THE Trump tariff roller coaster continues (as The Wall Street Journal titled an editorial last Thursday). This was before Trump announced on social media Thursday that he will suspend tariffs on USMCA-compliant imports from Mexico and Canada until April 2. Later in the day, he extended the suspension to other goods from Canada as well. But tariffs remain on 62% of all Canadian imports and on some Mexican imports. This decision exempts meat, poultry, and live animal imports from Mexico and Canada from the 25% tariff. The Meat Institute and other agricultural groups applauded Trump’s move but some observers warned that Trump might still impose tariffs on many Canadian and Mexican imports.
The imposition of the 25% tariffs and subsequent retaliatory tariffs by the two countries would cause significant trade upheavals throughout North America until they are removed. The U.S., as previously announced, imposed its tariffs on March 3 after delaying its move for 30 days. Now they are delayed another 30 days but uncertainty remains. Trump last week left in place an additional 10% tariff on Chinese imports. It immediately announced that it was placing an additional tariff of 15% on U.S. wheat, corn, cotton and chicken and an additional 10% on U.S. soybeans, sorghum, pork, beef and other agricultural products. This translates into billions of dollars of U.S. agricultural products.
Canada And Mexico Pause Retaliation
The U.S. tariffs drew immediate retaliation and sent financial markets into a tailspin. Canada said it would proceed with tariffs that it proposed when the trade dispute was raised last month. It would initially impose tariffs on $30 billion of American goods, followed by $125 billion worth of other American products in 21 days. Its list in early February included meat, poultry, eggs, dairy products, dairy ingredients, honey, tomatoes, legumes, nuts, fruit, coffee, tea, spices, grain-based commodities like wheat, rye, barley, oats, canola and rice, margarine, processed meats, sugar, molasses, chocolate, malt extract and sauces. Mexico President Claudia Sheinbaum announced last Tuesday that her government would impose its own tariffs on U.S. goods. Her government was due to detail these tariffs on Sunday (March 9). All this is now on pause by both countries.
The U.S. Meat Export Federation (USMEF) earlier had said it was disappointed that no agreements have yet been reached that would avoid or postpone tariffs on goods from Mexico and Canada, as well as the tariff increase on goods from China, says President and CEO Dan Halstrom. It is reviewing the retaliatory measures announced by Canada and China and are watching for details on the response from Mexico. These three markets accounted for $8.4 billion in U.S. red meat exports last year, including nearly $4 billion to Mexico. While the U.S. is the primary supplier of pork and beef to Mexico, U.S. red meat has already been facing heightened competition in this critical market, he says.
U.S. beef exports last year equated to more than $415 per fed steer or heifer slaughtered and pork exports equated to more than $66 per head slaughtered, says USMEF. These exports, a large share of which are underutilized cuts and variety meat, help producers maximize the value of every animal produced and allow U.S. consumers to enjoy more of the cuts they prefer, it says. As CBW previously reported, Canada exported 1 billion lbs of its beef to the U.S. in 2024 while Mexico exported 600M lbs of beef. In turn, the U.S. exported 103.5M metric tons (mt) of beef to Canada in 2024 worth $877M. It exported 232.5M mt of beef worth $1.35 billion to Mexico. In 2024, Canada exported 780,000 cattle to the U.S. and Mexico exported 1.24 M head.
U.S. AG WILL BE SEVERELY IMPACTED
WHILE many sectors in the U.S., Canada, Mexico and China would be damaged by an escalating trade war, economists have said that U.S. agriculture would rank at or near the top of those most severely affected. U.S. The new tariffs (now postponed) on goods from Canada, Mexico and China threaten to hurt the $191 billion American agricultural export sector and raise costs for farmers struggling with low crop prices, farm groups warned last Tuesday. U.S. tariffs on imports from Canada would raise fertilizer costs. About 85% of U.S. imports of potash fertilizer come from Canada, according to industry data.
Higher costs and lower exports would hit farmers as many are bracing to lose money growing corn and soybeans, the nation’s biggest commodity crops. For the third straight year, farmers are losing money on almost every major crop planted, says Zippy Duvall, president of the American Farm Bureau Federation. Adding even more costs and reducing markets for American agricultural goods could create an economic burden some farmers may not be able to bear, he says. Agriculture Secretary Brooke Rollins told reporters at the National Association of Counties conference that she was in communication with Trump about the economic repercussions to farmers. His message, frankly, to the ag community is “trust me,” she said.
Canada is by far the largest exporter of wheat to the U.S., which last year imported 92,000 metric tons (mt) from its northern neighbor, up from 65,000 mt the previous year, according to USDA’s Foreign Agricultural Service (FAS). Mexico accounts for nearly half of U.S. corn exports, with an intake of 23.4M mt in the 2023-24 marketing year worth an estimated $5 billion dollars, according to FAS. Mexico was also the leading importer of U.S. wheat in 2023-24, purchasing $937M worth of the food grain from its northern neighbor.
