The trade war initiated by President Trump has severely impacted agricultural markets, causing significant price drops for corn, wheat, and soybeans. Tariffs on imports from Canada, Mexico, and China have led to retaliatory measures, further destabilizing trade dynamics. Experts predict prolonged uncertainty, with U.S. farmers unable to adjust production to meet domestic demand. Meanwhile, European markets face challenges, particularly with rapeseed, as Canadian canola supply issues emerge.
The Impact of the Trade War on Agricultural Markets
In the wake of the trade war initiated by American President Donald Trump, the agricultural markets are experiencing a significant downturn, with corn prices experiencing a dramatic “free fall.” In just ten days, corn, which is the most exported grain from the United States, plummeted over 11% on the Chicago Stock Exchange, dropping to $4.36 per bushel (approximately 25 kg). This marks its lowest point since mid-December.
During the same timeframe, wheat saw a decline of 12%, bringing its price down to $5.90, while soybeans dipped more than 5%, falling below the critical $10 mark—its lowest since January. Arlan Suderman from StoneX Financial described the current state of the markets as one of fear and emotional sell-offs. Investment funds that had heavily invested in corn are now liquidating their assets, which is further driving down prices. Sébastien Poncelet, a grain expert at Argus Media France, summarized the situation as a “free fall” affecting Europe as well.
Escalating Tariffs and Uncertainty
This alarming trend can be traced back to recent U.S. political developments characterized by threats and the introduction of new tariffs. Imports from both Canada and Mexico are now subject to a 25% tax, while Chinese goods face a 20% tariff. The European Union is expected to impose similar tariffs in April.
In retaliation, Canada has swiftly enacted targeted tariffs of 25% on American products such as meats, eggs, and wines. Meanwhile, China has introduced tariffs of 10% and 15% on various agricultural goods ranging from chicken to soybeans. The U.S. is specifically targeting its key customers: Mexico, which imported $5.6 billion worth of corn in 2024, and China, which accounted for more than half of American soybean exports last year with purchases nearing $13 billion.
Looking at the situation with China, Arlan Suderman suggests that little change is expected in the near future. Chinese purchases of American soybeans have already diminished, and Brazil’s recently harvested and more affordable soybeans are likely to dominate future Chinese imports for the next six to eight months. Dewey Strickler from Ag Watch Market Advisors views the tariffs imposed by Beijing on American soybeans as a strategic move aimed at initiating negotiations.
The ramifications of this trade war are also concerning for Mexico and Canada, both of which may experience inflation as a result of the ongoing crisis. This cycle of retaliatory measures is unprecedented; unlike the isolated trade conflict of 2018 between the U.S. and China, the current situation has a broader scope that creates “uncertainty” about the future reorganization of global agricultural trade, as noted by Damien Vercambre from the Inter-Courtage firm.
In light of these developments, President Trump has called upon “the great farmers of the United States” to increase domestic agricultural production. However, experts argue that as the world’s leading exporter of agricultural products, the U.S. domestic market simply cannot absorb excess supply. Additionally, farmers in the Midwest, particularly in Iowa’s Corn Belt, are unlikely to change their crop yields drastically to accommodate domestic needs, as highlighted by Sébastien Poncelet.
While temporary adjustments may occur, the Midwest remains predominantly suited for corn and soybean cultivation. As the market awaits a rebalance, prices have sunk so low that farmers are disinterested in selling, and potential international buyers are holding off on purchases.
In Europe, the decline was especially notable for rapeseed, which has become a “collateral victim” of the Canadian canola situation. Most Canadian canola oil is exported to the U.S. for biodiesel production, and a reduction in this demand could lead to an oversupply in Canada, which may then compete with local rapeseed in the European market.