location of our military bases.

🌾Assembly Bill 4781 by Asm. Alex Sauickie, Asw. Dawn Fantasia, and me would stop this in its tracks in New Jersey.

🚨With today’s announcement by the U.S.… pic.twitter.com/1CGA7K9Iwj
— Mike Inganamort (@MikeInganamort) July 8, 2025

States Applaud USDA’s Aggressive Plan

Governors and state agriculture secretaries were on hand for the announcement this week, applauding USDA’s plan.

“Tennesseans know that our farmland is our national security, our economic future, and our children’s heritage. The National Farm Security Action Plan puts America First by defending our farmland from foreign adversaries and protecting our food supply, and I thank the Trump Administration for its bold leadership,” said Tennessee Gov. Bill Lee.

“Farm Security = Food Security = National Security. Thanks to these actions taken by President Trump and his team, we can further protect the backbone of Nebraska’s economy from foreign adversaries like China. Homeland security starts at home, and we will continue to do our part in Nebraska,” Nebraska Gov. Jim Pillen said in a news release.

“I am grateful for Secretary Brooke Rollins’ bold leadership in advancing USDA’s Ag Security Agenda, which prioritizes safeguarding American agriculture and farmland from those who seek to undermine our nation’s food and energy security. Iowa’s multi-generation family farms are the backbone of our state’s economy and way of life. For decades, Iowa has banned the foreign ownership of farmland, a law we strengthened in 2024, to preserve our agricultural integrity and security while balancing the need for foreign business investment in our state. I fully support Secretary Rollins’ and the Trump Administration’s efforts to bolster enforcement, increase reporting, and enhance transparency of land ownership laws at the national level to guarantee that our American farmland remains in the hands of Americans,” said Iowa Secretary of Agriculture Mike Naig.

Pigs Can't Fly: U.S. High-End Livestock Breeders Lose Millions in China Tariff Fallout

Thu, 22 May 2025 13:33:21 GMT

Dr. Mike Lemmon’s pigs, each valued between $2,500 and $5,000, were supposed to be on a plane bound for Hangzhou, China, from St. Louis in April, where’d they spend the flight snoring, play fighting and snacking on oats and husked corn before taking up residence at Chinese hog farms.

Instead, many went to a local Indiana slaughterhouse for less than $200 each after the Chinese buyer canceled the order within a week of China implementing retaliatory tariffs against the U.S. in April.

China is one of the biggest importers of American breeding pigs and other livestock genetic material such as cattle semen. These lucrative niche export markets had been growing, but dried up since U.S. President Donald Trump started a trade war with Beijing.

U.S. farmers and exporters said the dispute has already cost them millions of dollars and jeopardized prized trade relationships that took years to develop.

Though Washington and Beijing agreed to pause tariffs last week, exporters said Trump’s unpredictable trade policy has caused their companies long-term damage and could encourage China and other major buyers to turn to foreign rivals like Denmark.

“We’ve got brand damage now. There’s not a week that goes by without clients asking what’s happening with the U.S.,” said Tony Clayton, owner of Clayton Agri-Marketing, a Missouri-based livestock exporting company.

(Clayton Agri-Marketing, Inc.)

“I don’t know how we can put this back together. This is long-term damage,” he said.

White House spokesperson Kush Desai said the administration was “working around the clock to secure billions of dollars in even more opportunities with our other trading partners.”

Some farmers raise pigs specifically for breeding, a niche business within the $37 billion U.S. hog industry. Farmers pay top dollar for these specialty pigs, which have favorable genetics to produce lots of healthy piglets that can eventually be processed into tasty, high-quality pork.

Lemmon, an Indiana veterinarian and farm owner, has been selling pigs worldwide for over 30 years. He said he spent more than a year working on the $2.4 million sale of the pedigreed pigs to China. He noted they were carefully bred for good health, litter size and high fat content that leads to richly marbled, tender meat when cooked.

“It’s devastating when it happens,” Lemmon said, referencing the sale he lost.

He said he plans to stay in the breeding business, and is working to rekindle the deal with his Chinese buyer during the tariff pause.

(Clayton Agri-Marketing, Inc.)

Roughly half of the world’s pigs live on Chinese farms. The country has purchased large quantities of breeding pigs from the U.S. since an outbreak of African swine fever, a virus with a near-total fatality rate, wiped out millions of the country’s hogs in 2018.

Shipping livestock is lucrative but time-consuming. Shippers must personally fly with the animals or hire an on-board attendant who can make the rounds to keep their pricey passengers well-hydrated and comfortable during a long flight. When not working, the attendants chat with the flight crew or sometimes lie in sleeping bags next to the animals in the chilly cargo bay, exporters and farmers said.

China has also been the biggest importer of semen from U.S. dairy cows, known for producing large amounts of protein-rich milk. But “Not one unit of semen is going to China right now,” Jay Weiker, president of the National Association of Animal Breeders, said, noting China had been importing one-quarter of all U.S. cattle semen, which they use to artificially inseminate their dairy cows.

The Chinese milk industry began importing large amounts of cattle semen to improve the genetics of domestic dairy cows after a deadly scandal over contaminated milk in 2008, Weiker said. At least six children in China died and nearly 300,000 fell ill after a Chinese manufacturer added melamine, a dangerous chemical, to milk powder to make the protein levels appear higher.

Brittany Scott, owner of SMART Reproduction Services, a sheep and goat genetics company, said several foreign customers had also pulled out of deals. This left many vials of semen sitting in her Arkansas facility, frozen in tanks of liquid nitrogen and waiting for buyers.“They are eager to do their jobs,” Scott said of her male goats and sheep. “They understand the assignment and they do really well.”

However, the work of selling their product has proven harder after Trump announced sweeping tariffs in April, and China retaliated.

The lost sales have been “a punch in the gut,” Scott said.

(Reporting by Heather Schlitz. Editing by Emily Schmall and Tom Polansek; Editing by David Gregorio)

Your next read: Is Tariff Pause First Step to Restore Access to China for U.S. Pork and Beef?

Milk Price Futures Heat Up on Seasonal Momentum

Wed, 14 May 2025 18:50:44 GMT

Class III milk futures came to life at the beginning of the month following underlying cheese prices higher, but more importantly, a seemingly change of attitude. Class III milk futures had been under pressure since the beginning of the year and accelerated to the downside with the announcement of widespread tariffs at the beginning of February. The price increases in cheese became short-lived, with the traders uncertain over international demand. Not only was international demand a concern, but slower domestic demand also weighed on the market.

