Markets anxiously await Trump's inauguration and his first 100 executive orders

Ahead of Trump's inauguration, markets are debating the fate of the United States-Mexico-Canada Agreement (USMCA), a free trade agreement negotiated during Trump's first term. The United States trades $1.5 trillion with Mexico and Canada, but Trump is threatening to impose a 25% tariff on imports from both countries, as well as a 60% tariff on imports from China.

 

The US National Corn Growers Association (NCGA) states that at current prices, farmers are losing $160/acre when growing corn, so the introduction of a tariff will dramatically worsen the situation, as major corn importers will start buying it from Argentina and Brazil.

 

After the signing of the USMCA in 2020, U.S. agricultural exports to Canada increased by 36% to $7.5 billion compared to 2019, and to Mexico by 47% to $9.1 billion. Against the backdrop of the trade war with China in 2018-19, these countries became the largest buyers of American agricultural products.

 

According to CoBank's forecast for 2025, a new trade war will have devastating consequences for US agriculture, as Brazil, Argentina, the Russian Federation and Australia are already preparing to supply American buyers with their products.

 

Agricultural trade between the US and Canada

In 2023, agricultural exports from the United States to Canada amounted to $28.4 billion, and imports - $40.4 billion. In 10 months of 2024, the United States supplied agricultural goods to Canada worth $26.2 billion, and purchased - $37.7 billion, which is practically in line with last year's level.

 

Canada is the main buyer of baked goods, vegetables, and ethanol from the U.S. In 2023, the U.S. exported $2.8 billion in baked goods, $1.97 billion in vegetables, and $1.74 billion in ethanol to it (which is 4 times more than all other buyers).

 

In the first 11 months of 2024, the United States imported 730,409 cattle and 3.4 million pigs from Canada, and exported $824 million worth of beef, up 2% from 2023.

 

Canada is the third largest buyer of poultry from the United States, purchasing $504 million in 2023.

 

Over 90% of potash fertilizers in the US are imported, with 87% of this volume, or 11-12 million tons, coming from Canada.

 

Agricultural trade between the United States and Mexico

In 2023, agricultural exports from the United States to Mexico amounted to $28.3 billion, and imports - $45.5 billion. In 10 months of 2024, the United States supplied agricultural goods to Mexico for $27.7 billion (+7% compared to last year), and purchased - for $45 billion (+7%).

 

Mexico is a major buyer of American corn, wheat, pork, poultry, and dairy products.

 

In 2023, the United States exported $5.4 billion in corn to Mexico and $1.26 billion in poultry.

 

In 10 months of 2024 (before the US import ban), the US purchased 1.2 million head of cattle from Mexico and exported $1.2 billion worth of beef there, which was 14% higher than in 2023 and became the 4th largest buyer.

 

Impact of tariffs on farmers and consumers

Mexico is a major supplier of fruits and vegetables to the US, so the new tariffs will lead to higher food prices.

 

American farmers will also suffer, as in the long term Brazil will increase the area sown with soybeans and second crop corn, which will allow it to increase its share of the world market.

 

Economists believe that the introduction of a 25% tariff on goods from Mexico and Canada and a 60% tariff on goods from China will negatively affect trade in grains and oilseeds between these countries.