BLOOMINGTON, Ill. — After a wild week of “tariff posturing” initiated by the United States and involving its top three agricultural trade partners — China, Canada and Mexico — the only thing to emerge as certain is that struggling farmers cannot afford to lose their share of the commodity export market over trade policy. This is according to Collin Watters, director of exports and logistics for the Illinois Corn Growers Association (ICGA), who thinks that it would be even harder for corn farmers to recapture export markets lost or diminished by a multi-nation trade war similar to the one that occurred in 2018. 

“(Trade partners) can source soybeans from other places, and the Chinese have really made a concerted effort over the last few years to really start sourcing a lot more of their commodity imports out of South America. If any of us were in the same position we’d likely try to diversify as well,” Watters told Farm World.

The week of Feb. 3 began with President Trump levying a 25 percent tariff on all products imported from Canada and Mexico along with a 10 percent tariff on Chinese goods. The tariffs against Canada and Mexico were quickly walked back after, according to Trump, leaders of both nations agreed to increase border security to stem the flow of illegal border crossers and drug smugglers. 

China announced retaliatory tariffs from 10-to-15 percent on U.S. farm machinery, coal, crude oil and liquified natural gas, but, unlike their response to Trade Wars 1.0, held back on a tariff for U.S. farm commodities. Watters feels that China’s exclusion of farm commodities from their first-round of retaliatory tariffs against the U.S., while welcomed, may serve as an intended “trump card” in determining the extent and duration of Trump’s latest tariffs. 

“I wouldn’t be surprised if those (Chinese) negotiators are keeping that in their back pocket,” he said. “I think that at this point it feels like (negotiations are) going to move slowly, but I’m hopeful we get some sort of arrangement figured out over the next few months and avoid another massive trade war and any real harm to farmers.”

The South American nations of Brazil and Argentina are among exporting countries to increase their production of corn. Global supply and demand patterns have shifted, Wattters noted, along with the productive growing capacity of South America. 

“If there is another seller on the market that is either more reliable or has better quality or price, it’s easier for them to bring that customer back. Depending on the situation, the U.S. might be higher-priced. We also have a strong dollar that makes exporting a little less favorable. There is growing competition, year in and year out,” he said. 

As for developing new markets, Watters responded: “Every new market that we’re looking at the Brazilians are looking at, too. In the case of Mexico, we’re talking about potentially replacing 23 million metric tons of corn. It’s not easy to find 23, one-million metric ton markets to replace that demand with.”

Mexico was not making idle threats when the first Trump administration moved to upend the newly-ratified U.S.-Mexico-Canada (USMCA) trade agreement by imposing tariffs on its trade partners. The bordering nation immediately responded with their own tariffs on U.S. goods and began negotiating with South American agricultural commodity exporters to replace U.S. imports.

“It’s not impossible for (Mexico) to source corn elsewhere. We right now have a competitive advantage in Mexico, but if you implement some tax at the border all of a sudden that advantage might completely go away,” said Watters, adding that ICGA farmer-leaders will be keeping a close eye on Trump’s trade policy and tariff maneuvers over the next 30 days.

“We’ve been preparing for the tariffs that the Trump administration announced since before they were pulled back. Right now we’re in a little bit of a holding pattern, not really 100 percent sure how things might shake out over the next month. One of the real challenges here is that we all really want to know what’s going to happen. Your guess is as good as mine,” he said.  

Canada, Mexico and China account for over 40 percent of all goods imported into the U.S. in 2024, with total trade in goods and services, including agriculture, exceeding $1 trillion. Roughly 70 to 80 percent of all Canadian and Mexican exports are destined for the United States. 

The tariffs against China, Mexico and Canada are now expected to begin on March 1, 2025, pending ongoing negotiations.