The commercial disappearance of all dairy products for 2024 was about half a percent below the previous year, and the beginning of 2025 did not look any better. The potential for continued slower domestic and international demand left prices on the daily spot market floundering. Class III futures moved later contracts to a discount to the cash prices rather than a premium, generally maintained through September or October.

The increase in cheese prices at the end of April broke out of the short-term pattern, exceeding what traders had anticipated during the spring flush. It seemed the attitude of traders began to change. Class III milk futures not only followed the higher cheese prices but also removed the discount that was held to put a premium back into the market. This magnified the increase more than the underlying cash prices would have suggested.

Class IV futures did not follow a similar pattern as the butter price remained in a sideways range. This moved some Class III contracts above Class IV, which has been unusual over the past 2 years. The Grade A nonfat dry milk price has been trending higher, but it has not been enough to ignite aggressive buying interest in Class IV futures.

We have not yet seen any significant impact on tariffs from international buyers, as some of the tariffs did not go into effect as had been feared. It will take time to see what the impact might be on overall international demand. The biggest concern will be exports of lactose and whey, as China is the largest importer of those commodities. Whey exports for the first three months of the year are 1.5% higher than in the same period last year, totaling 129,282 metric tons, with China importing 64,359 metric tons of that amount. Lactose exports for the first quarter totaled 101,017 metric tons, with China importing 28,527 metric tons. However, there has been a 90-day pause on tariffs between the U.S. and China, with tariffs dropping back to 10% over the next three months.

Hopefully, something can be worked out permanently. China has been looking elsewhere for not only whey and lactose, but other agricultural products as well, and they may continue to do that to some extent. This business may be difficult to regain completely as China builds relationships with other countries to supply its needs. Whey is an important part of the milk pricing system, and lower prices due to reduced demand would impact milk prices.

Robin Schmahl is a commodity broker with AgDairy, the dairy division of John Stewart & Associates Inc. (JSA). JSA is a full-service commodity brokerage firm based out of St. Joseph, MO. Robin’s office is located in Elkhart Lake, Wisconsin. Robin may be reached at 877-256-3253 or through the website www.agdairy.com .

The thoughts expressed and the basic data from which they are drawn are believed to be reliable but cannot be guaranteed. Any opinions expressed herein are subject to change without notice. Hypothetical or simulated performance results have certain inherent limitations. Simulated results do not represent actual trading. Simulated trading programs are subject to the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. There is risk of loss in trading commodity futures and options on futures. It may not be suitable for everyone. This material has been prepared by an employee or agent of JSA and is in the nature of a solicitation. By accepting this communication, you acknowledge and agree that you are not, and will not rely solely on this communication for making trading decisions.

Tariffs Cast Chilling Effect Over Whey Sales

Thu, 08 May 2025 18:16:37 GMT

The U.S. trade war with China continues despite recent comments from President Donald Trump and members of his administration that suggest the U.S. could cut its current 145% tariff rate on goods from China by 50% or more. While these comments buoyed markets initially, an official from China’s Commerce Ministry called on Trump to eliminate tariffs altogether if he wants to negotiate with China.

Sarina Sharp, analyst with the Daily Dairy Report, says, “the damage high tariffs can do is very real. In the dairy complex, whey and lactose prices could be hardest hit. In fact, tariffs are having a chilling effect on both international and domestic whey sales. China is already turning to other suppliers for whey and lactose.”

In 2024, China bought 38% of all U.S. dry whey product exports and 25% of U.S. lactose exports, according to data from USDA. While early in the trade war, China granted tariff exemptions for U.S. lactose and some whey products, Beijing allowed those exemptions to lapse on Feb. 28. Today, China’s tariff on whey remains at 127%. Tariffs on food-grade whey protein concentrate are 140% and taxes on U.S. lactose products range between 130% and 135%.

“Any product that left the United States before April 9 and arrives in China before May 13 will not face these punitive border taxes, so it could take time for monthly trade data to confirm a setback in U.S.-China dairy trade volumes,” Sharp says. “Ahead of the tariffs, Chinese buyers stepped up imports of American whey products, and in March, Chinese imports of U.S. whey reached a nine-month high.”

Damage from the trade war has extended far beyond imports. Relations between Chinese buyers and American suppliers have soured, Sharp says.

“Amid growing anti-American sentiment, Chinese hosts have rescinded invitations to trade shows, and even the least patriotic buyers will eschew U.S. dairy products under the new tariff rates,” she adds.

China has turned to Europe as an alternative supplier, and as a result, European whey prices have been climbing, while U.S. prices have weakened. USDA’s Dairy Market News recently noted that U.S. buyers of whey feel a general lack of urgency to purchase whey because they are, “aware of the potentiality of more dry whey loads remaining,” in the U.S. In other words, buyers believe the steep slowdown in sales to China will provide plenty of opportunities to snap up whey at cheaper prices down the road, Sharp says.

The loss of whey exports is already having a negative impact on U.S. dairy producers’ milk checks, according to Sharp.

“Some dairy producers are buying liquid whey from cheese plants at steep discounts to feed to their cattle,” she adds. Before the tariffs, that whey was dried and shipped to China.

“As cheese and whey production climb, the U.S. dairy industry will need to maintain or grow exports to keep inventories in check,” she says. “If the U.S.-China trade war drags on, exports will suffer and whey and lactose values will likely drop again.”

Your Next Read: Economists Fear Trade War Will Push Agriculture Deeper Into a Recession

Tariff Escalation Clouds the Outlook

Mon, 21 Apr 2025 18:50:07 GMT

After a long winter, farmers have returned to the fields for a new crop year, and milk production is racing higher to the peak output weeks of the year. Milk prices were relatively healthy in the first quarter of this year, and when coupled with welcomed lower feed costs, there were likely profits earned on dairies in most regions of the country. However, recent policy shifts have clouded the outlook for the months ahead, introducing demand uncertainty at a time when milk production and components are increasing. These wildcard factors are driving increased volatility and have forced markets lower in recent weeks, must the concern of farmers who were hoping for continued healthy margins throughout this year.

