Mexico

How Will U.S. Producers Maintain Business when New World Screwworm Invades?

Wed, 11 Mar 2026 19:59:35 GMT

With animal disease, prevention and preparation beat panic. Since New World screwworm (NWS) was last eradicated from the U.S. in the 1960s, the tools and infrastructure to deal with foreign animal disease have dramatically changed.

Dr. Justin Smith, Kansas animal health commissioner and state veterinarian, during the recent Kansas State University Cattlemen’s Day gave an update on how Kansas and other states are preparing for NWS. The approach is designed to keep producers in business, keep cattle and products moving, and manage NWS in a way that protects both herds and markets.

He says the U.S. animal health officials along with USDA are planning a multistate, coordinated response that aims for consistency across state borders.

Smith summarizes the industry’s preparation to tackle NWS is like a three-legged stool. U.S. producers will be able to maintain business when NWS invades through surveillance, treatment and movement controls.

Surveillance: Eyes on Animals

The first leg of the stool is surveillance. He stresses early detection depends heavily on producers and veterinarians watching animals closely and reporting anything suspicious.

Smith emphasizes they would rather over investigate than miss a case.

“We want to make sure that we err on the side of having to say no on many occasions, versus saying, ‘Yep, this is what we got.’ Eyes on animals is going to be key.”

He was clear this should feel like partnership, not policing.

“They don’t want it to look like Big Brother coming over your shoulder,” he explains. “I hope we want to get this thing quickly.”

Smith explains that once a positive premises is identified, surveillance becomes structured around zones. The infested premises sit at the center, surrounded by an infested zone, an adjacent surveillance zone and a broader fly surveillance area.

The infested zone is 12.4 miles in radius from the infested premises. In this zone, there will be frequent on‑animal checks for wounds and larvae, plus enhanced monitoring in surrounding zones using fly traps and animal observation. The adjacent surveillance zone is another 12.4 miles radius and then there will be a fly surveillance area — an 124-mile radius from the infested premises.

Smith says movements out of the infested zone will require visual inspection for wounds and systemic treatment, including a treatment window of three to 14 days before movement plus a documented certificate of veterinary inspection.

He says the current Kansas response plan aligns with USDA’s playbook and neighboring states’ plans while taking into account specific needs of the Kansas livestock industry.

He stresses the playbook will continue to evolve, and state-by-state implementation may vary, but he says the “zone approach” will be utilized by all states.

Treatment: Limited Tools, Use Strategically

The second leg is treatment. Smith says that after decades without large domestic outbreaks, labeled options are limited.

From the fact that we haven’t had this new tool in our nation, in a large-spread outbreak since the 60s, we don’t have a lot of treatments out there that are labeled for this organism.”

To date, the Food and Drug Administration (FDA) has approved four products for large animals:

He cautions, “The goal is not to go out there and just habitually treat your animals just in case. We want to make sure that we’re utilizing these [products] responsibly. There’s not an unlimited supply out there, and so we want to make sure that it’s available for us when we do need it.”

On a positive premises, Smith says treatment will be mandatory and systematic.

“There will be a quarantine placed on that premises. We’re also going to require a certain level of treatment on that premises,” he explains.

There will be protocols for daily mortality disposal, so carcasses don’t become breeding sites.

“The last thing you want to do is bury an animal that has larvae and has the ability to advance.”

He says treatment is also tied to movement out of infested zones, with most animals needing prophylactic treatment before leaving.

Movement Controls: Targeted, Not Statewide Shutdowns

The third leg is movement control, designed to be precise rather than broad-brush. Smith stresses NWS is an infestation, not an infection , emphasizing it is not a systemic disease problem, but an infestation that still demands strong controls.

He says there will be movement restrictions if a premises falls into an infested region. To move animals out of that zone, there will be steps to follow but movement will not be completely shut down.

He explains some exceptions exist:

Animals moving directly to slaughter can go without pre‑movement treatment, but those animals have to be hanging on the rail within 72 hours.
Baby dairy calves must be treated but can move right away if treatment and navel care are documented.

He says Kansas is also coordinating with neighboring states to create “synergistic” rules, especially for cattle from higher‑risk states such as Texas. Cattle entering Kansas from recognized infested zones will face inspection, treatment requirements and at least 14 days in drylot containment on arrival.

NWS is Not a Food Safety Issue

Smith reassures producers and consumers that NWS is not a meat safety threat.

“This is not a food safety issue,” he says. “If an animal is presented to slaughter, it has a screwworm wound then it has the ability to be trimmed. That carcass will not be condemned. There are no restrictions on any inspected product for food safety reasons.”

Smith summarizes underpinning all three legs is a commitment to dynamic planning and continuity. He notes a revised USDA playbook is forthcoming and that “plans will be a little bit dynamic” as they learn more.

The core message for producers is clear: watch your cattle, report early, use treatments wisely and expect targeted movement controls — not blanket shutdowns — if NWS crosses the border.

USDA Announces Sterile Fly Production Facility Construction Contract

USDA and U.S. Army Corps of Engineers (USACE) announced March 9 a construction contract with Mortenson Construction to build a new sterile fly production facility at Moore Air Base in Edinburg, Texas.

This facility is a key component in U.S. Secretary of Agriculture Brooke Rollins’ sweeping 5-prong strategy to fight NWS. USACE is partnering with USDA and will provide oversight for the contract, design, engineering and construction of the facility.

“The Army Corps of Engineers is an essential partner in bringing this facility to life and further highlights the Trump Administration’s government-wide effort to fight the New World Screwworm threat in Mexico,” Rollins says. “The Army Corps is the best in the business and their engineering expertise and proven track record in delivering complex projects will help ensure we can build a modern, resilient facility that protects American agriculture from invasive pests for decades to come. This first-of-its-kind facility on U.S. soil will ensure we are not reliant on other countries for sterile flies.”

A sterile fly production facility is a specialized biosecure complex where NWS flies are raised and sterilized using irradiation and then released into targeted areas.

USDA currently produces about 100 million sterile flies per week at the COPEG facility in Panama and disperses them within and just north of affected areas in Mexico. In addition to the COPEG facility in Panama, USDA invested $21 million to support Mexico’s renovation of an existing fruit fly facility in Metapa , which will double NWS production capacity once complete.

With ongoing support from APHIS technical experts, Mexico anticipates sterile fly production will begin at this facility in summer 2026. The new facility at Moore Air Base will be the only U.S.-based sterile fly production facility and will work in tandem with facilities in Panama and Mexico to help eradicate the pest and protect American agriculture.

USDA and USACE will break ground on this new facility later this spring, after initial planning and development meetings with the new contractor. By November 2027, the production facility at Moore Air Base is expected to reach its initial goal of producing 100 million sterile flies per week. After that, construction will continue at the facility to increase production with the long-term goal of producing 300 million sterile flies per week.

New World Screwworm Found in Newborn Calf 197 Miles from U.S.-Mexico Border

Wed, 31 Dec 2025 16:35:05 GMT

On Dec. 27, Mexico’s National Service of Agro-Alimentary Health, Safety, and Quality (SENASICA) reported a new case of New World screwworm (NWS) in a 6-day-old calf with an umbilical lesion in Llera, located in the state of Tamaulipas, approximately 197 miles from the U.S.-Mexico border.

According to the Texas Animal Health Commission, there have been no other detections in Tamaulipas or any evidence of established fly populations in the area.

To support a swift response if NWS reaches Texas, producers located on the southern border and travelers from NWS-affected areas should closely monitor animals for signs and promptly report suspected cases of NWS.

