The U.S. market is bracing for potential disruption as President Donald Trump reiterates his plans to impose 25% tariffs on imports from Canada and Mexico starting tomorrow. These tariffs, aimed at addressing concerns over illegal immigration, drug trafficking, and trade imbalances, would impact a wide range of goods, including agricultural products, crude oil, and auto parts.

With just hours to go before the deadline, uncertainty looms. "Discussions about the tariffs are ongoing, and beyond heightened volatility, it’s hard to predict how the market will react. A lot depends on upcoming announcements," said Olivier Bouillet, Head of Analytics & Insights at ASAP Agri.

Both Canada and Mexico have strongly opposed the tariffs and are preparing countermeasures. Canadian Foreign Minister Mélanie Joly warned that the move could force the U.S. to rely more on Venezuelan oil, highlighting Canada’s key role in the U.S. energy supply. Meanwhile, Mexico has also signaled its readiness to impose counter-tariffs, raising the risk of a broader trade conflict.

If imposed, the tariffs would have a significant impact on North American agricultural trade. The U.S. is a key buyer of Canadian canola oil, meal, and crude oil, while Mexico supplies a large share of fruits, vegetables, and beverages. Higher tariffs could drive up costs for American consumers and businesses, while retaliatory measures from Canada and Mexico could hurt U.S. agricultural exports, putting pressure on American farmers.

Mexico

Agri-products are likely to be at the center of Mexico's countermeasures to U.S. tariffs. Historically, Mexico has strategically imposed tariffs on U.S. agricultural goods that impact key farming states, particularly those that supported Trump in previous elections. This time, expected targets include pork, cheese, apples, grapes, potatoes, cranberries, and Bourbon whiskey, alongside steel and aluminum.

"Given that Mexico is the top export market for U.S. corn, any retaliation could have serious implications for American farmers. The country imports over 15 MMT of U.S. corn annually, primarily for livestock feed, making it a crucial component of U.S. agricultural exports. If Mexico imposes tariffs or shifts sourcing to countries like Brazil or Argentina, U.S. corn growers could face declining prices and reduced market access," said Victoria Blazhko, Head of Editorial, Content and Analytics at ASAP Agri. The video attached discusses the worst-case scenario for the U.S.-Mexican corn trade.

However, while Mexico may seek alternative suppliers, the U.S. market remains irreplaceable for its economy, added Blazhko. "Exports account for roughly 40% of Mexico’s GDP, with more than 80% of its exports going to the U.S. This deep economic integration makes a prolonged trade conflict risky for both sides, as disruptions in agricultural trade would not only hurt U.S. farmers but also increase costs for Mexican consumers and industries reliant on American grains and meat."


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