The recent 25% tariffs imposed by the United States on products from Mexico and Canada have raised significant concerns in the agri-food sector. According to an analysis by Areté – The Agri Food Intelligence Company, an Italian firm specializing in forecasting agri-food markets, this change in trade policy could have a notable impact, especially on the supply chain of corn and soybeans.
Mexico, which accounts for 40% of US corn exports for the 2023/24 season, is in a delicate situation. Meanwhile, China represents 55% of US soybean exports. With the possibility of the trade war escalating, it is estimated that the United States could face a production surplus, which could put pressure on domestic prices. This scenario is reminiscent of the tariff crisis of 2018/19 when soybean exports to China plummeted by 52%.
The increase in tariffs could also raise the cost of importing vegetable oils and animal fats, mostly from Canada. This could increase the demand for domestic products, such as soybean oil. However, the substitution of products will not be an immediate process, leading to considerable instability in the food industry.
The situation is further complicated by the rising energy costs, as Canada and Mexico are the main suppliers of crude oil to the United States, accounting for 60% and 10% of its imports in 2022. An increase in the costs of these imports could result in higher prices in the energy sector, contributing to an inflationary spike that would affect the entire industry.
The exports of Canada, Mexico, and China are heavily reliant on the US market, representing 78%, 80%, and 15% of their external sales in 2023, respectively. This new protectionist approach by the United States could reshape international trade, creating volatility in multiple sectors. Although the European Union has not been subject to trade restrictions so far, former President Donald Trump has expressed his intention to impose tariffs on EU exports if he returns to the White House.
Areté – The Agri Food Intelligence Company, with over 15 years of experience in analyzing agri-food markets, has collaborated with some of the most established companies in this field, as well as various associations and the EU Commission. The firm, leading in Italy and Europe, aims to continue its advisory work in an increasingly challenging commercial environment.
via: MiMub in Spanish
