This article is based on an April 7 report by CoBank's Knowledge Exchange.
President Donald Trump’s reciprocal tariffs announced on April 2 included across-the-board 10% tariffs on all products from all countries and adds higher tariffs on many other countries including 34% on China, 20% on the European Union and 24% on Japan. The retaliatory tariffs announced Wednesday were higher and more wide-ranging than expected, impacting numerous agricultural trading partners. Thankfully for agriculture, products covered under the United States-Mexico-Canada Agreement (which will need to be reauthorized in 2026) will remain tariff-free. The overall tariff rate is expected to rise to its highest level in over 100 years, with the U.S. import-weighted average tariffs applied rising from 2.4% to 23.3% (static) and to 20.7% dynamically (considering a decrease in the volume of imports).
Trump’s executive order identifies specific agricultural products. “Brazil (18%) and Indonesia (30%) impose a higher tariff on ethanol than does the United States (2.5%). For rice in the husk, the U.S. most favored nation tariff is 2.7% (ad valorem equivalent), while India (80%), Malaysia (40%), and Turkey (an average of 31%) impose higher rates. Apples enter the United States duty-free, but not so in Turkey (60.3%) and India (50%).”
Of the grain and oilseed complex, total imports of corn and soybeans are negligible at 0.2% and 0.4% respectively. Wheat imports account for 5.0% of total U.S. wheat supply, and rice imports account for 15.5% of total supply.
As of April 4, China, Canada, and the EU have announced or imposed retaliatory tariffs altogether affecting $330 billion of U.S. exports. China announced it would impose a 34% tariff on all goods imported from the U.S. starting on April 10. This comes after Treasury Secretary Scott Bessent said countries that retaliate could see their tariffs increased even further. After the news, President Trump posted on social media, “CHINA PLAYED IT WRONG, THEY PANICKED - THE ONE THING THEY CANNOT AFFORD TO DO!”
China’s retaliatory tariffs of 34% on the U.S. will be most impactful for soybeans with 45% of U.S. soybeans going to China. Chinese demand has already shifted to South America as Brazil brings its record soybean harvest to market.
New reciprocal tariffs placed on Brazil (10%) and Australia (10%) were supportive for U.S. soyoil prices on the expectation of a slower import pace of tallow. Tallow competes with soyoil in renewable diesel production, shifting demand to U.S. soyoil. Additional tariffs on China (34%), Malaysia (24%) and the United Kingdom (10%) will also slow the imports of used cooking oil, which also competes with soyoil in renewable diesel production.
Corn prices resisted the volatility in other markets for the week as Mexico showed restraint on retaliatory tariffs, implying corn exports into the top corn market will continue to flow freely, for now.
New tariffs on the Philippines (17%), China (34%), Japan (24%) and South Korea (25%) and numerous other countries may have wide-ranging effects on the U.S. wheat market, which is more dependent on exports than the other grains with 42% of the U.S. wheat crop being exported.
Rice prices suffered the biggest loss of the grain complex last week despite tariff news being largely favorable. More than 15% of the U.S. rice supply is imported from Thailand and India combined accounting for 80% of U.S. rice imports. New tariffs were imposed on both Thailand (36%) and India (26%). The global abundance of rice, particularly from India, continues to weigh on world prices, while Brazilian rice supplies are now entering the market and slowing export demand for U.S. rice.
More than 20% of U.S. farm income is based on agricultural exports and grows much higher for many commodities. Agriculture groups sent a letter to key administration officials ahead of “Liberation Day” reinforcing the importance of trade to the entire sector. Last year, the U.S. exported $30 billion in agricultural products to Mexico, $28 billion to Canada, and $25 billion to China. “The 2024 marketing year showed a food and agriculture trade deficit of $32 billion, a stark contrast to the United States’ historical trade surplus in agricultural exports, averaging $12.5 billion over the past ten years,” the letter said. Farm Credit Council and the National Council of Farmer Cooperatives were both signees to the letter.