Increasing Milk Production and Supply Dynamics

On the supply side, milk production returned to growth this year, with volume up 0.5% in January followed by a leap-year adjusted 1% growth rate in February. Globally, production gains are expected as well, with RaboResearch expecting 0.8% YOY growth from the Big 7 export regions in 2025. Regardless of a limited supply of replacements, U.S. cow numbers grew quickly early this year, likely driven by farmers keeping cull rates low to drive as much milk volume as possible when prices were good. With this additional milk after three years of stagnation, the outlook shifts to demand expectations, with trouble brewing for the export markets.

Trade Policies and Their Ripple Effects

Since the U.S. presidential inauguration in January, a range of tariffs have been implemented, with some ongoing and others temporary. Initially, the focus was on China, Mexico, and Canada, key markets for U.S. dairy products. China has issued retaliatory tariffs on a wide variety of U.S. dairy products, making it more expensive for product to move to the country. So far, Mexico has avoided any retaliatory action, but the situation with both Canada and Mexico remains tenuous, with USMCA-covered products like dairy avoiding the worst of the tariff impacts for now. Attention now turns to the major announcement that came in early April: the U.S. will institute a 10% import tariff on goods from all countries, with certain higher tariffs on goods from more than 60 countries. The likelihood of retaliation is high, which could limit dairy exports moving forward. With more products to be consume domestically, markets have reacted accordingly lower.

It is frustratingly impossible to estimate how the trade situation will play out. CME Class III milk futures have sunk below $17 per hundredweight for May and June contracts, reflecting the uncertainty on the trade front. What was initially expected to be a healthy year for on-farm profitability is now being questioned after the increasing trade ambiguity. Thankfully, milk production growth is not overwhelming, and certainly, the tariff situation is ever evolving and could change quickly. Expect ongoing volatility in the short run, with market attention focused on forthcoming policy changes in the coming weeks.

Your Next Read: No, You Aren’t Crazy: It Is The Windiest Start To Spring In 50 Years

Will Tariffs Have an Impact on Dairy Demand?

Tue, 15 Apr 2025 19:59:29 GMT

Tariffs have been dominating the news, and the uncertainty of the impact of those tariffs on dairy export demand. For the present, it seems the only impact of certainty is China. Tariffs on U.S. imports have been implemented across the board. China is the largest importer of whey, whey protein concentrate +80, and lactose from the U.S., and could have a significant impact on those prices. Whey is a significant part of the Class III milk price calculation. It will be interesting to see whether increased demand may come from other countries.

Butterfat Exports Surge Amid Global Price Gap
Butterfat exports have increased dramatically recently, with February increasing by 5,979 metric tons or 224.5% over February 2024. Butterfat exports in February totaled 8,642 metric tons. This is the biggest monthly exports since April 2014. The reason for this is that the U.S. price is substantially under the world price.

The latest Global Dairy Trade auction showed an average butter price of $3.45 per pound. This compares with the butter price of $2.3475 per pound on April 11^th. But not only does that show a large difference, making it attractive to international buyers, but the average price of butter in Oceania in March was $7,548 per metric ton or $3.43 per pound compared to $7,294 per metric ton in February. The average price in March 2024 was $6,465 per metric ton or $2.94 per pound. There are a total of 14 countries that are within Oceania. These 14 countries include Australia, Papua New Guinea, New Zealand, Fiji, the Solomon Islands, Federated States of Micronesia, Vanuatu, Samoa, Kiribati, Tonga, the Marshall Islands, Palau, Tuvalu, and Nauru.

The average butter price for Western Europe was $8,103 per metric ton or $3.68 per pound, compared to $7,563 per metric ton in February. The average price in March 2024 was $6,302 per metric ton or $2.86 per pound. The Western European countries consist of Belgium, Germany, France, Liechtenstein, Luxembourg, Monaco, Netherlands, Austria, and Switzerland. With these substantially higher prices, any tariffs that may be implemented on countries may not make much difference due to the price difference, or even if dairy products are included in the tariffs.

Low Milk Prices Could Prompt Cow Culling
The lower milk prices that we will see may increase the culling of dairy cows in the months to come. Cows have been held due to the higher heifer prices and the high values being received for calves. However, low milk prices will cause producers to push the pencil to determine which cows are making money at lower milk prices. Culling has been below the previous year for the past 18 consecutive months, with cow numbers in February totaling 9.41 million head. This was 62,000 head more than February 2024. We may see cow numbers pull back in the near term.

Robin Schmahl is a commodity broker with AgDairy, the dairy division of John Stewart & Associates Inc. (JSA). JSA is a full-service commodity brokerage firm based out of St. Joseph, MO. Robin’s office is located in Elkhart Lake, Wisconsin. Robin may be reached at 877-256-3253 or through the website www.agdairy.com .

The thoughts expressed and the basic data from which they are drawn are believed to be reliable but cannot be guaranteed. Any opinions expressed herein are subject to change without notice. Hypothetical or simulated performance results have certain inherent limitations. Simulated results do not represent actual trading. Simulated trading programs are subject to the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. There is risk of loss in trading commodity futures and options on futures. It may not be suitable for everyone. This material has been prepared by an employee or agent of JSA and is in the nature of a solicitation. By accepting this communication, you acknowledge and agree that you are not, and will not rely solely on this communication for making trading decisions

U.S. Unlikely to Capitalize on Dairy Demand Growth in China

Fri, 11 Apr 2025 20:09:15 GMT

President Donald Trump’s trade war with China ramped up this week, with both Trump and China President Xi Jinping refusing to yield. Trump and Xi appeared to be willing to climb the tariff ladder together, with no ceiling in sight, but then Xi announced Friday, after raising tariffs again, that they were as high as they would get. He made it clear, though, that he wasn’t backing down and that tariffs were already high enough to make U.S. products unmarketable in his country. Chinese importers of most U.S. goods will be required to pay a 125% tariff, while U.S. importers of most Chinese goods will be stuck with 145% duties.

The escalation of the trade war will basically lock the U.S. dairy industry out of the Chinese market for now, just when demand for dairy is expected to increase and milk production continues to fall, said Betty Berning, analyst with the Daily Dairy Report. China is the U.S. dairy industry’s third largest market by value, accounting for 7% of total dairy exports last year.

In February, milk production in China fell for the seventh straight month. CN Agri data showed that milk collections were 6.1 billion pounds in both January and February, with year-to-date output down 9.2%, compared to January and February 2024. Despite falling milk production, milk prices in China also fell, down 15 % in February relative to February 2024, according to RaboResearch. And skim milk powder production in January and February plummeted more than 30% compared to the same months in 2024.

