On March 4, President Trump imposed tariffs of 25 percent on all goods imported from Canada and Mexico, and raised the existing tariff on China from 10 to 20 percent. All three countries have responded by implementing tariffs on US goods. Furthermore, on April 2, Trump is expected to expand the tariff landscape to several countries beyond Canada, China, and Mexico.
Tariffs are a tax imposed on goods imported from other countries. The newly imposed tariffs mean that businesses importing goods from Canada, China, and Mexico will now pay a tax of 25 percent of the value to the US government. Businesses typically pass that cost on to consumers, ultimately making these products more expensive for all of us. My colleague Dr. Precious Tshabalala recently wrote a compelling blog post explaining how tariffs work, and how President Trump’s tariffs will affect inflation and food prices in the United States. Tariffs are usually implemented to promote domestic production and consumption by making imported goods prohibitively expensive, but when it comes to imported fruits and vegetables, there are no domestic alternatives to certain products that cannot be cultivated here because of unfavorable weather, soil, and growing conditions. So if we want avocados, for example, we will have no choice but to pay more.
For fiscal year (FY) 2025, current projections by the US Department of Agriculture (USDA) show that the United States is on a path to becoming an overall importer of agricultural goods. US agricultural exports—largely corn, soy, and meat products—are projected at $170.5 billion, whereas imports are forecast at $219.5 billion. This means that the United States is reliant on other nations for its food supply, and jeopardizing international trade relations can have implications for food security.
The scale of this current trade and tariff war is broad, ranging from energy (like fossil gas) to car parts, but we will be focusing specifically on imports related to food and agriculture.
What agricultural goods do we import from, and export to, Canada, China, and Mexico?
Mexico is our largest trading partner, with agricultural goods imported by the United States totaling about $45 billion in 2023. In the same year, Mexico alone supplied about 63 percent of our vegetables and 47 percent of our fruits and nuts. And Mexico is also our biggest customer when it comes to agricultural exports, buying billions of dollars of corn, dairy, meat, and poultry.
Canada ranks second when it comes to US agricultural exports, buying billions of dollars of baked goods and fresh fruits and vegetables. According to USDA data, a majority of agricultural products we import from Canada consists of meat, grains, and oilseeds, as well as a key input used in US agriculture: fertilizer. This essential input for the US farming system could be hit the hardest in this trade war.
China ranks third in agricultural exports from the United States after Mexico and Canada, spending billions of dollars annually on US cotton, meat and meat products, and soybeans. While the majority of Chinese goods imported into the United States consist of manufactured goods like electronics, machinery, and plastics, the United States also imports processed and fresh fruits and vegetables, snacks, spices, and tea from China.
How tariffs could affect fertilizer manufacturing
In a previous post, I described how fertilizer is manufactured and how it harms the environment, from factory to farm. I also wrote about how a disruption to the fertilizer market abroad can affect food production and prices here. Here’s a quick rundown of the “holy trinity” of nitrogen, phosphorus, and potassium (or NPK) that farmers use in the form of synthetic fertilizers:
Potash (potassium) is almost completely dependent on imports. The United States imports almost 93 percent of its potash, and about 79 percent of that comes from Canada—the largest exporter of potash in the world. As of 2015, USDA data show that about 4.75 million tons of potash is used annually in this country.
Nitrogen is mainly manufactured in the United States. The United States is one of the largest manufacturers of ammonia in the world, approximately 88 percent of which is used in nitrogen fertilizer production. Only about 6 percent of the ammonia used in fertilizers is imported.
There’s another aspect to nitrogen fertilizer manufacturing that needs to be discussed: its dependence on fossil fuels. Combining nitrogen and hydrogen to produce ammonia is an incredibly energy-demanding process that is achieved by burning fossil fuels. The emissions from this process contribute to climate change, and the fact that the Trump administration has imposed a 10 percent tariff on oil and gas from Canada could also have ripple effects on fertilizer prices.