Read more about how to identify NWS:
The Smell You’ll Never Forget: A Calf Infested with New World Screwworm
Protect Your Livestock: Signs of New World Screwworm

A suspected NWS case requires immediate action, but it all starts with one thing: your call. If you suspect an infestation, report it right away.

The Texas Animal Health Commission recently posted this video explaining the process for producers to take if they suspect a NWS case:

What Are Some Key Concerns if NWS Crosses the Border?

Texas beef producer Donnell Brown says NWS poses a real threat to rural America.

“Fortunately, we made it to winter without a major screwworm infestation in the United States,” he says. However, as temperatures rise this spring and fly season begins again, I am deeply concerned that we could see an outbreak with devastating consequences for livestock and wildlife.”

Read more about NWS and winter:
Winter: The Secret to Slowing the Spread of Screwworm

Brown recalls the previous NWS outbreak in Texas.

“Compared to the last screwworm epidemic I experienced as a child, we now have far more effective parasiticides with extended protection for livestock,” he says. “Unfortunately, we still lack practical ways to treat or protect wildlife. After the screwworms were eradicated in the 1970s, it was 15 years before I remember seeing deer on our ranch. Today, deer are abundant and hunting has become a major economic driver for ranchers and rural communities.”

Read more about NWS treatment and prevention options:

FDA Approves Exzolt Cattle-CA1 for Prevention and Treatment of New World Screwworm
FDA Approves Dectomax-CA1 for Prevention and Treatment of New World Screwworm
New Technology to Combat New World Screwworm

Browns says if NWS cause significant wildlife losses, the ripple effects would be severe.

“Fewer hunters would travel from cities to rural areas, reducing spending on food, fuel, feed, lodging and other local necessities. This would harm rural economies already under pressure,” he explains. “The risk is especially high because fawns and many other wild mammals are born during fly season. Their wet navels become prime targets for screwworm infestation, making the potential impact on wildlife populations both immediate and profound.”

Read more about NWS and wildlife:
The Importance of Wildlife Monitoring for New World Screwworm

Sterile Flies Remain Key to Eradicating New World Screwworm

“The continued detections of New World screwworm near the Texas border are grim reminders of the serious threat this pest poses to our state,” says Texas Agriculture Commissioner Sid Miller. “Thanks to the efforts of USDA Secretary Brooke Rollins and APHIS working in coordination with Mexico, its northward spread has been halted, and this recent case promises to be a one-off, for now. But to fully eradicate this threat, the bottom line remains unchanged: we need sterile flies. I said as much a year ago when I criticized the Biden Administration’s failed efforts to corral this pest — dollars don’t kill screwworms, sterile flies do.”

Under President Trump’s leadership, Secretary Rollins and the USDA have now committed to a historic, targeted response that will deliver real results.

“Earlier this year, I was proud to stand alongside Secretary Rollins in Edinburg, Texas, as she unveiled her comprehensive five-point plan , and again at the Texas Capitol as that plan was expanded ,” Miller says. “I will continue to support and advocate for federal efforts to expand sterile insect fly production and infrastructure, because this proven strategy is key to the long-term eradication of New World screwworm.”

Current information related to NWS is available on the USDA-APHIS website , including a current situation map and table showing cases within 400 miles of the U.S.

Your Next Reads:
The Battle at the Border
Preparing for the Battle Continues: USDA Shares Screwworm Update and Releases NWS Playbook

Next Step in the Screwworm Fight: USDA Announces Opening of Sterile Fly Dispersal Facility in Tampico, Mexico

Thu, 13 Nov 2025 21:50:03 GMT

USDA announced Thursday the opening of a sterile fly dispersal facility in Tampico, Mexico. The Tampico facility will allow USDA to disperse sterile flies aerially across northeastern Mexico, including in Nuevo Leon. This announcement is the next milestone in the fight against New World screwworm (NWS).

“The opening of the Tampico sterile fly dispersal facility is another incredibly important tool in our arsenal to stop the spread of screwworm. The facility will ensure flexibility and responsiveness in northern Mexico, giving us a greater ability to drop sterile flies and continue to push the pest south,” said U.S. Secretary of Agriculture Brooke Rollins in a press release . “Stopping the spread of screwworm is a top priority for the entire Trump administration.”

Last week Rollins met with Mexican President Claudia Sheinbaum and her counterpart Secretary Julio Berdegue on the joint response to NWS.

“We are boosting our efforts and completing a joint review of our screwworm operations in Mexico to ensure our protocols are being followed,” she says. “As we enter the winter months , we continue to prioritize the response in Mexico and the rest of our five-pronged plan to protect U.S. livestock and the livelihoods of American farmers and ranchers.”

A proven method for NWS eradication is releasing sterile male flies to mate with wild females collapsing the population over time. There are two methods of dispersing sterile insects – aerial dispersal and ground release chambers. Aerial operations are preferred because they allow for dispersal at a steady rate through a large area and also because sterile insects may be dispersed in areas that are unreachable from the ground. Ground release chambers are used when there’s a need to quickly deploy sterile insects outside of the dispersal facility range.

Learn more about NWS:
The Smell You’ll Never Forget: A Calf Infested with New World Screwworm

According to the press release, USDA continues to disperse 100 million sterile flies per week in Mexico, but until now, aerial operations have been limited to southern Mexico, necessitating the use of ground release chambers in more northern areas of the country. Mass production and targeted dispersal of sterile flies remain critical components of our effective response.

Although Mexico continues to confirm new cases of NWS, the overwhelming majority of these remain in the far southern part of the country, with no significant northward expansion over the past several months. Should that change, the Tampico facility will allow USDA to immediately tackle any cases that occur elsewhere in Mexico.

The two northernmost detections (approximately 70 and 170 miles from the U.S. border, respectively) occurred in Nuevo León, on Sept. 20 and Oct. 5 , in young cattle transported from Chiapas, Mexico.

Neither case is still active and there have been no additional detections of NWS flies in traps or cases in animals in Nuevo Leon. USDA continues to disperse sterile insects in Nuevo Leon, and will now transition from ground release chambers to aerial dispersal in those areas.

USDA produces sterile flies for dispersal at the COPEG facility in Panama. USDA is also investing $21 million to support Mexico’s renovation of an existing fruit fly facility in Metapa — which will double NWS production capacity once complete. With ongoing support from APHIS technical experts, Mexico anticipates this sterile fly production to begin as soon as summer 2026.

To expand our domestic response capacity, USDA has also begun construction on a sterile fly dispersal facility at Moore Air Base in Edinburg, Texas, that is projected to begin operating in early 2026. APHIS is also expediting design and construction of a sterile fly production facility in southern Texas, with a targeted maximum capacity of 300 million sterile flies per week.

USDA continues to work with Mexico’s agriculture authority, SENASICA, to implement the collaborative NWS Action Plan and guide trapping, surveillance and movement protocols to help stop the northward spread of NWS.

Trade Mission While In Mexico

While Rollins was in Mexico last week, she also led the largest U.S. Department of Agriculture agribusiness trade mission in history. During the mission, 41 U.S. businesses, 33 cooperators and agriculture advocacy groups, six state departments of agriculture, and 150 participants conducted more than 500 business-to-business meetings during the three days.

According to a USDA press release , “This was a critical opportunity for American business to further trade ties and for USDA to continue its aggressive response to NWS in Mexico and continue to hold Mexico accountable for its commitments to the 1944 Water Treaty.”

Honored to lead the largest @USDA Agribusiness Trade Mission in US history to Mexico City!

