Trade and Tariffs: The 2025 Agricultural Trade Outlook 

Agricultural trade has long been a cornerstone of the U.S. economy. 

As global markets evolve, agricultural trade is an important revenue stream for many farmers and ranchers in the U.S. and directly influences their operational decisions when planning for the coming year.

The USDA’s 2025 agricultural trade outlook offers a snapshot of opportunities and challenges on the horizon for U.S. producers. The last of these quarterly reports for 2024 was released shortly after this year’s election results. With a trade deficit widening and proposed tariffs on the horizon, farmers and ranchers are left grappling with how these shifts might affect their operations and market access. 

In this article, we cover key insights from this report and provide commentary on how the incoming administration’s expected policy shifts could influence the U.S. agricultural trade outlook moving forward.  

Key Highlights from USDA’s Agricultural Trade Outlook for 2025 

U.S. Agricultural Trade Exports 

U.S. agricultural exports are projected to reach $170 billion in FY 2025, a $500 million increase from August’s forecast. Gains in livestock and dairy exports ($39.3 billion) are leading this growth, with beef and dairy products performing especially well. Horticultural exports are also on the rise, forecasted at $41.7 billion. 

However, some sectors face challenges. Oilseed exports are expected to decline to $33.5 billion due to reduced demand and competition, while cotton exports are forecasted at $4.3 billion, reflecting a similar downward trend. 

U.S. Agricultural Trade Imports 

On the import side, the USDA projects a rise to $215.5 billion, driven by increased demand for horticultural and tropical products such as fruits, nuts, and sugar. Since 2020, agricultural trade imports have increased as much as 50 percent, while U.S. agricultural exports have increased 22 percent. This widening trade gap can be attributed to a mixture of factors, including but not limited to:  

• A decline in U.S. agricultural exports to China, a top agricultural export market.  
• Increase in U.S. consumer demand for imported agricultural products. 
• Drought and severe weather conditions in the U.S. lowering yields and increasing import demand. 

This growing agricultural trade deficit also underscores the importance of maintaining diversified markets and minimizing trade barriers to sustain export momentum.  

U.S. Agricultural Trading Partners 

Exports to Mexico are forecast to grow to $29.9 billion, a $700 million increase. Exports to Canada are expected to hit a record high of $29.2 billion due to stronger-than-expected demand for beef, fruits, and vegetables. 

 By contrast, exports to China are projected to decline by $700 million, settling at $23.3 billion, due to low soybean exports and lagging cotton sales. However, this outlook could be disrupted by new trade policies. 

Agricultural Trade and Tariff Policy in 2025 

The incoming administration’s selection of Howard Lutnick as Commerce Secretary signals a return to aggressive tariff strategies. Lutnick, a staunch advocate of using tariffs as leverage, aligns with the president-elect’s protectionist vision. Other key appointments, including Jamieson Greer as U.S. Trade Representative and Kevin Hassett as the head of the National Economic Council, further cement this approach. 

So far, the administration has announced plans for: 

• A 25 percent tariff on all imports from Canada and Mexico. 
• A 10 percent additional tariff on Chinese goods, with potential for higher rates. 
• A possible across-the-board 20 percent tariff on all U.S. imports. 

Many in the U.S. ag sector are discussing the impacts these proposals could have on the farm community—for better or worse. 

Potential Impacts of Proposed Tariffs on U.S. Agricultural Trade 

There are several ways these proposed tariff policies could influence the future of U.S. agricultural trade. Some say they would widen the trade deficit and increase costs. Others argue they could be a leveraging tool to improve future trade deals and encourage domestic production. 

Market Disruptions 

The proposed tariffs risk destabilizing trade deals like the U.S.-Mexico-Canada Agreement (USMCA) and jeopardizing tariff-free trade with two of the nation’s top agricultural export markets. Retaliatory measures from Mexico and Canada could further strain relationships and reduce competitiveness. Additionally, escalating tariffs on Chinese goods risk undermining already declining exports to the U.S.’s third-largest agricultural trade markets. 

Economic Implications 

Farmers reliant on imported machinery, fertilizers, and other inputs may face higher costs, cutting into already tight margins. Consumers and farmers alike could experience inflationary pressures, particularly as retailers like Walmart and Lowe’s warn of price increases tied to rising import costs.  

Federal Government Support 

If tariffs begin to significantly impact farm revenues, the government may renew support programs such as the Market Facilitation Program (MFP) or other subsidies. These programs have historically provided billions of dollars to farmers as compensation for lost trade opportunities. 

Domestic Production 

By making imported goods more expensive, the tariffs could encourage greater investment in domestic manufacturing and agriculture, potentially creating new opportunities for U.S. farmers and ranchers. 

Renewed Trade Deals 

If successful, these policies could reduce foreign tariffs and non-tariff barriers, improve terms in renegotiated agreements, or address unfair trade practices or subsidies used by competing nations. 

Managing Risk Through Agricultural Trade Turbulence  

Opinions differ on whether trade tariffs will ultimately help or harm agricultural trade in the long run, but experts overwhelmingly agree on one thing—disruption will occur if implemented. 

Here are several ways you can proactively manage the risk of trade turbulence in 2025. 

• Diversify markets. If you rely heavily on export trade, now is the time to explore emerging markets and reduce your dependence on vulnerable trade channels. 
• Engage in policy discussions. Farmer advocacy will continue to play a vital role in shaping trade policy. Reach out to your local representatives and industry groups to ensure your voice is heard. 
• Stay informed. Monitor developments in U.S. relations with top agricultural trade partners like Mexico, Canada, and China to align your business strategies with evolving realities and adapt as needed.  
• Plan ahead. Producers should prepare for potential cost increases and revenue fluctuations by leveraging federal support programs and flexible financing options. Be proactive in discussing ways to better secure your financial stability with your lender if you believe these trade policies could directly impact your operation.  

Trade-Proofing Your Farm Finances 

The latest agricultural trade outlook offers both promise and caution. While export growth in key sectors is encouraging, the looming uncertainty of new tariffs could disrupt established markets and strain farm finances. 

Through it all, AgAmerica is here to help. Speak with one of our financial experts today to learn how our flexible financing solutions can help protect your operation from trade uncertainties and secure your financial future.