On April 5, the United States put in place a 10% baseline tariff on all nations, with the exception of Mexico and Canada, whose US agricultural trade is still largely exempt under the United States-Mexico-Canada Agreement, which President Donald Trump negotiated during his first term.
On April 21, Mexican President Claudia Sheinbaum said trade talks with the United States were ongoing, with a focus on reducing a 25% tariff on vehicles, steel and aluminum, with the latter potentially increasing packaging costs for US food companies.
“We haven’t yet reached an agreement, but there’s communication on the level of ministers of commerce and economy, and on the level of presidents,” Sheinbaum said.
Trade discussions also were in the works with key US trade partners, including India, Japan and Thailand, White House officials said.
Vice President JD Vance was meeting with Indian Prime Minister Narendra Modi to try to smooth trade talks with India, the world’s most populous country with over 1.4 billion people and a key market for US exports, including dairy, fruit and processed food and beverages. In 2024, US-India bilateral trade was worth $129 billion. India is facing a potential tariff rate of 26% beginning July 8 if it can’t strike a deal.
Meanwhile, Japanese officials said the country could increase its imports of US soybeans, rice and meat as a concession in trade negotiations. Sizable US exports of soybeans and meat to China currently are under duress from Chinese retaliation. Japan also is a key buyer of US wheat.
On April 22, Thai Prime Minister Paetongtarn Shinawatra said her country was reviewing trade issues and would postpone an April 23 date set for trade talks with US counterparts. Thailand, the United States’ top rice-trading partner, is facing a paused tariff rate of 36%. The United States was Thailand’s largest export market in 2024.
“We are protecting (our) agricultural interests as much as possible,” Paetongtarn said.
As the global tariff exchange grows, the US Commerce Department said it is considering imposing tariffs as high as 3,521% on imports of solar panels from Cambodia, Thailand, Malaysia and Vietnam, over accusations of Chinese subsidies.
According to data from the Bureau of Economic Analysis and the Yale Budget Lab, the United States’ current effective tariff rate of 27% is now the highest since 1903, when it was 27.85%.
As of April 22, the United States has imposed a minimum 145% tariff on Chinese exports, while China has raised its minimum tariff rate on imports from the United States to 125%.
Select US agricultural imports to China are facing steeper levies: wheat 140%, corn 140%, meat 135% to 145%, sorghum 135% and soybeans 135%.
American beef is quickly being cut from Chinese restaurant menus, increasingly in favor of Australian alternatives. The United States typically sends about $125 million per month in beef to China.
China’s March soybean imports were the lowest for a month since 2008, though soybean imports from the United States (2.4 million tonnes) actually rose 12% during that period. Chinese buyers trying to get ahead of tariffs have been frontloading US soybean purchases to begin 2025, and January-March shipments were up 62% over the year prior, according to US Department of Agriculture data.
With the 135% levy on US soybeans now in place, that trend is expected to reverse sharply, as Brazil and its expected bumper harvest reclaim market share beginning in April. A 135% tariff applied to China’s 2024 US soybean purchases ($12.84 billion) would result in levies of $17.3 billion, nearly 70% of the value of all US soybean exports last year, according to data from the Foreign Agricultural Service of the USDA.
On the import side, the United States buys large volumes of fruits and vegetables, processed and snack foods, spices and tea from China. China also supplies more than 85% of the world’s monk fruit, a popular low-calorie sweetener in many US-produced packaged foods.
US dairy exports to China now face a minimum 135% tariff, increasing headwinds for dairy exporters but also likely lowering domestic dairy prices in some categories.
“The US dairy sector, which exports over 50% of its dry whey and lactose production to China, faces potential disruptions,” explained Mary Ledman, global dairy strategist for RaboResearch Food & Agribusiness. “This could lead to shifts in trade dynamics, with the European Union and UK possibly stepping in to fill the gap. The intensifying trade war could result in lower prices for US dairy producers, slimmer margins for traders and higher prices for Chinese end users and consumers.”
The US dairy industry has expanded global exports from less than 2% of domestic milk production in the early 2000s to nearly 20% last year. In particular, 50% of US dry whey and lactose powder now is sold overseas, with China the top buyer.
In 2024, the United States exported 409,000 tonnes of lactose, 58% of global trade, with nearly 110,000 tonnes going to China. In the 2018-19 trade war, during President Trump’s first term, US lactose exports declined by 33% in response to Chinese retaliation.
The US dry whey market also suffered, with exports falling by 55%. In turn, US domestic dry whey values declined more than 35%, and Class III milk (“cheese milk”) prices fell by more than $1 per cwt.
“RaboResearch expects the US dry whey and corresponding milk markets to respond similarly to China’s new retaliatory tariffs in 2025, with the potential for more downside risk, given that the tariff is more punitive,” Ledman said, “and because the US is experiencing an increase in production due to expanding cheese and whey production capacity.”
In a positive development for food producers and farmers, the Office of the US Trade Representative (USTR) on April 17 announced it was modifying proposed actions on Chinese maritime practices to make them less punitive for US manufacturers and businesses.
The original proposed actions, including fines of up to $1.5 million for each Chinese-made ship that entered a US port, could have increased shipment costs by an average of $15 to $40 per tonne, or 50¢ to $1.25 per bushel, according to industry estimates, resulting in a 62% decline in US wheat exports and a 40% decline for US soybeans. Of the roughly 21,000 vessels in the world’s bulk shipping fleet, almost 50% were built in China, and only five ships (0.2%) currently operating in the global fleet were built in the United States.
“Ocean shipping is critical for US wheat growers to move their crops to market, and this step helps maintain our global competitiveness,” said Pat Clements, president of the National Association of Wheat Growers.
The International Fresh Produce Association (IFPA) also lauded the move.
“While the USTR’s actions may affect agricultural and perishable products, we appreciate that the revised fee structure appears to take several concerns unique to the agricultural sector into account,” the IFPA said. “We will continue to engage with the administration, Congress and our industry partners to promote policies that enable a resilient, efficient and competitive trade environment.”
The USTR’s modified proposal pauses all new fees for 180 days. After that period, Chinese vessel owners and operators will face a $50-per-tonne levy per US voyage. Operators of Chinese-built ships will face less punitive fines, based on net tonnage or number of containers.
Vessels logging multiple US entries will be billed once per group of US port calls, meaning they won’t accrue a separate fee for each port, as originally proposed. Industry groups had argued that requirement could place staggering penalties up to $6.5 million on even smaller vessels making a rotation of port calls on the East Coast.
