US to Slap Tariffs on Crop Purchases as Food Imports Balloon (4)

President Donald Trump said the US would impose tariffs on “external” agricultural products starting on April 2, adding another layer of threats to impose trade barriers on imported goods.

“To the Great Farmers of the United States: Get ready to start making a lot of agricultural product to be sold INSIDE of the United States. Tariffs will go on external product on April 2nd. Have fun!” the president said Monday in a social media post.

The move comes just as US food imports balloon, driving the country’s agriculture trade deficit to a record $49 billion this year, the US Department of Agriculture forecast last week.

Read More: Agriculture Powerhouse US Has Never Imported So Much Food

The president did not provide more detail on which products would be affected, or if there would be any exceptions. The plan is part of a previously announced effort to enact so-called “reciprocal” tariffs on nearly all US trading partners, according to two administration officials who spoke on condition of anonymity ahead of a formal announcement.

Trump also said 25% tariffs on products from Canada and Mexico would start on Tuesday, and signed an order doubling a levy on China to 20% that will take effect shortly after midnight in Washington. The wave of tariff news doused hopes of avoiding an all-out continental trade war.

Read More: Trump Says ‘No Room Left’ for Canada, Mexico to Avoid Tariffs

The president announced the agricultural tariff plan a day before he is scheduled to speak to the nation in a primetime address to a joint session of Congress, his first major speech since Inauguration Day. The proposal may offer a preview of how the president plans to defend his tariff plans to the public amid persistent concern about high prices.

Tariffs on agriculture imports would hit the market for fruit, vegetables and nuts, which have typically accounted for at least half of inbound crop shipments into the country, USDA data showed. Sugar, coffee, cocoa and other tropical products accounted for about 15% of imports.

The US has also been importing used cooking oil from China to make biofuels, something lawmakers have tried to crack down on. Tariffs that could prevent that would be a boon for US-produced soybean oil, with futures traded in Chicago paring earlier losses after Trump’s social media post.

“It’s all speculative at this point, but we could see domestic soybean oil as a beneficiary as used cooking oil out of China and abroad would be targeted,” said Daniel White, a broker at Blue Line Futures. “Canadian canola imports could get hit as well. Coffee and sugar are other agriculture products that could see price increases due to the tariffs.”

Mexico shipped $45.4 billion of agricultural products to the US in 2023, accounting for about 23% of imports and making the country the US’s largest supplier, according to the USDA. Canada and the European Union sent a combined $73 billion in crops to the US.

Trump’s latest threat comes at a precarious time for the US economy, with persistent inflation a chief concern for Americans. Many economists say that higher import taxes will further raise prices, as companies pass along the cost to consumers.

The administration last week announced plans to invest $1 billion in a new strategy to mitigate the impacts of bird flu, which has raised egg prices and slowed milk production across the US — a key driver of inflation. The plan includes importing between 70 million and 100 million eggs during the next month or two.

Still, Agriculture Secretary Brooke Rollins defended Trump’s plans to use tariffs to protect US farm interests.

“His idea of using tariffs in his tool kit has proven very successful the first time. I have no doubt it will be successful again,” Rollins told reporters last week at the White House.

Canada plans to respond with an initial set of 25% tariffs on about $20.6 billion of goods from US exporters, including orange juice, peanut butter, wine and coffee. Beijing, meanwhile, is considering retaliation on American agriculture and food products, according to the Global Times.

“I really don’t know how raising tariffs would help the US corn and soybean farmer unless tariffs produced a new Phase 1 deal like Trump signed with China in 2020,” said Dan Basse, president of consultants AgResource Co. “Such a deal would completely change the US ag outlook from bearish to bullish, but seems to be a ways off, if at all possible as China diversified suppliers in the past four years.”

(Updates throughout.)

--With assistance from Isis Almeida.

To contact the reporters on this story:
Josh Wingrove in Washington at jwingrove4@bloomberg.net;
Skylar Woodhouse in Washington at swoodhouse15@bloomberg.net;
Ilena Peng in New York at ipeng5@bloomberg.net

To contact the editors responsible for this story:
Justin Sink at jsink1@bloomberg.net

Jordan Fabian, Jeff Sutherland

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