Over three days, our delegation of 41 US businesses, 33 cooperators, 6 state departments of agriculture, and 150 participants held more than 500 business-to-business meetings - deepening a… pic.twitter.com/39rGi9Snhj
— Secretary Brooke Rollins (@SecRollins) November 13, 2025

Your Next Read: Preparing for the Battle Continues: USDA Shares Screwworm Update and Releases NWS Playbook

U.S.-Mexico Border Battle Continues As the Threat of New World Screwworm Intensifies

Wed, 24 Sep 2025 20:04:07 GMT

With New World screwworm (NWS) confirmed just 70 miles from the U.S. border , producers, government officials and industry leaders are taking action. Finding NWS along one of the most heavily trafficked commercial thoroughfares in the world from Monterrey, Nuevo Leon, to Laredo, Texas, is a red flag for the industry. Emphasizing the importance of maintaining strong safeguards, it’s time to plan for not “if but when” NWS crosses the border.

On Monday, Secretary of Agriculture Brooke Rollins confirmed protecting the U.S. from NWS is non-negotiable and a top priority for President Trump.

UPDATE ON SCREWWORM THREAT:

Protecting the United States from New World Screwworm is non-negotiable and a top priority for @POTUS.@USDA landed boots on the ground this morning in Nuevo Leon, physically inspecting traps and dispersing sterile flies after the detection of the…
— Secretary Brooke Rollins (@SecRollins) September 23, 2025

“The southern border remains closed to livestock trade, and we are aggressively expanding trapping and surveillance,” she wrote. “At the same time, we’re expediting operations at our sterile fly dispersal facility at Moore Air Base in Texas .”

On Tuesday, Secretary of Agriculture Brooke Rollins reported 80,000 sterile flies were released on “spot” and nearly 200 surge staff had been deployed to Mexico.

Thank you, @IngrahamAngle, for paying attention to this important issue. Due to multiple failures from our southern neighbors and failure to act in the last Admin, the devastating parasite New World Screwworm is knocking on our southern borders door. We’re not waiting, we’re… pic.twitter.com/ZO5Vx5oes8
— Secretary Brooke Rollins (@SecRollins) September 24, 2025

Mexico’s Response To New World Screwworm

According to Reuters, Mexican’s agriculture ministry said there is no risk of adult screwworm fly emergence due to the early detection of the infected bovine, which was confirmed on Sept. 21. The infected animal was in a shipment of 100 animals originating from the Gulf Coast state of Veracruz, according to the statement.

Fly traps in northern Mexico have not detected a single screwworm fly.

U.S.-Mexico Border Remains Closed to Cattle Trade

The Mexican border closure remains a topic of debate. The September Ag Economists’ Monthly Monitor found 80% of ag economists surveyed oppose reopening the border to Mexican cattle due to screwworm risks.

(Farm Journal)

The border closure has created significant division within the cattle industry with producers, feeders and industry leaders on both sides of the fence.

“We have some cattle people that are glad it’s closed. We’ve got others who are hit pretty hard and are not happy about it,” explains David Anderson, Texas A&M professor and extension specialist — livestock and food product marketing.

NWS is a threat the industry can not ignore, says the ag economist with more than 30 years under his belt.

“I think this is the most serious problem the industry has faced since I’ve been a livestock economist,” he stresses.

From his perspective, keeping the border open with heightened monitoring and surveillance could have potentially been more effective than implementing a total closure.

“If we go back and look at data from the early ‘70s, when we had a big screwworm outbreak in the U.S. and Mexico, the border was open,” he says. “I probably would have leaned to not closing the border to begin with. I understand why you would want to do that, but I don’t know that it’s ended up reducing the likelihood that we’re going to get screwworms, and yet we’re paying a price for that.”

According to Anderson the economic consequences to the border being closed are:

Significant loss of approximately 26,000 imported cattle weekly
Estimated 18% reduction in cattle placements in Southern plains
Contributed to tighter beef supplies and higher consumer prices
Substantial economic hit to cattle feeders and ranchers

At this point, he’s quick to admit keeping the border closed is the best option.

When it comes to reopening the border, Derrell Peel, Extension livestock marketing specialist with Oklahoma State University, suggests the decision is not straightforward.

“Given everything I’ve experienced, it’s probably prudent to leave the border closed,” he says.

He adds any reopening should be “under very, very controlled, limited circumstances.”

Peel emphasizes the need for a collaborative approach with Mexico.

“We’re kind of in it together, and so whether it’s here or there, we’ve got to work together,” he summarizes. “We’re going to need to control it in both places. Otherwise, it’s not going to benefit either one of us.”

He also points out not everybody in Mexico is sorry the border is closed. For example, cattle buyers in Mexico can source cattle cheaper because the border is closed.

“Keeping the border closed does affect the movement of cattle south of the border ... it builds a backstop for cattle movement north,” he adds.

Peel notes cattle from Central America to Panama have increasingly made their way to the Mexican market, which validates NWS movement in Mexico and why recent confirmation has occurred.

“The longer this goes on, the more the Mexican industry will adjust,” he says. “It might permanently change the way the [U.S. and Mexico] work together.”

Texas Rancher Weighs In On Impact of New World Screwworm

Texas rancher Wayne Cockrell says the parasite’s entry into the U.S. is inevitable, suggesting that winter and colder weather might temporarily delay the spread until next April or May. Cockrell, who serves as the Southwestern Cattle Raisers Association director and chair of the cattle health and well-being policy committee, recently joined AgriTalk to talk about NWS.

“We would much rather stop this on Mexico’s southern border than our Southern border,” Cockrell says.

Mexican feeder cattle traditionally represented 30% of Texas feedyard inventory, he adds, but with current restrictions, feedlots are adapting.

“I think a lot of those feedyards have moved to the dairy-cross side,” he adds. “They have had to change the way they do business.”

Noting the broader economic implications of the border closure, 1.2 million fewer cattle for Texas represents “about two weeks” of impact nationwide, according to Cockrell.

“Winter and sterile flies is what we need now,” Cockrell summarizes.

Your Next Read: The Smell You’ll Never Forget: A Calf Infested with New World Screwworm

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 .

New World Screwworm Battle: Texas to Deploy Fly Bait That Mimics Open Wound Scent

Tue, 22 Jul 2025 19:20:39 GMT

Texas Agriculture Commissioner Sid Miller has announced a bold step forward in the battle against New World screwworm (NWS). Working closely with USDA and Secretary of Agriculture Brooke Rollins, the Texas Department of Agriculture (TDA) is spearheading efforts to reintroduce an improved pest control method to NWS — Swormlure Bait .

“The New World screwworm is not just a Texas problem,” Miller says. “This is a nationwide crisis with potential massive implications for American agriculture, which could result in billions of dollars in economic losses and place a heavy burden on our agriculture, wildlife industries and public health systems. We cannot wait for sterile flies alone to turn the tide. That’s why we’re applying a little cowboy logic and bringing back Swormlure, now with an enhanced formula that’s more powerful and effective than ever.”

The NWS issue has shut down cattle imports from Mexico into the U.S.

The NWS was eradicated from the U.S. in the 1960s but experienced an isolated outbreak in the 1970s. It was ultimately eliminated again through a coordinated response that included the release of sterile flies, deployment of the Swormlure-2 attractant, and application of the insecticide Dichlorvos.

What is Swormlure?

A synthetic bait designed to attract adult screwworm flies, Swormlure may be highly effective when combined with insecticides, such as Dichlorvos, in eradicating NWS. Miller has directed TDA to lead development and deployment of this bait to enhance eradication efforts.

“Swormlure-5, created using modern science and built upon previous versions — Swormlure-2 and Swormlure-4 — is a potent synthetic attractant that mimics the scent of open wounds, drawing adult screwworm flies to the bait, where they die,” Miller explains.

