Friday, February 14, 2025

A New Trade Policy Is Coming – Get Ready To Set Sail!

For U.S. agricultural exporters, the past four years held many challenges, pandemic disruptions, wars, transportation troubles and higher costs, rising farmer input costs, weather devastation, weak export market economies, strength of the U.S. dollar and continued uncertainty in the economic relationship between the United States and China. For the next four years, will the waters be calm or rough?

The Biden Administration rebuilt relationships with U.S. allies, including in the trade arena, and it continued a focus on shoring up the U.S. industrial base, focusing heavily on its “worker-centric” trade policy. While Biden had no interest in negotiating market-opening free trade agreements, his team did negotiate deals to eliminate retaliatory tariffs by U.S. trade partners, including the European Union’s retaliatory tariff on U.S. peanut butter. The administration allocated billions of dollars for export promotion work to diversify U.S. agriculture export markets, including an additional $6.4 million allocated over five years to the American Peanut Council.

On the campaign trail, President-elect Trump was clear about policies that he intends to implement, which are not unlike his first term:

China — proposed application of 10% tariffs on imports from China and 50% to 60% tariffs on all imports from China. China is the U.S. peanut industry’s fourth-largest export market at $91 million in 2023.

Mexico and Canada — proposed application of 25% tariffs on all imports from Mexico and Canada unless those countries address illegal immigration and fentanyl crossing into the United States. Mexico and Canada are the U.S. peanut industry’s first and second-largest export markets, at $230.5 million and $229 million respectively. The governments of Mexico and Canada engaged early on with the Trump transition team to avoid these tariffs.

All other countries — proposed 10% to 20% tariffs on imports from all other countries in pursuit of changes to create fairness, reciprocity, balanced trade and socially necessary policies.

Based on Trump’s first term, we can expect that he will pursue these objectives although they may not all be implemented at once. We also learned during Trump’s first term, that foreign countries will retaliate, and they always seem to include tariffs on U.S. agricultural products as part of that response. For example, the EU retaliated against U.S. peanuts and peanut butter over two separate actions taken by the United States.

Are there opportunities for the peanut industry and U.S. agriculture? Certainly, the threat of tariffs will bring most if not all trading partners to the negotiating table. As with Trump’s first term, agricultural issues can be on that table, whether to seek reduced tariffs or resolve non-tariff barriers. Later in the term, we may even see an interest in negotiating free trade agreements, as we did with the United Kingdom and Kenya at the end of Trump’s first term.

With the experience of Trump’s first term, U.S. exporters should prepare now to chart your course to be able to weather the impending rough waters.


Information provided by the American Peanut Council.

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