“In 2018, China announced a modernization plan to increase milk production across the country and reduce its dependency on dairy imports,” Berning noted. “From 2018 to 2023, volumes grew rapidly, up 27%, or 24.7 billion pounds, and, by all accounts, the effort was a success. However, the nation has also sought to increase dairy consumption, but that endeavor has been less successful.”

According to Italy’s CLAL, China’s per capita milk consumption in 2023 was 25.6 lbs. “That is woefully less than per capita consumption in the rest of the world,” Berning said. “Growth in dairy consumption in China has not kept pace with gains in milk production. But in mid-2024, an oversupply of milk pushed prices lower, and the industry began culling cows, widening the gap between consumption and production.”

Consumption growth in China has been slow for several reasons. First, Berning said, many Chinese are lactose intolerant, which is why milk historically has not been a staple of the Chinese diet and why adoption is slow.Second, demand for infant formula has fallen due to declining birth rates, and the retail cost of dairy is also a factor in China’s volatile economy.

“Less milk from China seems likely to continue, at least for now. If dairy consumption takes off as Beijing hopes, more imports will be required until the country’s domestic supply can rise to meet demand. However, due to escalating tensions between the United States and China, these products would likely come from countries that China has a free trade agreement with—not from the United States,” she said.

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Trade Turbulence Could Shake Up Dairy Exports to China

Thu, 10 Apr 2025 19:27:31 GMT

Ongoing trade tensions and tariff negotiations between the U.S. and China are beginning to impact dairy markets, particularly for dry whey, whey permeate and lactose — products in which the U.S. is a leading global supplier.

More than half of U.S. dry whey and lactose production is shipped overseas, with China standing out as the largest buyer. But as trade disputes intensify, concern is growing that China might look elsewhere to meet its demand.

A Quick Tariff Recap
On April 2, President Donald Trump announced a new 34% tariff on goods imported from China into the U.S. Since then, that rate has increased to 84%. In response to the hike, China imposed a 34% retaliatory tariff on U.S. products entering the Chinese market.

But the back-and-forth retaliations didn’t end there. On April 9, the U.S. introduced further changes, announcing a 90-day pause on new tariffs for all countries except China, during which a universal 10% tariff would apply. However, for Chinese goods, tariffs are expected to increase to 125%.

U.S. Exports of Lactose and Whey
In 2024, the U.S. exported 409,000 metric tons (mt) of lactose, about 58% of the global market, according to a recent report from Rabobank. Of that, 110,000 mt were shipped to China, which accounted for 43% of total global lactose imports. In comparison, the European Union and United Kingdom combined exported only 33,000 mt of lactose to China.

While recent retaliatory tariffs are likely to put a dent in U.S. lactose exports to China, some volume may remain competitive. U.S. lactose is priced significantly lower, averaging around $834 per metric ton, compared to European prices, which range between $1,183 per metric ton and $1,918 per metric ton. Even with tariff retaliations, U.S. lactose could still offer better value in some segments when compared to the EU.

“The intensifying trade conflict between these two major trading partners could lead to shifts in lactose and whey trade, with potential export opportunities for Europe, Oceania and South America,” says Mary Ledman, global sector strategist for dairy at Rabobank.

“However, due to its competitive pricing, some U.S. lactose will likely still find a market in China. U.S. dry whey and permeate exports to China, on the other hand, are likely to fall significantly, with domestic U.S. prices for these commodities also declining,” Ledman says. “The trade war could result in lower prices for U.S. dairy producers, slimmer margins for traders and higher prices for Chinese end users and consumers.”

Phil Plourd, head of insights at Ever.ag, notes U.S. dairy exporters are already on edge.

“China takes a lot of U.S. whey products — dry whey, whey protein concentrates, permeate, lactose,” he says. “U.S. manufacturers and marketers had to be plenty concerned with the initial 34% levy announced by China late last week. Today, we’re up to 84%, which only makes things more challenging.”

Still, he acknowledges that the situation remains fluid, and both sides could be looking for ways to adapt.

“Even so, as is likely to be the case with many commodities and many countries, buyers and sellers are going to have to figure some things out,” Plourd says. “Do buyers have many immediate alternatives? Do sellers? Have buyers front-loaded, buying time for both sides to see how the dust settles? Over the short run, the unfolding actions aren’t a positive for prices. But it’s still early in this whole process.”

Will History Repeat Itself?
During a similar trade dispute in 2019, when China imposed a 25% tariff on U.S. whey products, U.S. exports of dry whey and permeate to China declined by 55%, and domestic prices fell by more than 35%. Lactose exports fell 33% during the same time period.

“When China implemented its 25% retaliatory tariff on U.S. imports in 2019, the U.S. dry whey market felt the brunt of this retaliation,” Ledman says. “At the time, China was also dealing with declining swine production due to an outbreak of African swine fever, resulting in lower whey and lactose exports to China for animal feed.”

However, with current tariffs now significantly higher than 2019, Ledman believes market pressure could be even more pronounced in the months ahead.

“RaboResearch expects the U.S. dry whey and corresponding milk markets to respond similarly to China’s new retaliatory tariffs in 2025, with the potential for more downside risk, given that the tariff is more punitive, totaling 36% as of April 10, and because the U.S. is experiencing an increase in production due to expanding cheese and whey production capacity.”

More Ripple Effects Likely to Come
As global trade flows adjust, there might be opportunities for Europe, Oceania and South America to expand their presence in the Chinese market. However, a mix of costs, product quality and supply constraints make this far from guaranteed.

In the meantime, the U.S.-China trade conflict adds another layer of uncertainty to global dairy markets.

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Ag Secretary Brooke Rollins Says New Deals May Be Struck Over Tariffs By End of Week

Wed, 09 Apr 2025 00:23:18 GMT

U.S. Agriculture Secretary Brooke Rollins said on Tuesday that new deals could be struck with other countries over trade tariffs by the end of this week.

Rollins made the comments in an interview to Fox News host Bret Baier on the network’s “Special Report” show.

Why It’s Important

President Donald Trump said last week that he would impose a 10% baseline tariff on all imports to the U.S. and higher duties on dozens of other countries, including some of Washington’s biggest trading partners, rattling global markets and bewildering U.S. allies.

After China retaliated with its own tariffs, the United States said on Tuesday that 104% duties on imports from China would take effect shortly after midnight, even as the Trump administration moved to quickly start talks with other trading partners targeted by Trump’s sweeping tariff plan.

