From grains to dairy, alcohol and snacks, a raft of agricultural goods have been caught in the latest trade tariff crossfire.
The US exported $8.22bn of dairy products in 2024 alone, with Mexico, Canada and China the top destinations for US dairy in dollar terms.
According to the US Foreign Agricultural Service’s latest quarterly report published in February, dairy exports are forecast to increase to $8.5bn this year, thanks to increased price competitiveness for US cheese and butter and strong demand for those products in North and South America and the Middle East and North Africa.
But this positive outlook is now threatened by the introduction of tariffs on goods imported to the US from the three top export markets for US dairy – with imports from Mexico and Canada officially slapped with 25% tariff and China – with a 20% cumulative tariff.
The US-imposed tariffs encompass a raft of food and agricultural goods and have already sparked what could be the start of a trade war between major trading partners after both Canada and China announced retaliatory measures earlier today (March 4, 2025).
Canada president Justin Trudeau said CA$30bn (US$20.7bn) worth of goods coming from the US into Canada will be subject to a 25% levy – including dairy, from yogurt to buttermilk, along with a raft of other fresh and processed foods, from eggs and honey to meat and confectionery.
China – which is now facing a 20% tariff versus the previously-announced 10% - said agricultural products imported from US will be subject to 10% to 15% tariffs from March 10, 2025.
US dairy falls within the 10% tariff category, along with soybeans, sorghum, pork, beef, aquatic products, and fruit and vegetables; while US chicken, wheat, corn and cotton will be subject to a 15% tariff.
Beijing has also banned wood imports from the US and suspended soybean imports from three US firms: Louis Dreyfus Company Grains Merchandising LLC, CHS Inc, and EGT, LLC. In recent years, China has been buying more soybeans from Brazil and Argentina, in a bid to diversify its imports.
No funny business
More tariffs could be on their way, with president Trump suggesting the US would introduce levies on overseas agricultural products within weeks, including on farm products.
“To the Great Farmers of the United States: Get ready to start making a lot of agricultural product to be sold INSIDE of the United States,” Trump wrote on Truth Social. “Tariffs will go on external product on April 2nd. Have fun!”
This address may feel like a sneer to those in US agriculture, given the risks associated with starting a trade war that could affect what’s projected to be a bumper year for US agricultural exports.
According to the latest USDA FAS quarterly forecast, US agricultural imports in FY2025 are forecast at $219.5bn, an increase of $4bn from the November 2024 projection; that is largely driven by higher import values of horticultural products as well as sugar and tropical products.
Editor's note
For the purposes of the US Foreign Agricultural Service Situation and Outlook Report, FY2025 runs from October 1, 2024 through September 30, 2025.
The positive outlook is helped by the US dollar appreciation which on average against global trading partner currencies grew by 3.9% in calendar year 2024. The strength of the dollar is expected to grow compared to its largest trading partner currencies, including Mexico, Canada and the EU.
US GDP is also expected to grow 2.7% in calendar year 2025, driven by less restrictive monetary policy and robust consumer spending associated with relatively low unemployment and growing business investment, according to the forecast. Meanwhile, GDP growth in both Canada and Mexico is expected to be lower that of the US, with Europe and Central Asia economies also expected to lag behind other major global economies.
Back to agriculture, US exports of livestock, poultry and dairy are forecast up $400m to $39.7bn on increases to beef and dairy products.
US beef ($9.1bn), dairy ($8.5bn) and pork ($7.6bn) exports have all been revised up, with poultry ($6.8bn), horticultural products ($41.7bn) and ethanol ($4.2bn) unchanged from November’s forecast.
US agrifood trade: Mexico, Canada and China, compared
In FY 2025, Mexico is projected to remain the largest market for US agricultural exports at a record $30.2bn, a $300m increase from the previous forecast based on strong sales of dairy, wheat, and other products during the first quarter.
In import terms, Mexico is the largest supplier of distilled spirits to the US: imports have increased in the first quarter of FY 2025, driven largely by the unit value of tequila. However, beer imports have been weak in FY 2025, according to the data. Overall, imports from Mexico are projected to increase on FY 2024 by 3% to $49.1bn.
(In 2024, US dairy exports to Mexico came at $2.47bn in 2024 for 757,081 metric tons of product; this value has increased by 10% over the past decade.)
FAS has cut its forecast for US exports to China by $1.3bn to $22bn, largely due to reduced prospects for US soybeans, grains, and cotton. (US dairy exports to China totalled $584m in 2024 for 385,485 metric tons of product.) In particular, US corn exports to China are expected to fall significantly and sorghum exports are also projected to decrease. But the country is likely to remain the third largest US agricultural market, the report states.
In terms of imports, China imports are expected to come at $6.1bn for FY 2025, revised up by $300m in the latest quarter. FAS says this adjustment is based on increased imports of processed food products and ingredients and fruit juices in the quarter.
US exports to Canada are forecast down $800m to $28.4bn due to weaker-than-expected shipments to date, the forecast says. This is largely driven by lower than-expected sales of baked goods, food preparations, corn, and feeds and fodders, including distiller’s grains. (US dairy exports to Canada in 2024 totalled $1.14bn for 221,883metric tons of product; an increase of 82% over the past decade.)
Imports from Canada are projected to grow 6% in FY 2025, led by vegetables and higher values of prepared foods, baked goods and sugar and tropical products, most notably processed cocoa products and confectionery.
Industry reaction
The International Dairy Foods Association, which represents US dairy processors, has urged de-escalation of the trade tensions.
“The US dairy industry urges the Trump administration to quickly resolve the ongoing tariff concerns with Canada, Mexico, and China - America’s top agricultural trading partners.
“A prolonged tariff war will deliver significant economic damage to American dairy farmers, processors, and the rural communities, and therefore we urge the administration to resolve these tariffs as soon as possible.”
“While we recognize that China and Canada have yet to fulfil the promises made in the Phase One and US-Mexico-Canada Agreements, respectively, prolonged tariffs will further diminish market access.
“We strongly urge the administration to both resolve US dairy’s trade barriers with these markets and the newly announced tariffs.”