Phosphorus comes from phosphate rock and is mined domestically in the states of Florida, Idaho, North Carolina, and Utah. More than 95 percent of mined phosphate rock is used to manufacture different forms of phosphoric acid, which then become feedstocks in the manufacture of phosphate fertilizers. The United States imports about 13 percent of its phosphate rock from Peru and Morocco, which are insulated (for the time being) from the tariffs imposed on Canada, China, and Mexico.
Many fertilizer products used by farmers are a combination of multiple nutrients, making it hard to predict the overall impact of tariffs on fertilizer prices. But one thing is clear at the outset: because our reliance on potash imports is so high, potassium fertilizers are likely to face the largest increase in cost. In 2023, Canada exported about $4.9 billion of potash to the United States, which is currently priced at around $443 per ton. A 25 percent increase would mean an increase of more than $100 per ton (the final pricing depends on a complex web of factors).
According to the USDA, farmers are projected to spend as much as $30 billion on fertilizer inputs. Any increase in fertilizer prices will hit farmers first, followed by the cost of agricultural products.
Retaliation is already happening
The previous Trump administration imposed tariffs on steel and aluminum imports from major trading partners. In response, countries like Canada, China, and Mexico (amongst others) responded with retaliatory tariffs—meaning goods imported by these countries from the United States also faced tariffs. This included agricultural and food products like meat, grains, and soybeans.
Canada and China again imposed retaliatory tariffs on March 4—and Mexico is threatening to do the same—on a range of US exports. China announced a 15 percent tariff on US agricultural goods including soy and meat products, and Canada imposed a 25 percent tariff on all US goods. Given the strong economic integration between Canada, China, Mexico, and the United States, including a long history of trade worth hundreds of billions of dollars, these actions are likely to have significant cascading impacts on the cost of energy, agricultural products, and manufactured goods, which will affect farmers, businesses, and, ultimately, you and me—the consumers. Any increased cost in manufacturing and farm inputs will likely be transferred to consumers, resulting in higher food and grocery prices.
Mexico is the largest market for US agricultural exports, at around $30.2 billion. Agricultural goods exported to Canada total about $28.4 billion, and China at about $22 billion. Because corn, dairy, meat, and soybeans constitute the United States’ flagship agricultural exports, retaliatory tariffs on these products will be especially painful for US farmers.
Short- and long-term impacts
When tariffs were imposed by the previous Trump administration, data indicate that US agriculture lost more than $27 billion in trade with countries that responded with retaliatory tariffs. Products like meat, grains, and soybeans were primarily affected, and this allowed other countries to considerably expand their exports of those products to the nations subjected to US tariffs. Data show that these third-party countries gained at least $13.5 billion from this trade war.
The USDA could offer relief payments to farmers affected by tariffs, as it did during the first Trump administration. In 2018, the department announced $12 billion in financial assistance (referred to as a trade-aid package) for certain agricultural products, followed by a second package of $16 billion in 2019. It also established the Market Facilitation Program (MFP) in 2018 to offset the increased cost of farm inputs and loss of markets for US agricultural products.
Trade-aid packages offer relief only in the short term, and research has shown that tariffs have dire long-term consequences, especially considering geopolitics and international relations. Many farmers still have not recovered from losses incurred due to the previous Trump administration’s trade war, and yet the new administration is implementing the same policies again. The current scenario is too fluid and rapidly developing to gauge exact short- and long-term impacts, and any relief efforts that may be offered will likely be announced in the coming months or years as the full scale of damage is assessed.
This would be a good time to transform US agriculture from growing the commodity crops that are always hit first (and hardest) in trade wars to cultivating food that is actually nutritious and also benefits the environment. Transitioning away from a system that is reliant on subsidies and policies that prop up the cultivation of a single crop (mostly corn and soy) to growing fruits and vegetables would make tariffs on agricultural products a moot point.