“I believe, sincerely, it will be sooner rather than later. I believe we’ll be hearing about new deals that are being struck, perhaps by the end of the week,”

Rollins said, adding 70 countries had reached out to the U.S. for talks.

U.S. stocks dropped on Tuesday for a fourth straight trading day since Trump’s tariffs announcement last week.

The administration has scheduled talks with South Korea and Japan, two close allies and major trading partners, and Italian Prime Minister Giorgia Meloni is due to visit next week.
Trump’s sweeping tariffs have raised fears of recession and upended a global trading order that has been in place for decades.

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U.S. Soybean Exports Now Face 60% Tariff to China, That Could Grow as Tariff Tit for Tat Plays Out

92% of Ag Economists Say the U.S. is Already in the Middle of Another Trade War

Fri, 21 Mar 2025 14:47:57 GMT

President Donald Trump hasn’t been shy about using tariffs as a negotiating tool. As he cracks down on fentanyl and illegal border crossings, he’s also pushing to restore what he calls fairness in U.S. trade relationships and countering non-reciprocal trading arrangements.

The reality for agriculture is the U.S. agricultural trade deficit hit a record in 2024 as imports soared, and Trump says he wants to reverse the trend.

According to the Trump administration, when it comes to tariffs and the impact on the overall economy, long-term gain will be worth the short-term pain. However, when it comes to agriculture, ag economists survyed in the March Ag Economists’ Monthly Monitor don’t agree.

Ninety-two percent of economists think Trump’s strategy of using tariffs as a negotiating tool won’t benefit U.S. agriculture in the long run.

Here are some of those economists’ comments from the most recent Farm Journal Ag Economists’ Monthly Monitor survey.

“Food as a weapon doesn’t have a successful track record, see Jimmy Carter and the 1980s,” responded one economist in the anonymous survey. “It’s not a guarantee as it’s like playing Russian roulette; you might ‘win,’ but the risks are huge.”
“Farm Journal readers should learn about the long-term consequences of Smoot-Hawley. It wasn’t just about the economic costs — it was also about the relational damage between trading partners. I have a hard time believing we will rebuild these relationships any time in the foreseeable future,” another economist said.
“It depends on whether tariffs are used as a negotiating tool with the ultimate goal of reducing trade barriers, or whether they instead result in a world with higher barriers. The president’s emphasis on tariffs as a way to raise revenue suggests tariffs and their consequences may persist,” was another economist’s response in the Monthly Monitor.

However, one economist wasn’t as certain, saying, “For it to be beneficial depends on it being short lived and resulting in trade initiatives with market access or purchase commitments. And in the meantime, action is taken quickly related to Trump’s post to offset trade loss with increased domestic use such as removing dated rules that limit ethanol blends, renewing or creating biofuels production incentives, and adding SAF as a mandated fuel.”

Trade War or No Trade War?
What an overwhelming number of agricultural economists do agree on is that the U.S. is in the midst of another trade war. Ninety-two percent of economists say a trade war is already here, while only 8% responded no.

“I don’t think anyone is arguing with the notion that we are in another ‘trade war,’” one economist said. “This one is far bigger and far more consequential than the last one we were in.”

“It seems more like a trade cold war,” another economist responded. “The situation is ever-changing, and it is hard for buyers, markets and producers to anticipate reality and effect. The threat of tariffs is almost as effective as a tariff.”

As agriculture tries to navigate the turbulence and shocks of another trade war, the ultimate question is: Who wins in a trade war? According to Romel Mostafa, professor of business, economics and public policy for the Ivey Business School in London, Ontario, it’s neither the U.S. or Canada.

“If we think about U.S. and Canada, we both lose,” Mostafa says. “The way our markets are integrated, both from the input side as well as the product side, any tariff really increases cost of production for our farmers all the way to food on the table. What then happens, essentially, some of our products are going to be less competitive in major markets than where we compete. Who then benefits? Perhaps Brazil, Russia or other countries.”

Other agricultural economists agree: If you’re looking at the trade war between the U.S. and Canada or the U.S. and China, it’s not the U.S. who wins, it’s ultimately one of the United States’ biggest competitors: Brazil.

The Ag Economists’ Monthly Monitor asked, “In the next 10 years, which country ultimately benefits the most from the current trade turbulence?” Seventy-three percent of economists think it’s Brazil, and 18% said China.

This Trade War Could Be Worse Than the Last time
Of the agricultural economists surveyed, 69% say they don’t think a trade war today would have the same impact it did 2018 through 2020. Instead, most think it will be worse.

“The trade war in 2018/19 also had the African swine fever in China. Because of ASF, they did not need the soybeans anyway. It will be hard to figure out what impacted the U.S. markets/prices more, but the market reaction should not be as great this time,” said one economist in the monthly survey.

Ag Econoimsts’ Monthly Monitor

(Lindsey Pound)

“It would be a bigger impact,” another economist said. “The first round of trade wars in agriculture were largely used as a wedge for negotiation or renegotiation of agreements that provided improved access and growth opportunities for ag trade. This round seems to be championed based on reshaping the entire trading system, a system that U.S. agriculture largely benefited from over time.”

“There appears to be less willingness by the U.S. taxpayer to provide financial assistance to agricultural producers. That is not to say that financial assistance is absent this go around, but I do believe it increases the uncomfortable situation for producers who largely support less government spending,” one of the respondents shared.

However, other economists think it could have a similar impact, saying the same commodities will be impacted.

Even talk of tariffs is enough to move the markets, as some analysts argue the commodity markets have been ignoring fundamentals, instead trading headlines recently.

The Potential Economic Hit to Ag
The American Farm Bureau (AFBF) economists recently took a deeper dive into the possible impact of reciprocal tariffs. AFBF economists say of the top 20 U.S. agricultural products currently being targeted by Canada, for a total of $5.8 billion, commodities such as juice, coffee and chocolate are hardest hit, along with wine, fresh fruit, dairy products, poultry and rice.

Canada’s retaliatory tariffs

(AFBF)

China’s retaliatory tariffs

(AFBF )

When it comes to China, Beijing has specifically targeted 15 products including beef, cotton, grain sorghum, pork, corn and dairy along with fresh fruit. Economists say while it’s too early to measure the full impact of the tariffs on U.S. agriculture, they believe it will certainly decrease demand for U.S. products in Canada and China.