Swormlure-5 bait, when used as an attractant and capture tool, is highly targeted. The attractant only impacts screwworm and blow flies and should pose no threat to beneficial insects such as honeybees, monarch butterflies or other pollinators.

“Today, we’re doing it smarter, faster and stronger. Swarmlure-5 bait will attract and trap flies, specifically screwworm and blow flies, which are both better off dead,” Miller adds. “In prior research and deployment, this method eliminated approximately 90% of the flies within a two-to-four-week period. The remaining 10% were eliminated with the release of sterile male flies in the areas where traps were deployed.”

This effort should reinforce existing sterile fly operations and supercharge early detection and suppression of screwworm fly populations.

This collaboration with USDA and Rollins emphasizes Texas’ leadership in agricultural biosecurity. TDA will coordinate the deployment of specialized Swormlure-5 traps to monitor and control potential hotspots in collaboration with USDA, the Government of Mexico and other state and federal partners.

“We’ve beaten the NWS before, and we’ll do it again. But it will take all hands on deck,” Miller adds. “We need another success story like we had in the ’70s, and I believe Swormlure-5 bait is the game-changer that will get us there.”

Your Next Read: The Smell You’ll Never Forget: A Calf Infested with New World Screwworm

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.

Mexico Goes All Out to Grow Milk Production

Mon, 21 Jul 2025 16:00:00 GMT

Mexico has been trying to grow its dairy industry for years, with mediocre success. But the threat of 30% tariffs on top of a 10% base tariff appears to be the impetus the country needs to pick up its effort. That’s bad news for the U.S. dairy industry because Mexico is the largest foreign purchaser of U.S. dairy products, according to Sarina Sharp, analyst with the Daily Dairy Report.

“Mexico accounted for more than half of U.S. milk powder exports and more than one-third of U.S. cheese exports in 2023 and 2024. In each of the past three years, Mexico consumed more U.S. milk powder than the United States used domestically,” Sharp noted.

Amid uncertain trade relationships and food inflation, Mexico recently announced plans to spend $4.1 billion over the next five years to boost domestic milk production 13% by 2030. The country’s Ministry of Agriculture and Rural Development hopes domestic milk production growth will replace 30% of milk powder imports.

The ministry announced it will provide small- and medium-sized operations—97% of all operations—with subsidies, technical assistance, and infrastructure upgrades. Funding will also be provided to reopen and modernize dairy processing facilities. These new programs will be launched alongside the new Leche para el Bienestar, or Milk for Wellbeing, initiative. In this initiative, which is expected to benefit 7 million consumers this year alone, the government will directly purchase milk from producers in the poorest states and resell it to low-income consumers at a fixed price.

“Mexico will surely face some potholes on the road to self-sufficiency,” Sharp said. “Many nations, including the United States, have attempted to prop up small farming operations, but they’ve failed to forestall consolidation. In addition, Mexican processors will have difficulty competing on quality and cost by restoring manufacturing facilities that were mothballed decades ago.”

Even without government help, Sharp noted that Mexico’s dairy industry was expected to expand. According to a recent USDA Global Agricultural Information Network report, milk production in Mexico is expected to grow 1% this year compared to 2024 due to drought relief, less expensive feedstuffs, an expanding milk-cow herd, and continued consolidation. Since the report was published in May, Sharp added that drought conditions have improved and feed costs have continued to drop, indicating that growth in milk output could be even stronger.

“Even if Mexico’s milk production ambitions fall short, the focus on growth could have a significant impact on the U.S. dairy industry,” Sharp said. “For decades, a favorable trading relationship has cultivated a vital outlet for U.S. dairy output. But today, the relationship has started to sour, and the Mexican government is looking to replace American dairy with homegrown products.”

President Trump Threatens New Round of Tariffs Over the Weekend: Here’s the Latest

Tue, 15 Jul 2025 13:39:35 GMT

U.S. commodity markets were down to start the week in Sunday night trade as the markets digested the latest tariff announcement by President Donald Trump. On Saturday, President Trump threatened to impose 30% tariffs on Mexico and the European Union starting on August 1. The announcement came after a string of new tariff threats last week, as the Trump administration’s deadline for trade deals came due.

On Monday, President Trump continued with tariff talk, saying he would implement “severe tariffs” on Russia unless a peace deal is reached with Ukraine within 50 days.

He provided few details on how they would be implemented but described them as 100% secondary tariffs, meaning they would target Russia’s trading partners in an effort to isolate Moscow in the global economy.

The latest tariff threats weren’t good news for farmers looking to price fertilizer for fall, as StoneX Group says Russia is the United States’ top destination for both urea and UAN imports. StoneX points out Russia’s market chair has “grown substantially in recent years.”

Monday’s news follows a week where many anticipated trade deals. Instead, President Trump made a series of announcements with new tariffs. The new tariffs on Mexico and the European Union, which Trump announced Saturday, capped off a week of sweeping tariff threats.

Earlier in the week, Trump warned of a possible:

50% tariff on all copper imports
50% tariff on all goods from Brazil
35% tariff on Canadian goods
25% tariff on goods from Japan
25% tariff on imports from South Korea
200% tariff on imported pharmaceuticals

The positive side of the announcements is the Trump administration says any products covered under the U.S. Mexico Canada Agreement (UMCA) won’t face the new tariffs.

President Trump also sent letters to both Japan and South Korea last week, saying their goods will be taxed at 25% starting August 1st.

The President posted the two letters he sent to those countries’ leaders on his Truth Social site. In the letter to South Korea, he stated when it comes to Korea’s tariff and non-tariff polices and trade barriers, the relationship between the two countries has been far from reciprocal. He added the 25% tariff was far less than what he says is needed to eliminate a trade deficit disparity.

The letter to Japan added if Japanese companies decide to build or manufacture a product within the U.S., there will be no tariffs. Japanese and U.S. negotiators have been working for several weeks to try and reach a deal.

Lack of Progress Impacts Commodity Prices
The lack of trade announcements last week was just one factor that caused corn prices to tank, according to AgMarket.net’s Matt Bennett. While rain in the upper Corn Belt was also bearish for the markets, little to no movement on trade is also pressuring prices.

“We had no trade announcements, and then we continued to talk about tariffs. The unfortunate reality right now is it appears the administration is playing the long game, trying to get people to come to the table with better trade deals than what we currently have seen. But it certainly isn’t doing any favors for the corn market,” Bennett said on U.S. Farm Report this weekend. “I think something like a big trade agreement certainly could tilt the tide more in the favor of the corn market moving higher. Until you get that, with weather being as good as what it is, there’s nothing there.”

It’s not all bearish, though. Arlan Suderman of StoneX Group says the 50% tariff on Brazil is actually bullish for beef.

“We already have a shortage of protein in America with the cattle herd being shrinking over recent years because of lingering drought in the western half of the country, and supplies are tight. We’re just getting to the point of trying to rebuild those supplies, which holding back heifers, tightens up the supply of meat even more. We’re feeding to record-high carcass weights to try to fill the void. We’re increasing imports to record levels. Brazil is the primary supplier of those imports: 27% of our imports come from Brazil in the first five months of the year, according to the latest data we have available, that’s 666 million pounds. That’s 4% of consumption,” Suderman says.

If you think 4% doesn’t sound like a big deal, Suderman says it is - especially considering meat demand in the U.S. has turned out to be inelastic.

“We’ve been shifting from a starch-based diet more heavily toward protein-based. And as the prices go up, we’re actually increasing demand for beef and the other proteins - but we don’t have the supply of it. I think that could be a real problem going forward for the meat industry and the meat supply. We will have to find somewhere else to get that meat,” Suderman says.

Are Trade Deals Close?