Even before this latest round of tariffs, China’s imports of U.S. agricultural products had been declining, says Meat+Poultry. The world’s top agricultural importer and second largest economy bought $29.25 billion worth of U.S. agriculture products in 2024, a 14% drop from a year earlier. This extended a 20% decline seen in 2023. China has been building food and agriculture self-sufficiency as it attempts to reduce its dependence on imports. Although China has reduced its dependence on soybean imports from the U.S. in recent years, it still purchased an estimated $11 billion worth in 2024, the most by any country. Chinese wheat imports from the U.S. in 2024 were valued at $570M, which ranked third. In 2018 during his first term as president, Trump initiated a trade war with China by imposing massive tariffs on Chinese goods. China responded in kind, which devastated U.S. soybean and corn producers and who since that time have lost a significant amount of the Chinese market to Brazil and other countries. China also imposed 20% tariffs on U.S. pork imports for ten months.
Retaliatory Tariffs Will Hurt Consumers
American consumers are likely to have to pay more for a wide range of good and food if Trump’s tariffs and those imposed by Canada, Mexico and China proceed. Trump’s tariffs are estimated to be about an annual $150 billion tax increase. An analysis by the nonpartisan Tax Foundation found that the tariffs imposed on the three countries (but postponed) would amount to an average tax increase of $1,072 per U.S. household. The Tax Foundation estimated that the tariffs on Chinese goods would add $329 in costs per U.S. household annually. The tariffs on Mexican imports would cost the average U.S. household $435 per year, according to the Tax Foundation. Tariffs on Canadian imports, meanwhile, would cost the average U.S. household $309 per year. The typical American family could face higher annual costs of between $1600 to $2000 due to the new tariffs, according to another analysis from the Yale Budget Lab, a nonpartisan public policy research center.
In the hours after implementation of the new tariffs last Tuesday and threats of retaliatory action, U.S. stocks responded negatively for the second day in a row. The Dow Jones Industrial Index, the S&P 500 and Nasdaq all fell almost 1.5%. Tariff-sensitive stocks, including automakers, retailers and homebuilders, all contributed to the declines after the S&P 500 experienced its worst day of 2025 following Trump’s confirmation Monday that the tariffs would go into effect. The Dow is down 3.4% since Trump took office, erasing the gains that followed his November election victory.
Price Increases Could Be on Fruit To Autos
Americans might face price increases on everything from fruit and vegetables to electronic goods to automobiles. Mexico in 2021 provided almost two-thirds of U.S. vegetable imports and about half of U.S. fruit and tree nut imports, says USDA. The U.S. last year imported $46 billion of agricultural products from Mexico, according to USDA data. That included $8.3 billion worth of fresh vegetables, $5.9 billion of beer and $5 billion of distilled spirits. The biggest category of agricultural imports was fresh fruits, of which the U.S. imported $9 billion worth, with avocados accounting for $3.1 billion of that total. 90% of the avocados consumed in the U.S. come from Mexico, so consumers can expect to pay more for them and for guacamole, said an NPR story.
The tariffs mean that for other foods from Mexico such as tomatoes, raspberries, bell peppers and strawberries prices will rise, given that Mexico is the leading supplier of each of them. It is also winter, when more of the produce consumed in the U.S. comes from Mexico, said NPR. Tomatoes are a crop that the U.S. produces a lot of in the summer but not so much in the winter, so your imported tomato would cost more too
Target CEO Brian Cornell said in an interview with CNBC last Tuesday that Trump’s tariffs on Mexico may force the company to raise prices on fruits and vegetables very quickly. Target relies heavily on Mexican produce imports during the winter. These are categories where Target will try to protect pricing but the consumer will likely see price increases over the next couple of days, he said. Best Buy CEO Corie Barry also said Tuesday that tariffs make price increases for American consumers highly likely. NAFTA, which was supplanted by the USMCA, encouraged electronics manufacturers to set up shop in Mexico instead of China, he said.
Car And Gas Prices Will Rise
Car, gas and energy prices would all increase because of the U.S. tariffs. The cost of producing cars throughout North America would rise between $3500 and $12,000, according to analysis of both public and private data by the Anderson Economic Group, a Michigan-based think tank. Because it won’t make sense to make some of the models at those higher costs, particularly cars with cheaper option packages, there would likely to be cutbacks in production and jobs across the industry, said Patrick Anderson, the group’s CEO. Anderson estimates the tariffs would raise the cost of a pickup assembled in North America by $8000. Trump last Wednesday gave a one-month tariff reprieve on autos and auto parts that trade through the USMCA trade agreement.
Energy prices would rise as well, said The Wall Street Journal (WSJ) in an editorial last Tuesday titled “Trump’s Tariffs Whack Trump Voters.” Mr. Trump implicitly conceded this by reducing his tariffs to 10% on Canadian energy imports. Despite the U.S. shale fracking boom, constraints on pipeline capacity mean the Midwest and Northeast depend heavily on Canada for natural gas. That means heating bills would rise in Trump country. So would electricity prices, said the WSJ.
