OMAHA (DTN) -- American consumers continue to drive up the U.S. agricultural trade deficit, which is now projected to reach a record $45.5 billion in fiscal year 2025.
The USDA on Tuesday released its latest update of U.S. agricultural trade. The report showed a slight bump in exports to $170 billion for fiscal year 2025, which runs from Oct. 1, 2024, to Sept. 30, 2025. The export forecast is $500 million higher than the August forecast.
The export data was released a day after President-elect Donald Trump announced he would impose a 25% tariff on imports from Canada and Mexico due to illegal immigrants and accusations about fentanyl entering the U.S.
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An analyst from CoBank on Tuesday highlighted that one potential outcome of tariffs on Canada and a 10% tariff on imports from China could end up increasing demand for soybeans.
Canada and Mexico are big drivers of agricultural imports, which are now projected to top a record $215.5 billion, up $3.5 billion from the August forecast. That creates a potential $45.5 billion agricultural trade deficit, also a record level.
U.S. imports from Mexico are projected at $49.9 billion, up 4% from fiscal year 2024, due to growth "from a wide range of agricultural products -- especially processed fruits and beverages, alcoholic beverage, and livestock and animal products." This note was likely written before the U.S. closed the border to Mexican cattle earlier this week due to New World screwworm.
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Imports from Canada are projected at $42.5 billion, up 5% from fiscal year 2024. The strong dollar and rising demand are increasing the value of prepared foods, grain products, frozen potatoes and other frozen vegetables. Imports of canola oil also remain strong.
There's a lot of emphasis overall on the broad category of "horticultural products," which account for $105.6 billion in imports. Fresh fruit imports are projected at $20.1 billion, though USDA lowered the forecast for fresh fruits by $200 million. Fresh vegetable imports account for $13.5 billion, up about 5% from 2024. That is driven by improved growing conditions in Mexico, the largest supplier of fresh vegetables.
A few other numbers stand out, given the volume of U.S. production:
Total livestock, poultry and dairy imports combined are projected at $30.3 billion. Beef imports increased $400 million to $11.3 billion. Also, Dairy imports were pushed higher to $5.7 billion.
Grain, feed and oilseed imports combined account for $44.6 billion. U.S. grain and oilseed imports combine for $70 billion in value, or a net positive of $25.4 billion.
Sugar and sweetener imports are projected at $7.8 billion, while coffee imports are projected at $9.8 billion, tied to increasing global coffee prices.
"Today's forecast also shines light on the health of the American economy. A strong dollar and economy are evidenced by U.S. consumers' demand for imports of high-value products such as spirits and coffee. The U.S.'s agricultural export numbers should remain strong unless retaliatory tariffs result in steep declines," said Agriculture Secretary Tom Vilsack.
Tanner Ehmke, lead economist at CoBank for grain and oilseeds, also addressed the potential impacts of tariffs on LinkedIn.
"Mexico's main exports to the U.S. are fruits, vegetables and other horticultural products -- basically labor-intensive crops they can produce cheaper than the U.S. Groceries won't be getting cheaper next year."
"Canada's main ag exports to the U.S. are grain and feed, canola oil (for use in biofuels), and fruit/vegetable/horticulture products," Ehmke said.
"The tariff on canola oil imports from Canada will give a lift to U.S. soybean oil demand and buffer crush margins for U.S. soybean crushers. Feed prices in the U.S. won't budge much due to ample corn and feed supplies from this year's harvest."
"China's ag exports to the U.S. are fruits/vegetables/horticulture products and processed oils (used cooking oil, or UCO, for biofuels). The main beneficiary again will be U.S. soybean crushers that will see demand shift away from UCO over to soybean oil," Ehmke said.
See the USDA trade update here: https://www.ers.usda.gov/…
Chris Clayton can be reached at Chris.Clayton@dtn.com
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Jerry Hagstrom can be reached at jhagstrom@nationaljournal.com
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