While President Trump initially stated he had reached trade agreements with 200 countries, only a few have been officially announced. These include deals with China, the United Kingdom, and Vietnam, however. Negotiations with other countries are ongoing, with the administration extending the deadline for tariff-related negotiations to August 1.

The European Union says it was working on sealing a trade deal with the U.S. by the end of this month, and the European Commission president says the EU was working closely with the Trump administration to reach a deal.

Breaking: Mexican Border Closed Again as New World Screwworm Comes Within 370 Miles of the U.S.

Thu, 10 Jul 2025 02:18:05 GMT

On July 8, Mexico’s National Service of Agro-Alimentary Health, Safety and Quality reported a new case of New World screwworm (NWS) in Ixhuatlan de Madero, Veracruz, Mexico, which is approximately 160 miles northward of the current sterile fly dispersal grid on the eastern side of the country and 370 miles south of the U.S./Mexico border.

This new northward detection comes approximately two months after northern detections were reported in Oaxaca and Veracruz, less than 700 miles away from the U.S. border, which triggered the closure of our ports to Mexican cattle, bison and horses on May 11, 2025 .

While USDA announced a risk-based phased port re-opening strategy for cattle, bison and equine from Mexico beginning as early as July 7, 2025 , this newly reported NWS case raises significant concern about the previously information shared by Mexican officials and severely compromises the outlined port reopening schedule of five ports from July 7 to Sept. 15. Therefore, in order to protect American livestock and the U.S. food supply, Secretary of Agriculture Brooke Rollins has ordered the closure of livestock trade through southern ports of entry effective immediately.

“The United States has promised to be vigilant — and after detecting this new NWS case, we are pausing the planned port reopening’s to further quarantine and target this deadly pest in Mexico. We must see additional progress combatting NWS in Veracruz and other nearby Mexican states in order to reopen livestock ports along the Southern border,” Rollins says. “Thanks to the aggressive monitoring by USDA staff in the U.S. and in Mexico, we have been able to take quick and decisive action to respond to the spread of this deadly pest.”

To ensure the protection of U.S. livestock herds, USDA is holding Mexico accountable by ensuring proactive measures are being taken to maintain a NWS free barrier. This is maintained with stringent animal movement controls, surveillance, trapping and following the proven science to push the NWS barrier south in phases as quickly as possible.

In June, Secretary Rollins launched a 5-point plan to combat NWS by protecting our border at all costs, increasing eradication efforts in Mexico, and increasing readiness. USDA also announced the groundbreaking of a sterile fly dispersal facility in South Texas. This facility will provide a critical contingency capability to disperse sterile flies should a NWS detection be made in the Southern U.S.

Simultaneously, USDA is moving forward with the design process to build a domestic sterile fly production facility to ensure it has the resources to push NWS back to the Darien Gap. USDA is working on these efforts in lockstep with border states – Arizona, New Mexico and Texas – as it will take a coordinated approach with federal, state and local partners to keep this pest at bay and out of the U.S.

USDA will continue to have personnel perform site visits throughout Mexico to ensure the Mexican government has adequate protocols and surveillance in place to combat this pest effectively and efficiently.

Click to enlarge.

(USDA)

Your Next Read: Protect Your Livestock: Signs of New World Screwworm

Rollins Rolls Out 5-Point Plan to Contain New World Screwworm

Wed, 18 Jun 2025 19:01:29 GMT

Today Secretary of Agriculture Brooke Rollins announced a five-pronged plan to combat New World screwworm (NWS) – a pest that would devastate ranchers if it made its way across the border.

Rollins made her announcement at the Moore Air Base facility near Edinburg, Texas. Moore was instrumental as a sterile fly production lab to rid the U.S. of NWS in the 1960s and 1970s. Hundreds of millions of flies were reared, sterilized with radiation and dropped from aircraft to eliminate the parasitic pest that preyed upon wildlife and livestock. According to a USDA spokesperson it will cost an estimated $8.5 million to get the base up and running as a distribution facility.

U.S. Secretary of Agriculture Brooke Rollins this morning launched an $8.5 million sterile New World screwworm (NWS) fly dispersal facility in South Texas and announced a plan to enhance USDA’s already robust ability to detect, control, and eliminate this pest.

(U.S. Department of Agriculture)

According to the Texas Wildlife Association , there are currently more than 1,800 cases of livestock infestation in southern Mexico. The flies are moving north and are currently 600 miles from the south Texas border.

“We have defeated the screwworm before, and we will do it again,” Rollins says.

Here in McAllen, TX to announce a BOLD 5-pronged plan to combat the deadly parasite called New World Screwworm – which would devastate ranchers if it made its way across the border.

We are protecting producers, strengthening biosecurity, and ALWAYS standing up for American… pic.twitter.com/VHOlqZyZ9a
— Secretary Brooke Rollins (@SecRollins) June 18, 2025

Her five-pronged plan to combat NWS includes:

Stop the pest from spreading in Mexico.
Rollins plans to continue partnering with her Mexican counterparts and using sterile insect technology to stop the spread. This includes investing $21 million to produce up to 100 million additional sterile flies weekly.

“We are first enhancing the international sterile fly production and investing $21 million in renovation of an existing fly facility in southern Mexico, which will provide up to 100 million additional sterile flies every week to stop the spread,” Rollins says.

Currently, the only sterile fly facility is located in Panama. It’s jointly run by the Panamanian government and the U.S. government. USDA had previously announced its plan to invest in the retrofiting of a fruit fly facility in Chiapas, Mexico, to produce additional sterile flies.

According to the National Cattlemen’s Beef Association , “The Chiapas facility produces about 117 million flies per week, but to form an effective barrier along the U.S. southern border, we need upward of 300 million sterile flies per week.”
Protect the U.S. at all costs.
Rollins temporarily closed the southern border to live animal imports and intercepting illegally introduced livestock. USDA is working closely with Mexico to improve surveillance.

“I do believe we have met and moved into a new era of productive partnership —perhaps better than ever before — with our Mexican counterparts,” Rollins says.
Maximize our readiness.
This will be achieved by partnering with state animal health officials to update emergency management plans and stockpile therapeutics for ranchers.
Take the fight to the screwworm.
The domestic fight includes establishing a sterile fly dispersal facility at Moore Air Base. Rollins says they are exploring options for building a domestic production facility at Moore that could produce up to 300 million sterile flies per week.

“We can’t get a brand new facility up and running probably before two or three years. So, that’s why we’ve got to really focus on the today,” Rollins explains.

She also announced USDA will be hosting listening sessions in affected areas starting next week.
Innovate Our Way to Eradication.
Leverage the sound science including USDA’s Agriculture Research Service (ARS) to continue to quickly develop novel treatments, preventatives and response strategies. Rollins says this includes working with land grant universities in Texas, Arizona and New Mexico. She listed these key strategies during the press conference:
- Develop better fly traps and lures
- Provide local training
- Improve surveillance methods
- Create new response strategies

Nearly 80 lawmakers led by House Ag Committee Chair Glenn “GT” Thompson (R-Pa.) sent a bipartisan letter on Tuesday to Rollins urging immediate action and promising congressional support for the significant funding required.

The letter included this message, “When looking solely at the historical impact of NWS in Texas, USDA’s Animal and Plant Health Inspection Service (APHIS) estimates a contemporary outbreak would cost producers $732 million per year and the Texas economy a loss of $1.8 billion. Extrapolating those results to the states within the historic range of NWS pre-eradication, a contemporary outbreak of NWS could cost producers $4.3 billion per year and cause a total economic loss of more than $10.6 billion. This does not account for the possible expansion of NWS beyond the historic range.”