The U.S. imports about 3315 gigawatt hours of electricity on average from Canada each month, enough to power about 3.7M homes, said the WSJ. These flows help stabilize the grid and lower prices in the Northeast and Midwest. New England’s grid operator estimates the tariffs could cost the region between $66M and $165M per year. Energy makes up 40% of primary aluminum producers’ costs. Several Midwest foundries have closed in recent years amid rising energy prices. The Trump tariffs would harm the very workers he claims to be trying to help, said The Wall Street Journal.
The tariffs would also cause pain at the pump, said the WSJ. The U.S. is a net oil exporter but it still imports about 6.5M barrels a day of crude, mostly from Canada and Mexico. That’s because refineries in the Gulf Coast and Midwest process heavy grades. It would cost billions of dollars to retrofit them to process light blends from U.S. shale. Drivers of pickup trucks in the Midwest (where refineries depend on Canadian crude) are likely to suffer the most pain, said the WSJ.
FUTURES MARKETS IGNORE TARIFFS
THE live cattle futures market, in contrast to the stock market, appeared to ignore the possibility of lower cattle and wholesale beef prices because of the imposition of U.S. tariffs and retaliatory measures by Canada and Mexico. The April live cattle contract softened slightly before the U.S. tariffs were put in place. But the contract gained 430 point Tuesday and Wednesday to close at $196.55 per cwt live. Very little cash trade occurred last week through Thursday. But live prices ranged from $195 per cwt to $197 per cwt. The week before last saw 5-area steer prices average $197.65 per cwt live or $312.92 per cwt dressed. These were down $1.99 per cwt and $2.20 per cwt, respectively.
Carcass weights declined sharply in the latest reported week ended February 22 but remained well above year ago levels. Steer weights averaged 946 lbs, down 8 lbs on the week before but up 32 lbs on the same week last year. Heifer weights averaged 866 lbs, down 10 lbs from the week before but up 32 lbs on the same week last year. Overall weights averaged 875 lbs, down 2 lbs on the week before but up 41 lbs on the same week last year. This was the equivalent of adding 27,765 head to that week’s slaughter total of 564,737 head, according to HedgersEdge.com. Last week’s slaughter total was higher at an estimated 578,000 head.
Meanwhile, the national comprehensive boxed beef cutout (cuts, grinds and trim) the week before last declined slightly from the prior week. It averaged $317.18 per cwt, down $0.38 per cwt. Spot market sales accounted for 30.1% of the total volume. Formula sales accounted for 52.3%, forward sales 17.7% and export sales 13.0% The daily Choice and Select cutouts see-sawed slightly last week but were higher after four days of sales. The Choice cutout increased by $1.29 per cwt and the Select cutout increased by $1.46 per cwt. With a late Easter this year (Easter Sunday is on April 20), a normal seasonal rebound in the cutouts may be delayed into the second half of this month, says Andrew Gottschalk, HedgersEdge.com.
BEEF-ON-DAIRY CATTLE INCREASE
AS the U.S. cattle herd shrinks to its lowest inventory since 1951 due to prolonged drought and poor grazing conditions, feedlots are pulling from whatever source of cattle they can find, says a recent CoBank Knowledge Exchange report. The practice of using beef genetics in dairy reproductive programs, commonly referred to as beef on dairy, has steadily increased in correlation with the contraction of U.S. beef cattle numbers. New data from USDA’s Agricultural Marketing Service suggests the growing number of beef-on-dairy animals is contributing to higher cattle prices for producers and delivering added value to feedlots and processors.
USDA in March 2024 began tracking beef-on-dairy animals sold at public auctions, says CoBank. With the new pricing data, it was able to provide an analysis to quantify the impact of beef-on-dairy on the cattle market. CoBank’s report found that slaughter auction prices for beef-on-dairy cattle were slightly higher than for beef cattle and significantly higher than dairy cattle. The weight of beef-on-dairy animals fell between the ends of the beef and dairy cattle spectrum. The data also showed that beef-on-dairy cattle maintained the largest proportion of their value from feeder price to slaughter cattle auction price on a per hundredweight basis, says CoBank livestock analysts Abbi Prins. That is an important financial metric for feedlots. CoBank will have to see if these patterns hold over time as additional data becomes available. But preliminarily, it reaffirms the value proposition that beef-on-dairy brings to the wider beef sector, she says.
While the U.S. beef supply is tight, demand remains robust, pushing cattle prices to record highs, says CoBank. Taking advantage of this opportunity, dairy producers are capitalizing on the higher prices and creating an additional revenue source by bringing more beef-on-dairy calves into the market. Many of the animals from dairy programs that utilize native beef genetics such as Angus can now qualify for branded premium programs, says CoBank.