Ag Policy Blog

Trump Imposes New Tariffs on Canada, Mexico and China

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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U.S. agricultural trade between the U.S., Canada and Mexico accounts for nearly $137 billion in trade. The U.S. also exported more than $22 billion to China through November 2024. (DTN map courtesy of U.S. International Trade Administration)

OMAHA (DTN) -- President Donald Trump on Saturday imposed universal tariffs on the country's three biggest trading partners -- and three biggest markets for U.S. agricultural commodities.

Trump signed three executive orders Saturday imposing 25% tariffs on Canada and Mexico and 10% tariffs on China. Petroleum imports from Canada will face a 10% tariff. The tariffs will go into effect on Tuesday. Trump stated the increase in "illegal aliens and drugs, including deadly fentanyl, constitutes a national emergency under the International Emergency Economic Powers Act (IEEPA)."

For Canada and Mexico, the moves essentially scrap the United States-Mexico-Canada Agreement (USMCA) that Trump signed in his first term. That agreement lowered tariffs on products, including zero tariffs on most agricultural products flowing between the three countries.

Through November, agricultural sales to the three countries accounted for $75.9 billion for 2024.

Canadian Prime Minister Justin Trudeau has vowed his country would respond with retaliatory tariffs. Mexico's government has been quieter about its response.

Trump's executive order includes details that U.S. tariffs would increase if any of the countries imposed retaliatory tariffs.
A fact sheet from the White House stated the new tariffs will build on Trump's trade successes in his first term. "President Trump continues to demonstrate his commitment to ensuring U.S. trade policy serves the national interest."

In 2018-19, Trump's trade disputes with China led to $23 billion in aid payments to farmers under the Market Facilitation Program. After reaching a deal with Trump to buy $40 billion a year in agricultural commodities, U.S. agricultural exports to China reached as high as $38 billion in 2022, which was a record year for agricultural exports overall. China has dialed back its purchases of U.S. goods since then.

House Committee on Agriculture Chairman Glenn "GT" Thompson, R-Pa., said the tariffs are a "crucial tool" that Trump will use to reduce the agricultural trade deficit. Thompson blamed the Biden administration for not being more aggressive in expanding agricultural trade.

"President Trump's tariff policy has been an effective tool in leveling the global playing field and ensuring fair trade for American producers," Thompson said. "Look no further than Colombia's about face on accepting repatriated criminal migrants at the mere threat of tariffs."

Thompson added, "After four years of the Biden-Harris Administration's failure to expand foreign markets, which led to an inflated agricultural trade deficit of $45.5 billion, America's producers deserve an Administration that will fight for them. I look forward to working alongside of President Trump to support our hardworking producers and to make agriculture great again."

Rep. Angie Craig, D-Minn., ranking member of the House Agriculture Committee, criticized the tariffs for potentially driving up costs for a range of imported products.

"No one wins in a trade war. The last time President Trump started a trade war, costs went up for America's family farmers and consumers," Craig said. "The same will happen today. The cost of imported goods like oil, lumber, avocados, tomatoes, bell peppers, lettuce, broccoli, cucumbers, onions and mushrooms and other fresh food are likely to go up for Americans. At a time when farmers are struggling with high input costs and the American people continue to struggle with the cost of groceries, these tariffs will make it more expensive for farmers to grow food and for consumers to buy it.

"Additionally, when American farmers face the inevitable retaliatory tariffs from our trading partners, their profits take a hit. This action is especially questionable since President Trump's previous administration negotiated our last trade agreement -- USMCA -- with Canada and Mexico," Craig said.

Michigan Department of Agriculture and Rural Development (MDARD) Director Tim Boring said he had "extensive conversations with farmers and other stakeholders" who raised concerns about tariffs.

"While there are still a lot of unknowns, it's important to remember two things: Canada and Mexico are our biggest export destinations, and the last time this happened retaliatory tariffs specifically targeted agriculture," Boring said.

Mark McHague, president of the Nebraska Farm Bureau, noted his state's reliance on exports, which accounts for roughly one-third of farmers' income. Nebraska's exports to the top five agricultural products accounted for over $3.5 billion in 2024. Those sales helped support the largest segment of Nebraska's economy, which hit a rough patch in 2024, falling 17% as compared to 2023, he noted.

"Today's announced tariffs on Canada, Mexico, and China, some of Nebraska agriculture's most important trading partners, only adds to the economic uncertainty which remains the top concern at dinner tables on farms and ranches across our state and nation," McHague said.

McHague also pointed out U.S. farmers rely on Canada for 80% of the potash fertilizer used, as well as imported crop-protection tools and energy.

"While Nebraska agriculture is highly dependent on our export and import relationships with Canada, Mexico, and China, those relationships are not without challenges," McHague said. "From Canada's protection focused dairy industry, Mexico's illegal ban on genetically modified corn, to the many trade and geopolitical issues we have with China, much work needs to be done. During his first term, President Trump vowed to ensure America's farmers and ranchers didn't bear the brunt of trade disputes and the retaliatory tariffs that followed. Nebraska's farm and ranch families always seek to secure their financial future through free and open markets."

McHague added, "However, we now call on President Trump to again make good on his previous promises and ultimately seek new and expanded agriculturally focused trade agreements around the world, something former President Biden failed to do over the past four years."

Bob Hemesath, an Iowa farmer and chairman of the group Farmers for Free Trade, noted Canada, Mexico and China together buy half of all American ag exports. Agricultural exports had grown by nearly 300% in recent decades to Canada and Mexico under free-trade agreements. Placing tariffs on the three largest export markets for American farmers and ranchers, particularly for an extended period of time, would have severe consequences, Hemesath said.

"American farmers are already struggling. Record-high input costs, declining crop prices, and global supply gluts have created an environment where many farmers are operating at a loss. Adding tariffs to the mix would only exacerbate the situation across much of rural America," he said.

Hemaseth said he expects farmers would face retaliation and also lead to a disadvantage for exports compared to competitors such as Brazil and Argentina.

"Farmers for Free Trade strongly urges the administration to reconsider these proposed tariffs," he said.

The Coalition for a Prosperous America (CPA) stated the group "strongly supports" the tariffs as a "long-overdue step to rebalance trade, strengthen U.S. manufacturing, and restore American economic independence."

"For decades, so-called 'free trade' policies have hollowed out America's industrial base, destroyed domestic supply chains, and left American workers at the mercy of foreign governments and multinational corporations," said Zach Mottl, Chairman of CPA.

"President Trump's decision to impose universal tariffs is a bold and necessary step toward reversing decades of failed trade policies and rebuilding America's manufacturing and agricultural industries," Mottl said.

Chris Clayton can be reached at Chris.Clayton@dtn.com

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