U.S. Congresswoman Monica De La Cruz (R-Texas) was at the announcement and recently shared in a letter to Rollins these key advantages of the Moore Air Base location:

Border proximity: The proximity to the border with Mexico is crucial for effective monitoring and control of potential incursions of invasive fly species. A facility in this region would allow for rapid response and containment, minimizing the spread of infestations into the U.S.
Existing agricultural infrastructure: The region boasts a robust agricultural sector with established infrastructure and expertise in livestock management. This existing framework would facilitate efficient integration of the sterile fly facility and streamline its operations. Additionally, Moore Air Base has operations runways equipped to distribute sterile flies.
Strategic location: Moore Air Base offers a central location for distribution of sterile flies to other areas in the southern U.S., if such a need arises. Additionally, this base was the site of a facility used in the 1960s to successfully combat NWS.
Economic impact: The establishment of such a facility would provide valuable economic opportunities for the region by generating jobs and stimulating local economies.

U.S. Congressman Ronny Jackson (R-Texas) summarized at the announcement, “This is important to the whole country. We are going to be aggressive about this, and we are going to make sure that we don’t get screwed by the screwworm.”

Your Next Read: Urgency in Action: We Must Eradicate New World Screwworm

U.S. Cattle Industry Urges Mexico's Border to Remain Closed Over Spread of New World Screwworm

Tue, 13 May 2025 20:26:20 GMT

New World screwworm (NWS) has been detected in Mexico only 700 miles from the U.S. border. With the impending threat, National Cattlemen’s Beef Association (NCBA) says it’s not a matter of if the U.S. gets the deadly pest — but when.

Mexican officials said Tuesday they won’t close the southern border to cattle from Central America, but the U.S. cattle industry strong supports USDA’s decision over the weekend to suspend cattle, horse and bison imports from Mexico , saying the 15-day suspension will likely be extended due to Mexico’s lack of action so far.

NWS Detected 700 Miles From the U.S.
It’s an issue that started in November. The detection of NWS in Chiapas, which is near the Guatemala border, caused USDA to close the border to cattle imports. While shipments resumed in February, USDA says Mexico isn’t doing enough to eradicate the invasive pest, causing an even greater threat to the U.S. cattle industry. And now NCBA wants the U.S. to ramp up efforts as well.

“When we discovered New World screwworm flies in the southern border of Mexico right before Thanksgiving back in November, at that point in time, USDA provided counsel, they provided some money to help the Mexican government try to stop the incursion of the fly,” Colin Woodall, CEO of NCBA, told AgriTalk’s Chip Flory.

“But unfortunately, because of the ineptitude of the Mexican government, quite frankly, the corruption of the Mexican government, the inability to actually allow the planes that are carrying the sterile males to land and to be able to do their job, they have now come further north,” Woodall says. “And right now we know that New World screwworm flies have been detected just 700 miles south of the U.S. Border.”

Woodall told AgriTalk’s Flory that the pest is now way too close for comfort.

Mexico Won’t Close Mexico/Central America Border
According to Reuters, Mexico’s agriculture minister said on Tuesday it will take a long time to eradicate the pest. While the officials said they won’t close Mexico’s southern border to cattle from Central America, Mexico will tighten the flow of cattle from the south of the country to limit the potential spread of the screwworm.

“We are going to be restricting cattle movement from the south of the country much more tightly,” Mexican Agriculture Minister Julio Berdegue said on Tuesday, adding that “closing the border is a complex issue that needs to be carefully analyzed, because it also impacts the national meat supply.”

MEXICO AGRICULTURE MINISTER:

WILL TAKE A LONG TIME TO ERADICATE SCREWWORM FROM MEXICO AND CENTRAL AMERICA
— PiQ (@PiQSuite) May 13, 2025

Derrell Peel, Oklahoma State University Extension Livestock Marketing Specialist, spoke with Drovers about the geography of southern Mexico and how the NWS has been able to move further north.

“Mexico has that narrow point down there at the bottom, the Isthmus of Tehuantepec, then to the east of it is the Yucatan Peninsula. To the west is the rest of Mexico, and that narrow gap is, historically, where we established the boundary way back when,” Peel explains. “When we initially controlled screw worm in the U.S., we pushed it down through Mexico and got it past below that isthmus, and that was the boundary for years. Then we eventually got it down to Panama, but it got away from them. In Panama, it came back up through Central America, and now that’s the reason we closed the border. It’s actually jumped past that isthmus and is into a part of Mexico now where it’s going to be increasingly difficult to contain it, just physically. That’s the concern and the reason for this latest action.”

NCBA Blames Corruption in Mexico’s Government
Woodall told AgriTalk the country has poorly managed the situation so far and was pointed with his words, saying it’s because of the Mexican government’s failures that Rollins stepped up and closed the border on Sunday to “send a very clear signal that they have failed, and they’ve got to step up their approach.”

“We do know that the first meeting to review the ban is in about 15 days, and then it’ll be reviewed on a month-by-month basis,” Woodall said on AgriTalk. “That’s what the secretary has said. But unless they do something miraculous as far as changing the approach that they are taking in trying to address this in Mexico, I doubt that it’ll be lifted in 15 days just because of what we’ve already seen. They’ve had six months to step up here and try to address it, and they’ve fumbled the ball.”

“They’ve had six months to step up here and try to address it, and they’ve fumbled the ball.”

Colin Woodall, Chief Executive Officer, NCBA

The corruption claims are rooted in what the U.S. has experienced over the past several months. As the U.S. has tried to ramp up efforts to help stop the spread, Woodall told Flory that there have been instances where the government wouldn’t allow U.S. planes to fly over impacted areas, or not allow those planes to land.

“Will they allow that without additional hurdles or trying to extort money from these planes?” Woodall says. “Will they be true cooperators in helping us get those sterile flies delivered into the country? And can we show that there is a check in their northern approach? If we can look at some things like that, then we’ll be willing to go back to the table, because as I said, we know that this is an economic impact on us, but it’s also a pest that we do not want here domestically.”

The Risks of NWS If It Enters the U.S.
The risks are high. Not only is the U.S. beef cattle herd the smallest in more than 60 years, NWS can be lethal to other species.

“We have to be prepared, and that’s why I talked about it. We need to make sure producers understand what to look for because if you don’t catch it fast, you’re going to lose that animal,” Woodall says. “Also this is not just a cattle issue; we’re talking all warm-blooded animals. This can be on birds. This can be on hogs. It can be in pets like dogs. And it can be in people. So, this is going to be a significant issue that we have to deal with not just as a cattle industry, but us in agriculture because I think it also could look really bad from an optics standpoint if somebody’s dog gets screwworms and they want to blame us as agriculture for being responsible for it.”

“This is not just a cattle issue; we’re talking all warm-blooded animals. This can be on birds. This can be on hogs. It can be in pets like dogs. And it can be in people.”

Colin Woodall, CEO of NCBA

Woodall says NWS is a nasty parasite. It hasn’t been in the U.S. since the 1960s, but the reason it’s so difficult to manage is it lays larva, and the larva dig into the flesh of the animal, basically eating the flesh.

“That’s how it develops,” Woodall says. “And so, if it’s not treated, within four to seven days, you can lose an animal. This is a significant animal health issue.”

Currently, there’s a sterile fly production facility in Panama. Jointly funded by the U.S. government, the facility produces a little more than 100 million sterile flies a week, according to Woodall.

“Now, when we were dealing with this down in southern Mexico, 100 million were enough to be able to stop it,” he says. “But now that they have gone through that phytosanitary border and are coming north, that’s no longer going to be enough. We do not have enough sterile flies.”