Market Facilitation Program 2.0?
If agriculture is caught in the middle of another trade war, the March Ag Economists’ Monthly Monitor wanted to know if economists think USDA will compensate farmers for their losses again, similar to what the previous Trump administration did with Market Facilitation Program (MFP) payments.

March Ag Economists’ Monthly Monitor

(Lindsey Pound)

Even though Secretary of Agriculture Brooke Rollins has promised to make farmers whole through another trade war, economists are concerned about available funding. Seventy-seven percent of economists think USDA will compensate farmers, but 23% don’t think so.

“Congress might be the limiting factor,” one economist said.

“They will want to do so, but their ability to do so may be limited. The failure to include replenishment of the Commodity Credit Corporation’s borrowing authority in the continuing resolution limits available CCC funds, and other options may also be limited in potential scope,” another respondent shared.

“The political dynamics appear to be similar,” said another economist. “Amounts are however likely to be less, maybe substantially less, due to the general policy initiative to reduce government spending.”

The Secretary of Agriculture has come out and said they will use these tools if it becomes necessary.

Mexico and Canada Take Additional Actions to Ward Off U.S. Tariffs

Fri, 28 Feb 2025 20:18:21 GMT

A global stock selloff extended from Asia into Europe as investors worried that President Donald Trump’s planned tariffs on Canada, Mexico, and China could hurt economic growth. Asian shares fell as much as 2.5%, while the dollar strengthened. Trump announced 25% tariffs on Canada and Mexico starting March 4, with Chinese imports facing an additional 10% levy.

Economists warn the move could slow U.S. growth, fuel inflation, and trigger recessions in Mexico and Canada. China vowed “all necessary measures” in response, while Hong Kong saw some of the biggest losses, particularly in Chinese tech stocks.

The euro is at risk of further falls as markets are not fully priced for the prospect of a global trade war, ING analyst Chris Turner says in a note.

The U.S. economy is also showing early signs of strain as President Trump’s aggressive tariffs and federal spending cuts disrupt businesses, weaken consumer confidence, and spark concerns over inflation.

Job cuts across government agencies and funding freezes are forcing local officials to explore tax hikes and bond issuances to stabilize budgets.

Economists warn that escalating trade tensions and regulatory uncertainty could further dampen growth, with projections of higher inflation and slower economic expansion. While the administration insists its policies will strengthen the private sector, financial markets and businesses remain uneasy about the near-term outlook.

Trump Confirms Tariffs on Canada and Mexico, Additional Hike on China

President Trump announced that tariffs on imports from Canada and Mexico will take effect on March 4 as planned, citing inadequate efforts to curb drug trafficking.

Additionally, he declared a new 10% tariff on Chinese goods, doubling the previous levy imposed earlier this month. The move has drawn criticism from businesses and trade groups, warning of economic strain and higher consumer costs.

While Canada and Mexico have taken measures to address U.S. concerns, China’s response remains muted, potentially setting the stage for further trade tensions.

Mexico Extradites Top Cartel Figures to U.S.
In a historic crackdown on cartel operations, Mexico has transferred 29 high-profile cartel operatives to U.S. custody, including Rafael Caro Quintero, the infamous Sinaloa cartel leader wanted for decades.

The move, seen as a major victory for the Trump administration, signals increased co-operation between Mexican President Claudia Sheinbaum and U.S. authorities. Among those extradited is Miguel Ángel Treviño Morales, the notorious ex-leader of the Zetas cartel.

The mass transfer underscores ongoing diplomatic efforts to combat cartel violence and the drug trade across the U.S./Mexico border.

Will this and perhaps other measures that may be announced in the coming days be enough to impact the Trump threatened 25% tariffs on Mexico currently slated to take place March 4? Mexico authorities have arrested more than 700 people since early February, when President Claudia Sheinbaum agreed to deploy 10,000 National Guard troops along the U.S.-Mexico border. Sheinbaum said she was planning to have a telephone conversation with Trump in the coming days to follow up on the agreements reached by both leaders early this month. “We hope that we can make this call to close the agreement,” she said this week.

Canada’s ‘Fentanyl Czar’
As for Canada, it sent the country’s new “fentanyl czar” and cabinet ministers to meet with Trump’s border czar, Tom Homan, this week. Canada named the czar as part of an agreement earlier this month with Trump to increase its efforts to curb the amount of fentanyl crossing over from Canada to the U.S. Canada has argued that the amount of fentanyl seized at the Canadian border is a fraction of what is found at the southern border.

Even More U.S. Tariff Hikes Ahead
There are several actions set for April 2, from the completion of trade policy reviews ordered on Inauguration Day to the unveiling of 25% tariffs on automobiles, pharmaceuticals and semiconductors.

That is also the planned date for the announcement of Trump’s levies on reciprocal trade, which will seek to equalize U.S. tariffs with the duties and nontariff barriers imposed by other nations.

A White House official said a report will be released on April 2 that will “outline the equivalent tariff rate” for other nations and the “mechanics for how they would be implemented.” Details for some countries might be released before others, the official added. The official also declined to comment on the timeline for reciprocal tariffs, but said any talk of a bottleneck in implementing the trade agenda is “premature.”

Trump Trade Strategy Unfolding
Trump administration officials believe that a trade policy combining reciprocal trade action with sector-specific tariffs would be legally stronger and cause less disruption than a broad tariff approach.

This strategy would still allow the U.S. to impose tariffs on significant parts of the economy while minimizing harm to consumers and markets. The sectoral tariffs, particularly on steel, aluminum, and copper, could be announced on April 2. However, their implementation would likely fall under Section 232 of the Trade Expansion Act, which permits tariffs on national security grounds.

This process generally requires a 30-day notice and comment period, except for steel and aluminum tariffs, which are based on an existing investigation and may be enacted more quickly.

Trump Moves to Impose Reciprocal Tariffs, And It Could Reshape U.S. Trade Policy

Thu, 13 Feb 2025 20:42:48 GMT

President Donald Trump signed an executive order on Thursday , directing his administration to impose reciprocal tariffs on foreign countries with high tariffs and non-tariff barriers on U.S. exports.

These customized levies, expected to be finalized by April, are designed to rebalance trade relationships and target unfair practices, including subsidies, regulations, and exchange rate manipulation.

The proposed tariffs will be calculated on a country-by-country basis and could apply broadly to industries such as automobiles, semiconductors, and pharmaceuticals. Trump cited the European Union’s value-added tax (VAT) and restrictive regulations as examples of unfair trade practices, along with Japan and South Korea, which he claims have long taken advantage of the U.S.

