It has been a turbulent month in U.S. trade policy. First President Donald Trump announced tariffs of 25 percent on Mexico and Canada. After last-minute talks with both countries, Trump agreed to a 30-day reprieve. The 10-percent levy on all China imports still stands.
It may be only a matter of time before tariffs on our southern and northern neighbors are reinstated. Can Mexico and Canada deliver on their border security promises in a time-frame of only 30 days?
The prospect of renewed trade wars has alarmed the agricultural industry. According to the United States Department of Agriculture (USDA) Economic Research Service, U.S. agricultural exports in 2024 equaled about $176.0 billion, while corresponding imports totaled about $213.0 billion. According to a Reuters article on February 6, Canada, China and Mexico comprise the top three markets for U.S. farm goods in 2024. The three countries accounted for $91 billion of U.S. agricultural exports last year. The American Farm Bureau Federation reports that in 2024 the United States sold more $30 billion in agricultural products to Mexico, $29 billion to Canada and $26 billion to China.
Some say President Trump’s threat of tariffs has permanently damaged the image of the U.S. in the eyes of its most important trading partners. Painful memories of the trade wars unleashed in Trump’s first term are still fresh. Among the most striking moves was a 25 percent tariff on $200 billion worth of China goods. China responded by imposing additional tariffs ranging from 5 to 25 percent on many agricultural products worth $22.5 billion.
This trade war is not coming at a good time. Commodity prices are low and the prices of inputs like seed and fertilizer is going up. Zippy Duvall, president of the American Farm Bureau Federation, said “over 80% of the United States’ supply of a key fertilizer ingredient — potash — comes from Canada. Tariffs that increase fertilizer prices threaten to deliver another blow to the finances of farm families already grappling with inflation and high supply costs.”
“Farm and ranch families answer the call to feed America’s families and the world, and these tariffs and the promised retaliation will put further stress on their livelihoods,” Duvall said, adding that more than 20 percent of U.S. farm income comes from exports.
Daily Corn Chart, courtesy of CQG.
Weekly Corn Chart, courtesy of CQG.
Monthly Corn Chart, courtesy of CQG.
I like these corn charts because of the multiple wave counts. Even the monthly chart has four months of higher highs and higher lows. Usually markets go in three, in my opinion, and I don’t know if this means anything. In the short term, March corn at 501 and 507 is very good resistance. We await the United States Department of Agriculture (USDA) World Agricultural Supply and Demand Estimates (WASDE) Report that is due February 11.
One thing I learned in my long career is to not bet against American farmers. They persevere in the face of many challenges.
Stephen Davis
Senior Market Strategist
Walsh Trading
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