NCBA Is Working with Congress and USDA to Ramp Up Sterile Fly Production Domestically
NCBA is talking to both USDA and Congress about building a sterile fly production facility in the U.S. When NWS was a problem in the U.S. more than 60 years ago, there was a production facility based in Texas.

There is legislation to do just that. The STOP Screwworms Act was introduced by Rep. Tony Gonzales (R-TX) and Sen. John Cornyn (R-TX). It would fund the opening of a new sterile fly facility in the United States, with the legislators saying the bill would help protect both livestock and human health from the New World screwworm.

“One of the things that we’re also talking to the secretary about and also with Congress is how do we have the funding to build a sterile fly production facility here in the United States because that is the only way we’re going to stop these flies, get them out of the United States, out of Mexico, and ultimately push back into South America,” he says.

“One of the things that we’re also talking to the secretary about and also with Congress is do we have the funding to build a sterile fly production facility here in the United States?”

Colin Woodall, CEO, NCBA

He says in the ‘60s, it took more than 400 million sterile flies a week to eradicate the issue.

“We are focused on getting the domestic production up and running as quickly as possible, so is Secretary Rollins,” Woodall says. “She’s doing a tremendous job in leading this effort. This is something that she has taken on personally. And so I have a lot of faith in her and her willingness to help us as an industry push back this pest, eradicate it as quickly as possible and try to get back to normal training.”

Groups like the Texas & Southwestern Cattle Raisers Association (TSCRA) also support a bill to protect the U.S. from NWS.

“The STOP Screwworms Act is a vital step in protecting the U.S. cattle herd from the growing threat of the New World screwworm. This legislation provides USDA the support needed to construct or retrofit domestic sterile fly production infrastructure which Texas Southwestern Cattle Raisers Association believes is essential in preventing a widespread outbreak,” President Carl Ray Polk Jr. said in a statement. “We are grateful to both Sen. Cornyn and Rep. Gonzales who understand the importance of acting quickly to support cattle raisers and ensuring the threat of the New World screwworm is taken seriously at the highest levels in Washington.”

Read More: U.S. Suspends Mexican Cattle, Horse and Bison Imports Over Screwworm Pest

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

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.

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

Wed, 19 Mar 2025 17:07:05 GMT

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

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

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

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

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

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

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

Click here to share your answers.

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

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

Wed, 05 Mar 2025 19:46:39 GMT

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

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

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

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

(Federal Reserve Bank of Dallas)

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

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

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

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

By the numbers:

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

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

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

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

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

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

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

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

Wed, 26 Feb 2025 21:25:23 GMT

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

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

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

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

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

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

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

EU Tariff Rate

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

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

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

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

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

New U.S. Trade Representative Confirmed

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

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

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

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

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

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

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

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

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

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

Tue, 25 Feb 2025 19:02:31 GMT

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

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

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

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

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

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

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

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

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

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

Mexico’s current drought map.

(Conagua)

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

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

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

Mon, 03 Feb 2025 16:14:46 GMT

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

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

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

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

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

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

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

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

Tariffs Also Delayed At Least One Month on Goods from Canada

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

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

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

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

Executive Order Over the Weekend Hit Mexico and Canada With Tariffs

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

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

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

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

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

Key points:

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

Reasons for the tariffs”

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

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

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

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

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

Sun, 02 Feb 2025 13:56:53 GMT

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

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

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

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

American items that Canadians tariffs will be applied to include:

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

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

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

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

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

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

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

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

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

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

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

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

Sat, 01 Feb 2025 23:01:55 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.

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

Thu, 30 Jan 2025 22:59:43 GMT

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

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

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

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

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

Five Key Questions to Ask

There are five key questions regarding tariff situation:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Navigating 2025: What Lies Ahead for the U.S. Dairy Industry?

Tue, 28 Jan 2025 14:00:00 GMT

As 2025 begins, the dairy industry finds itself navigating shifting trade dynamics, volatile markets, and evolving consumer preferences. Drawing on lessons from the past while addressing new challenges, the year holds both uncertainty and opportunity.

Speaking at the 2025 Dairy Strong Conference in Green Bay, Wis., Mike North, Principal of Risk Management, offered insights into what lies ahead for the dairy industry in the coming months.

Shifting Trade Dynamics

Trade relationships with key partners, such as Mexico and China, are set to play a crucial role in dairy demand. Mexico remains a top market for U.S. dairy products, particularly cheese, due to strong economic growth and cultural ties to dairy. “The reality of Mexico is they’re a little bit more well-rounded of a trade partner for us,” North said. “They’ve been an incredible partner for us, and that’s the one where we’re certainly going to be watching probably a little bit more closely as we look at the balances of supply and demand through 2025.”

Conversely, trade with China has been less predictable. Any fluctuations in Chinese demand could ripple through the U.S. dairy export market. Rising U.S. cheese prices could also pose challenges to global competitiveness. In 2024, lower domestic cheese prices helped drive record export volumes. However, if prices stay high compared to global competitors, exports could slow, leaving the industry more reliant on domestic demand to sustain milk prices.

Domestic Demand: A Mixed Bag

Domestically, the dairy industry faces both headwinds and opportunities. Cheese consumption at home has stagnated, and weak restaurant traffic continues to dampen overall demand. With over half of Americans’ food spending occurring outside the home, sluggish restaurant sales present a real challenge.

“Foot traffic at restaurants really hasn’t been that great since last spring,” North noted. People just haven’t been going out with the same amount of zeal that they had in the past. And 51% of the food dollar in America is spent out of the home. So, what happens at restaurants is very important to what comes through on dairy demand.”

However, the protein trend continues to offer promise. Products like protein shakes, bars, and high-protein snacks have driven a surge in demand for dairy-derived ingredients, including high-protein whey. This trend has significantly reduced whey inventories, driving up prices and providing a welcome boost to Class III milk checks. For every cent increase in whey prices, farmers see about a six-cent increase in milk prices, making this a critical area to monitor.

Processing Capacity: Opportunities and Risks

One of the biggest developments on the horizon is the expansion of dairy processing capacity. States like Wisconsin, South Dakota, and Texas are adding significant new cheese-making capabilities. By the end of 2025, these facilities are expected to contribute an additional 360 million pounds of cheese annually. This growth could create new demand for milk, offering opportunities for farmers in these regions to expand their operations.

“However, there’s obviously going to be some compromise along the way” North stated. “We don’t have enough animals to make all the milk to supply all the plants in the U.S. This is a good problem. So, we are likely to see some inefficient plants close and some plants not run at 100% capacity. But with all of this cheese potentially coming online, we have a real need for exports because we are going to be creating a lot of additional products.”

However, this added capacity comes with risks. If the additional cheese produced cannot find a market—whether domestically or through exports—it could lead to oversupply and downward pressure on milk prices.

Navigating the Year Ahead

The key to success in 2025 will be strategic decision-making. With fluctuating export demand, evolving consumer preferences, and new processing capacity coming online, dairy farmers must remain flexible and proactive. Consider leveraging risk management tools like Dairy Revenue Protection (DRP) to safeguard against price volatility.

While the road ahead may be uncertain, it is also full of opportunity. By staying focused on efficiency, innovation, and market awareness, dairy farmers can position themselves for a successful year.

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Important Trade Talks Dominate this Year's MILK Business Conference as Farmers Watch Incoming Administration

Tue, 17 Dec 2024 20:25:54 GMT

Trade was a big part of the discussions that occurred last week at the 2024 MILK Business Conference, especially on how things could change with the incoming Trump administration. Dairy producers are keeping a keen eye on what potential tariffs could mean for top dairy trading partners. U.S. Farm Report host, Tyne Morgan, explains more.