“Whatever countries charge us, we will charge them back,” Trump said from the Oval Office, declaring the end of what he sees as a one-sided trade relationship. He indicated that additional import taxes beyond reciprocal tariffs would be imposed later.

Of Note:

The Trump Administration will first look at the countries with the highest tariffs on U.S. goods. An official briefing reporters said the tariffs could come into effect in weeks or months.

“For many years the United States has been treated unfairly by trading partners, both friend and foe,” according to a memorandum Trump signed. “This lack of reciprocity is one source of our country’s large and persistent annual trade deficits in goods. I’ve decided, for purposes of fairness, that I will charge a reciprocal tariff, meaning whatever countries charge the United States of America,” Trump said in announcing the new tariffs. “In almost all cases, they’re charging us vastly more than we charge them, but those days are over.”

Trump also said that tariffs on cars, semiconductors and pharmaceuticals in addition to the reciprocal tariffs will come “shortly.”

The official briefing reporters said the aim is to have discussions with countries about how their policies have created a trade imbalance and that Trump would be more than happy to lower tariffs if countries want to pare their tariffs or remove other trade barriers.

Marks a Major Shift in U.S. Trade Strategy

The reciprocal tariff plan marks a sharp departure from the “most favored nation” principle that has guided global trade policy since the post-World War II era. Under this system, all trading partners receive equal treatment unless covered by a specific trade agreement. Trump’s new approach aims to align U.S. tariff policies with those of its trading partners, effectively abandoning this long-standing norm.

Howard Lutnick, Trump’s nominee for Commerce Secretary, said studies and calculations would be completed by April 1, after which Trump could act immediately. The tariffs will require detailed analysis for nearly 200 countries, each with its own complex tariff schedules and trade regulations — a big task for the U.S. Trade Representative and Commerce Department.

Key: The executive order says: “Within 180 days of the date of this memorandum, the Director of the Office of Management and Budget shall assess all fiscal impacts on the Federal Government and the impacts of any information collection requests on the public, and shall deliver an assessment in writing to the President.”

You can read the full White House Fact Sheet here .

Negotiation or Brinkmanship?

While the plan seems aggressive, Trump’s decision to delay immediate implementation could be a strategic move to encourage negotiations, as he successfully did with Mexico, Canada, and Colombia. He emphasized that he would be open to reducing tariffs if other nations lowered theirs or eliminated non-tariff barriers. “It’s a two-way street,” Lutnick said, suggesting the administration remains flexible if partners engage in reciprocal concessions.

However, Trump stated that exemptions and waivers would be rare. He referenced Apple Inc.’s past exemption during his China tariffs but insisted this round would apply to all companies and countries without exceptions.

Global Implications

The new tariff plan could particularly hurt developing nations that impose higher average duties on U.S. imports. It differs from Trump’s earlier campaign proposal for a universal tariff on all imports. Instead, reciprocal tariffs will be tailored to match specific foreign policies and trade barriers.

India could be one of the hardest-hit countries, with its historically high tariffs on U.S. goods. Trump’s announcement came just hours before a scheduled meeting with Indian Prime Minister Narendra Modi, signaling that the topic would feature prominently in their discussions.

Trump’s tariff push follows his earlier move to impose a 10% tariff on Chinese goods and plans for 25% tariffs on U.S. steel and aluminum imports next month. The breadth of the new directive suggests a significant expansion of his trade war strategy, which has already injected uncertainty into global markets and left businesses waiting for clarity.

Of note:
While Trump and his advisers blame U.S. trade deficits on unfair foreign practices, many economists argue these imbalances are largely driven by broader macroeconomic factors, such as consumer demand, the U.S. dollar’s status as a reserve currency, and global appetite for U.S. assets.

Farm Groups and Farm-State Lawmaker Reactions: Growing Alarm Over Reciprocal Tariffs

Trump’s proposal for reciprocal tariffs will likely spark reactions from some U.S. farm groups and lawmakers representing agricultural states, many of whom fear negative impacts on rural economies and American farmers.

Key Concerns from the Agriculture Sector

Loss of Export Markets: Many farmers fear that countries like Japan, South Korea, Mexico, and the EU will retaliate by targeting U.S. corn, soybeans, pork, dairy, and beef exports.
Financial Pressure on Farmers: After years of trade uncertainty and declining commodity prices, new tariffs could push many farms to the brink of bankruptcy.
Global Competitiveness: Other countries, such as Brazil and Argentina, could quickly fill the void in markets like China, permanently reducing U.S. market share.
Rural Economic Decline: Tariffs on farm goods have a ripple effect, hurting local businesses, equipment manufacturers, and rural banks that rely on the agriculture economy.

What Farm Groups May Demand

Exemptions for Agricultural Exports: Some farm groups are urging the White House to exempt agricultural products from reciprocal tariffs to avoid retaliation.
Prioritize Trade Agreements: Several organizations called for the administration to focus on new trade deals rather than escalating tariff battles.
Direct Financial Support: If tariffs are imposed, farm groups will push for expanded federal relief programs like those used during the U.S./China trade war.

Global and Economic Reactions to Trump’s Reciprocal Tariff Plan

President Trump’s proposal to impose reciprocal tariffs has triggered mixed reactions from global leaders, economists, and business groups, with many warning of significant economic repercussions and potential retaliation from U.S. trading partners.

International Response: Concern and Potential Retaliation

European Union (EU): EU officials expressed concerns about escalating trade tensions and hinted at preparing countermeasures. The EU is particularly sensitive to Trump’s criticism of its value-added tax (VAT) system and regulatory barriers.
Japan and South Korea: Both countries are seen as key targets of the new tariffs. Japanese trade officials stated that they were monitoring the situation closely and emphasized the importance of open markets. South Korea warned that reciprocal tariffs could disrupt supply chains, particularly in the technology and automotive sectors.
India: With historically high tariffs on U.S. goods, India is one of the most affected nations. Prime Minister Narendra Modi is expected to address the issue in upcoming talks with Trump. Analysts predict India could seek bilateral negotiations to avoid harsh tariff penalties.
China: Though not directly addressed in this announcement, China could view the move as part of Trump’s broader trade war strategy, increasing tensions even further. Chinese officials reiterated their stance on global trade stability and multilateral solutions.

