US farmers in front line of tariff battles

US president Donald Trump introduced import tariffs on Canada, Mexico and China this week.

Although they had been announced in January, with the introduction deferred by a month, they still came as a shock to global stock markets.

The tariffs have targeted specific products and, at this stage, it could be described as a trade skirmish as opposed to an all-out tariff war.

The next move could be escalation to a full-blown tariff war or a de-escalation, where compromises are found which reduce or eliminate the recently introduced tariffs.

Retaliatory tariffs

Economists in general are horrified by the prospect of tariffs, as are stock markets.

The reason is that their introduction inevitably leads to retaliation and these are targeted to have maximum political impact.

In the case of the US, where farmers are considered politically aligned with the president’s Republican party, agricultural goods are an obvious target.

Canada hasn’t included agricultural goods in its initial response, largely because it is major exporters, as well as importers of agricultural produce to the US.

Mexico is still deciding what it will target, but China - the biggest market for US agri exports - has already introduced tariffs on imports from the US.

This follows the pattern set in a previous trade spat with the US during the first Trump administration.

In 2018, it imposed a 25% tariff on imports of US tillage crops, beef, pork and chicken, but these were removed in 2020 following negotiation.

This time, China has introduced tariffs on US technology, aviation and defence companies, as well as a range of agricultural products.

A 15% tariff has been applied to US chicken, wheat, corn and cotton, and a 10% tariff on sorghum, soybeans, pork, beef, seafood, fruits, vegetables and dairy products.

US export markets for agricultural produce

Each of the three countries targeted by the US administration for tariffs are major export markets for US agricultural produce.

In 2024, Mexico was the second-largest market for US beef exports, taking 232,488tonnes, while China and Hong Kong combined took 215,613t and Canada took 100,679t of US beef.

Mexico is the most important export market for US pork, taking 1.154m tonnes in 2024, a 5% increase on the previous year and one third of all US pork exports.

It is followed in second place by China/Hong Kong, which took 475,441t, while Canada on 212,439t was the fourth-largest export market for US pork in 2024.

Overall picture

Overall, the value of US agricultural exports are similar to imports. For three of the 10 years up to 2023, the US imported more than it exported.

The most recent data is for 2023 when the value of US exports was $178.7bn (€167bn), while imports were just under $200bn (€187bn).

China is the largest export market for US agri, accounting for $33.7bn (€31.5bn) of sales, followed by Mexico on $28.2bn (€26.4bn) and Canada on $27.9bn (€26bn).

Given that these three countries dominate US agriculture exports, the vulnerability to retaliatory tariffs becomes clear.

The US is the supplier of the highest-value beef to the market in China and there was a time that a tariff on their product could have created an opportunity for Irish beef.

Unfortunately, Irish beef exports to China remain suspended and attempts to build that market remain frustrated.

What Irish farmers will be watching out for is the US tariff position in relation to the EU. A 25% tariff is promised, but there isn’t yet a start date, nor a list of products likely to be impacted.

However, there is a major risk that dairy products would be included, which is not good news for Irish dairy farmers or exporters.

A secondary interest for Irish farmers is what might the Trump administration agree with the UK by way of a trade deal.

Prime Minister Sir Keir Starmer told the House of Commons that talks between officials had begun and it will be interesting to see if the UK holds firm on no access for beef produced from hormone-fed cattle.

A turbulent period lies ahead.