“It’s amazing how quickly rhetoric can change,” Morgan says. “Last year here at the MILK Business Conference, the focus was on the lack of attention on trade with the current administration. Today, we’ve put the focus back on trade and what the Trump administration could mean for ag both in terms as to what’s at risk and what dairy could possibly gain.”
In the latest Farm Journal Ag Economists’ Monthly Monitor, Morgan asked this question:

Ag Economists’ Monthly Monitor

(Farm Journal)

“No surprise, 63% said China,” Morgan says. “But 37% says it’s Mexico.”

The National Corn Growers Association and the American Soybean Association recently conducted analysis just looking at China and what Trump’s possible 60% tariff on China could mean.

“In that type of situation, we’re looking at a 60% tariff on U.S. corn and soybeans, [which] translates to a 13 cent per bushel drop in corn price in the projection modeling that [National Corn Growers] did,” says Krista Swanson, lead economist at National Corn Growers Association. “But that doesn’t account for Mexico. And if we have a situation with Mexico, that’s a whole different ballgame because over 40% of our corn exports have gone to Mexico this year. They are a really critical trading partner for corn.”

According to Morgan, there is another big wild card when it comes to trade.

“During the first Trump administration, the U.S. struck a trade deal with China. Much of that created new and more demand for many U.S. ag goods. We actually had record corn exports to China as a result of Phase 1. But will Trump pick up where he left off? If so, that could actually be good for U.S. ag trade,” Morgan says.

Canada and U.S. Dairy

While Canada may not top the list as the biggest concern for agriculture if trade hiccups emerge, it is a big issue for U.S. dairy. And the potential for conflict is already stirring as U.S. dairy leaders question Canada’s commitment to the United States Mexico Canada Agreement (USMCA) signed during the last Trump administration.

According to the International Dairy Foods Association (IDFA), members have yet to receive the full range of dairy access promised by Canada under the agreement.

“Clearly the contract that we wrote isn’t fully being abided by,” says Mike North, president of producer division at Ever.Ag. “So, if we are going to spend some time to review this and revisit the language around dairy, I don’t know that we need to change it, but from a behavior standpoint we just need to get execution of the language that already exists.”

U.S. Dairy Product Exports to Canada

(USDA)

How big is this market? According to the USDA, from 2010 to 2021, U.S. dairy product exports to Canada (adjusted for inflation) rose 48% from $466 million in 2010 to $691 million in 2021.

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What Impact Will Tariffs Have on Ag Markets and the Broader Economy?

Mon, 02 Dec 2024 17:23:00 GMT

President-elect Trump has threatened to place 25% import tariffs on Mexico and Canada and 10%a additional tariffs on China on day one of his second term.

What will this mean for the agricultural markets?

Jim McCormick with AgMarket.Net says Mexico, Canada and China are the top three export customers of the U.S. and account for 40% of total exports.

Mexico has already threatened retaliation, so another trade fight will be devastating for agricultural markets.

McCormick says during the trade war in 2017-18 prices for agricultural commodities, but especially soybeans, took a tumble due to retaliatory tariffs from China.

He says the agricultural markets have handled the threat well because of the flush of export demand for many ag products that the market is already seeing.

China has been front loading their purchases of U.S. soybeans and Mexico has been buying U.S. corn in anticipation of the tariffs starting after January 20.

Weekly exports on Friday were a marketing year high at 91.5 million bu. and China accounted for 40 million of that total.

Additionally on Friday morning private exporters reported flash soybean sales of 30.9 million bu. to unknown destinations and another 5.6 million bu. to unknown both for 2024-25.

Corn exports were at 41.8 million bu. for the week ending Nov. 21 and 16 million bu. went to Mexico.

Additionally, President-elect Donald Trump’s trade strategy, particularly his proposed tariffs on imports from Mexico, Canada and China, appears to be more of a negotiating tactic than a straightforward economic policy. Analysts interpret this approach as part of Trump’s broader strategy to leverage tariffs as tools for negotiation rather than strictly for trade regulation or economic improvement.

However, if a trade war were to happen McCormick says there could also be negative impacts for the broader economy as prices for all imported goods would rise for consumers.

Additionally, the U.S. imports a large amount of crude oil from Canada and so a 25% tariff could raise gas prices and the U.S. auto industry is reliant on imports of parts and autos from Mexico.

All this could drive inflation back up which is negative for consumers and businessses.

At a time when the FOMC is trying to cut interest rates a return of inflation could force the Fed to change course and maybe even raise interest rates.

Latin America’s Dairy Exports Likely to Remain in the Region...for Now

Wed, 27 Nov 2024 20:40:13 GMT

The current milk production situation across Latin America is starkly different than what it was at the beginning of this year. In some countries, healthy margins are boosting output, whereas adverse weather has limited output in others, according to Monica Ganley, analyst with the Daily Dairy Report and principal of Quarterra, an agricultural consulting firm in Buenos Aries.

Of the Latin American milk-producing countries, Mexico is the most crucial to the U.S. dairy industry, and like elsewhere across the region, a shift in output has also started to occur in the United States’ largest dairy market.

“Official government data indicates that Mexico’s milk production continues to move steadily higher, including a 3.1% year-over-year increase in October, but that is in sharp contrast to information being shared by market participants,” Ganley said. “Stakeholders indicate that milk volumes in Mexico have tightened considerably compared to earlier in the year.”

In fact, weakening production in Mexico has pushed milk prices higher, which helps to explain why Mexico’s dairy imports have remained so strong in recent months even as the value of the peso has declined, she said. While a decline in milk and dairy product supplies in Mexico should be good for the U.S. dairy industry, the election of former President Donald Trump as the 47th president of the United States has raised concerns for the U.S. dairy industry.

Trump has threatened to pressure Mexico into curbing illegal immigration into the United States, a crucial issue during the campaign, by levying 25% tariffs on Mexican imports into the United States. And if the border issue persists, he has further threatened to increase those tariffs to 100%.

If Trump follows through on his threat of tariffs, Mexico has already indicated it would retaliate with tariffs of its own. A recent New York Times article noted that about 80% of Mexico’s exports are sent to the United States, while 16% of all U.S. exports go to Mexico. However, Ganley noted that Mexico is a particularly critical market for the U.S. dairy industry, with nearly 30% of all U.S. dairy exports in value terms sent to Mexico last year.

Another large importer of dairy products, Brazil, started the year with strong milk production, but that has since stumbled due to major weather challenges. Ganley noted that lingering effects of flooding in the south of the country compounded by drought and wildfires in the center of Brazil have had a negative impact on milk production. By the third quarter of this year, she said, year-over-year milk production had slipped 0.6%.

“Weaker domestic production in Brazil has kept demand for dairy product imports strong,” Ganley noted. “But most of that demand will be filled by fellow Mercosur members, Argentina and Uruguay.”

South American Milk Production

(Daily Dairy Report)

At the same time, milk production in Latin America’s who largest dairy-exporting countries has shifted from double-digit losses early in the year to being down only slightly in recent months. “At the start of 2024, a difficult macroeconomic environment in Argentina, punctuated by soaring inflation, caused dairy producers to slash production as they attempted to insulate themselves from rising costs. The resulting scarcity of milk combined with moderate operating costs, have driven profits higher, and the resulting strong margins have encouraged dairy producers to expand.”

In Uruguay, the region’s other major exporter, heavy rains took a toll on second-quarter output, but just like in Argentina, strengthening milk prices in the face of lower output have improved producer profitability, Ganley reported, and that has led to a near recovery in output. Most industry analysts expect production in Uruguay to continue to improve.

“However, even if milk production continues to improve among the region’s exporters, milk and dairy products would largely stay confined to the region if demand among Latin America’s importers continues to increase,” Ganley said.

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