Economic Experts: Risks of Economic Disruption

Most economists criticized the plan, arguing that trade deficits reflect structural economic factors, such as consumer spending patterns and currency valuation, rather than unfair trade practices alone.

Bloomberg Economics predicted significant disruptions in emerging markets, where tariffs on U.S. goods are generally higher, and economies are more vulnerable.
Trade Uncertainty: Businesses fear an unpredictable environment. Companies dependent on global supply chains—especially in the automotive, semiconductor, and pharmaceutical industries—are bracing for increased costs and operational complexity.
Potential Consumer Impact: Higher tariffs could lead to increased prices for U.S. consumers, particularly on imported goods like cars and electronics, experts warned.

Business Community Reaction: Cautious but Wary

U.S. Chamber of Commerce: Called for careful negotiation to avoid a full-blown trade war. “Reciprocal tariffs may help level the playing field,” a spokesperson said, “but they should be used as a last resort.”
Tech Industry: Companies like Apple are watching closely, given the potential impact on semiconductors and electronics imports. While Trump had previously granted Apple exemptions, this round may be far more restrictive.
Automotive Sector: Industry leaders warned that tariffs on car imports could reduce competitiveness and lead to job losses in U.S.-based manufacturing plants dependent on imported components.

Global Markets on Edge

The announcement injected volatility into global financial markets, with stocks in industries such as automotive, technology, and pharmaceuticals facing pressure. Investors remain uncertain about how aggressively the U.S. will enforce these tariffs and whether it could trigger retaliatory measures that harm global growth.

Expanded Global Country Responses and Market Impact

President Donald Trump’s plan for reciprocal tariffs has drawn sharp reactions across the globe, leaving governments scrambling to assess the potential consequences. The global financial markets have also reacted with volatility, particularly in industries most likely to be affected by the proposed changes.

Country-Specific Reactions

European Union (EU): Preparing for Retaliation
The EU sees Trump’s tariff strategy as a direct threat to its trade practices.

Targeted Sectors: Trump has repeatedly cited the 15% VAT and restrictions on U.S. agricultural exports as examples of unfair barriers.
Possible Retaliation: The EU is considering countermeasures, likely targeting U.S. agricultural products, Boeing aircraft, and tech companies.
Official Response: EU Trade Commissioner said, “We urge the U.S. to avoid actions that disrupt the global trade system. If necessary, the EU will defend its interests.”

Japan: Concern Over Automotive and Tech Exports

Japan is alarmed by the possibility of tariffs on automobiles and semiconductors, two of its most critical exports.

Automotive Sector: Tariffs on Japanese cars could significantly impact the country’s economy, where automobiles account for nearly 20% of total exports to the U.S.
Tech and Electronics: Semiconductor and electronics companies like Sony and Toshiba are bracing for higher costs and potential supply chain disruptions.
Diplomatic Response: Japan’s Ministry of Trade warned that “the move could destabilize longstanding trade ties” and emphasized the importance of resolving disputes through multilateral frameworks like the WTO.

South Korea: High-Tech Industries at Risk
South Korea’s tech and pharmaceutical sectors are directly in the line of fire.

Samsung Electronics, one of the world’s largest semiconductor manufacturers, stands to be heavily affected if Trump’s tariffs cover microchips.
Auto Industry: Hyundai and Kia have expressed concerns over potential tariffs on vehicle imports, which would raise prices for U.S. consumers and reduce their competitiveness.
Government Stance: The South Korean government indicated it would seek bilateral negotiations and warned that tariffs could lead to mutual economic harm.

India: High Tariff Barriers in Focus
India could be one of the hardest-hit countries due to its high tariffs on U.S. imports, especially in agriculture, medical devices, and tech products.

Key Sectors: U.S./India trade tensions are likely to rise, particularly in the pharmaceutical and automobile sectors, where India has long imposed protective tariffs.
Modi-Trump Talks: Prime Minister Narendra Modi is expected to use upcoming talks to negotiate exemptions or reductions in targeted areas.
Domestic Impact: Analysts warn that higher tariffs could reduce India’s access to critical U.S. technology and agricultural products, affecting domestic businesses and consumers.

China: Watching Closely
Although China was not a primary target of this announcement, it remains cautious, given Trump’s history of escalating trade disputes.

Strategic Watch: Chinese officials see Trump’s move as part of a broader trade containment strategy.
Potential Retaliation: If included in future tariff rounds, China could respond by targeting U.S. agricultural products, energy exports, and tech firms.

Market Impact: Volatility and Sectoral Effects

Trump’s announcement has caused uncertainty in global financial markets, with some sectors feeling immediate pressure.

Stock Market Reactions

Automotive Stocks: Companies like Toyota, Hyundai, and BMW saw share prices dip on fears of higher tariffs and reduced competitiveness in the U.S.
Tech Sector: Semiconductor giants such as Samsung and Intel are facing concerns about increased costs if tariffs extend to microchips and related technologies.
Pharmaceuticals: Multinational drug manufacturers, including Pfizer and Novartis, are bracing for disruptions in global supply chains and higher costs.

Currency Market Volatility

The announcement triggered fluctuations in Asian and European currencies as investors assessed the risk of a full-scale trade war.
The U.S. dollar initially strengthened on expectations that tariffs might reduce the trade deficit, but analysts warn this could be temporary if retaliatory measures weaken U.S. exports.

Commodity Market Impact

Agricultural Commodities: Potential retaliatory tariffs from trading partners could hit U.S. farmers, particularly those exporting soybeans, corn, and dairy products.
Steel and Aluminum: Following earlier tariffs on these products, prices for industrial metals may rise further, increasing production costs in manufacturing-heavy industries.

Broader Economic Consequences

Economists caution that the uncertainty alone could slow global growth by reducing business investment and cross-border trade.

Supply Chain Disruptions: Many industries rely on global supply chains, and new tariffs could force companies to restructure operations at significant cost.
Consumer Prices: U.S. consumers may face higher prices on imported goods, particularly in sectors like electronics, automobiles, and household goods.

Long-Term Risks

Global Trade Fragmentation: If other countries adopt similar protectionist measures, it could lead to the fragmentation of the global trading system, reversing decades of economic integration.
Shift in Trade Alliances: Countries excluded from U.S. tariff targeting may seek regional trade alliances to reduce their dependence on U.S. markets.

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

Tue, 11 Feb 2025 15:57:02 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

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

Sat, 01 Feb 2025 23:01:55 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.