Trade negotiations continue to be an important and complex issue for agriculture with recent weeks bringing new agreements and ongoing negotiations between the United States and China.
The United States has announced several new trade agreements, including a deal with Japan July 22 and a deal with the European Union July 27.
Cornell University ag economist Wendong Zhang says these trade agreements help provide some stability.
“These trade deals help diffuse the tension and bring more certainty for many sectors, including agriculture,” he says.
The recent deals involve other countries accepting generally higher tariffs for their products coming into the United States but at lower levels than previously offered in negotiations. Many of the trade deals, including the one with Japan, mention lowering tariffs and trade barriers for agricultural products, according to a statement from the U.S. Trade Representative’s office.
Another recent deal with Indonesia includes an agreement for that country to purchase $4.5 billion of U.S. ag products, according to the National Pork Producers Council. The NPPC also says the deal works to address barriers such as Indonesia recognizing U.S. regulatory oversight and certifications of ag products.
Pat Westhoff is a University of Missouri professor who serves as the director of MU’s Food and Agricultural Policy Research Institute.
“We don’t have a lot of the details yet,” Westhoff says. “What we do know is there’s perhaps not as many changes as we thought there’d be.”
Zhang, who previously worked at Iowa State University, says some details remain to be seen, such as how much the purchase agreements as part of the Japan and Europe trade deals will include agricultural products.
Also, while he says the 15% tariff on European Union goods coming into the United States is lower than numbers mentioned in negotiations, it is still higher than the previous average tariff rate, meaning importing goods from Europe will cost more.
“It’s lower than expected, but it’s still an increase in the cost and trade barriers relative to half a year ago,” Zhang says.
On the positive side, Zhang says the trade deal purchase agreement totals are high enough that even if reality doesn’t quite meet those “lofty” goals, coming close to it would have a major impact.
The United States and China continued talks for a new trade deal, including discussions in Sweden in late July to delay tariffs.
Zhang says there are challenges to the two sides reaching a deal, including political disagreements as well as economic considerations.
“We have foreign ownership of U.S. farmland by Chinese companies, China has issues with the U.S.’s handling of visas for Chinese students,” Zhang says. “It’s very complex, even within the economic arena. It’s very challenging to negotiate.”
People are also reading…
Westhoff says the lack of a trade deal with China stands out as several deals have recently been announced.
“China is maybe one of the exceptions to the rule where not a lot has happened,” he says.
Zhang says it is a “co-dependent trade relationship” in which both sides benefit by doing business with the other, and he expects President Donald Trump and China’s President Xi Jinping to meet in the coming months.
He says it is an encouraging sign that both sides have sent positive signals in the comments about trade talks so far.
“Likely, we will see some sort of purchase agreement, and it will likely include agricultural products,” Zhang says.
While trade negotiations can be rocky, they can also grow export markets. Zhang says the “Phase 1” trade deal with China during the first Trump administration allowed for meaningful beef exports to China for the first time in decades.
“I think beef is probably one of the commodities that has made real progress,” he says. “Beef was essentially shut out of the Chinese market since 2003 because of mad cow disease. Because of that Phase 1 agreement, there is more of an avenue for getting that product into the market.”
Trade discussions are also continuing with Mexico and Canada. The U.S.-Mexico-Canada trade agreement is still in effect, although it is up for review in 2026.
Zhang says tariffs imposed on products from other countries coming into the United States can add costs for agriculture. In particular, steel and aluminum from the European Union are still subject to a much higher tariff than the 15% general rate. Also, Zhang says U.S. agriculture imports fertilizer and piglets from Canada, and tariffs could add costs there.
“Currently it’s still an increase in trade costs,” he says.
Also, if trade deals are too lopsided in favor of the United States, trade partners might look elsewhere to buy.
“There is a larger tariff risk that this creates a strategic incentive, even among strategic allies of the U.S., to diversify away from the U.S. if possible,” Zhang says.
Westhoff says tariffs on steel and aluminum coming from other countries can drive up new farm machinery costs.
He says not many countries except China have tried retaliatory tariffs on the United States, although he says tariffs in general can cause barriers to trade and potentially create a “less robust economy” that can impact demand for ag products.
Overall, Zhang says the recent trade deals improve the outlook, although the net result of higher tariffs on products coming into the United States could have economic impacts. The trade deal with the European Union set the general tariff rate at 15%, an increase from the previous average of 4.8%.
“I think we do have less uncertainty,” Zhang says. “There’s a danger though, through the trade deals we’ve normalized higher trade barriers.”
