China’s Tariffs on U.S. Ag Products Began Today

China deflation | Japan seeks tariff relief | Trump on possible recession and tariffs | Change in U.S. bird flu policy

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March 10, 2025 06:05 AM

Updates: Policy/News/Markets, March 10, 2025

— Chinese levies against U.S. ag goods started today, however, goods already in transit will be exempt from these additional tariffs until April 12. Beijing announced the retaliation just as President Donald Trump’s extra 10% blanket tariff on Chinese goods kicked in, on top of previous levies, ramping up the trade war between the world’s two largest economies.

Meanwhile, retaliatory Chinese tariffs on imports of Canadian rapeseed oil, pork and seafood are expected to begin March 20, as we reported on Saturday.

In the U.S., steel and aluminum tariffs will take effect Wednesday as planned, U.S. Commerce Secretary Howard Lutnick told NBC — details below.

The new Chinese tariffs affect a wide range of U.S. ag products. Specifically, the tariffs include:

15% additional tariff:
· Chicken
· Wheat
· Corn
· Cotton

10% additional tariff:
· Sorghum
· Soybeans
· Pork
· Beef
· Aquatic products
· Fruits
· Vegetables
· Dairy products

Additionally, China has suspended soybean imports from three U.S. entities: GHS Inc., Louis Dreyfus Company Grains Merchandising LLC, and EGT, LLC, due to alleged quality concerns.

— China’s inflation turns negative, highlighting deflationary risks. China’s consumer inflation fell below zero for the first time in 13 months, with the consumer price index (CPI) dropping 0.7% year-over-year in February, far below the forecasted 0.4% decline. The National Bureau of Statistics noted seasonal distortions due to the early Lunar New Year, but the data also signals persistent deflationary pressures. Core CPI decreased by 0.1%, marking only the second contraction in over 15 years. Weak domestic demand and continued factory deflation contribute to concerns, as Beijing sets a reduced inflation target of around 2% for 2025, down from the previous 3%.

Upshot: Policymakers face mounting pressure to stimulate the economy amid fears of prolonged deflation. At the country’s annual parliament session last week, leaders vowed to increase spending to address the “heavy and arduous” task of creating jobs and set the lowest inflation target in more than two decades.

— Japan seeks tariff relief amid Trump’s treaty criticism. Following President Donald Trump’s criticism of the U.S./Japan Security Treaty as “nonreciprocal,” Japan is seeking relief from upcoming 25% U.S. tariffs on steel and aluminum. Trump suggested that Japan’s economic gains from the U.S. relationship could be leveraged for trade concessions. Despite this, Japan maintains “full confidence” in the U.S. upholding its security commitments and is exploring ways to strengthen the alliance, including boosting defense spending to 2% of GDP by 2027. Japan’s trade minister plans a visit to Washington to negotiate on tariffs.

— Trump questions Ukraine’s survival amid limited U.S. support. In a recent interview with Trump told Fox News’ Sunday Morning Futures that aired Sunday, President Donald Trump expressed doubts about Ukraine’s ability to survive against Russia, even with full U.S. support. Defending his decision to reduce aid to Kyiv, Trump noted, “Well, it may not survive anyway,” in response to concerns from Polish President Andrzej Duda and others about Europe’s capacity to support Ukraine without U.S. backing. The Trump administration has also paused intelligence sharing and halted aid to Ukraine. Ukrainian and American officials are expected to meet in Saudi Arabia this week.

— Trump noncommittal on recession predictions amid tariff uncertainty. In a Fox News interview with Maria Bartiromo, President Trump declined to predict whether the U.S. economy would enter a recession this year, citing the “big” and “transformative” nature of his economic policies. “I hate to predict things like that,” Trump told Bartiromo on Sunday Morning Futures when asked if he expected a recession this year. “There is a period of transition, because what we’re doing is very big. We’re bringing wealth back to America. That’s a big thing. And there are always periods of — it takes a little time. It takes a little time. But I think it should be great for us. I mean, I think it should be great.” Trump acknowledged potential “disruptions” from his broad use of tariffs but emphasized the need to build a strong country despite market volatility.

While pressed for clarity on his trade strategy, Trump suggested tariffs could increase over time, maintaining that the U.S. had been “ripped off for many decades.”

Commerce Sec. Howard Lutnick shot down the possibility of a forthcoming recession during an interview on NBC News’ Meet the Press on Sunday. “Absolutely not,” Lutnick said when asked whether Americans should brace for a recession. There’s going to be no recession in America. What there’s going to be is global tariffs… You are going to see over the next two years the greatest set of growth coming from America as Americans. Donald Trump is a winner. He’s going to win for the American people. That’s just the way it’s going to be,” Lutnick added.

Lutnick defended President Trump’s approach to tariffs, saying the president is focused on stopping fentanyl from entering the country and is actively engaging with targeted countries to find common ground. “This is the way you run the country,” Lutnick said. “You shut the border. You get our neighbors to do their job. It’s not only us who has to do their job. Why are our neighbors, who live and breathe off our economy, not taking care of America?” Lutnick on the impact of tariffs on the price of foreign goods for American consumers said: “Yes, some products that are made foreign might be more expensive, but American products will get cheaper, and that’s the point… So will there be distortions? Of course, foreign goods may get a little more expensive, but American goods are going to get cheaper, and you’re going to be helping Americans by buying American.”

Lutnick confirmed that 25% tariffs on steel and aluminum imports will take effect Wednesday, March 12, with no expected exemptions. These tariffs, ordered by President Trump in February, will impact imports from key suppliers like Canada and Mexico, as well as finished metal products. The policy aims to prevent countries like Russia and China from circumventing existing duties, despite pushback from U.S. steelmakers who fear potential harm to domestic companies that rely on these metals.

Of note: The Trump administration’s tariff strategy has been characterized by abrupt rollouts, reversals, and delays, contributing to market volatility and uncertainty.

— Sheinbaum confident Mexico can avoid U.S. tariffs. Mexican President Claudia Sheinbaum expressed optimism that the U.S. will not impose reciprocal tariffs on Mexico’s exports next month. Speaking to thousands in Mexico City, Sheinbaum emphasized that existing trade agreements eliminate tariffs between the two nations, making Mexico exempt from potential U.S. measures set to begin April 2. After President Donald Trump delayed 25% tariffs on Mexican goods under the USMCA until April 2, Sheinbaum celebrated the pause as a victory. Her approach of balancing diplomatic relations with the U.S. while defending Mexican sovereignty has bolstered her popularity, with an 85% approval rating.

Sheinbaum reiterated Mexico’s commitment to collaborating on border security and drug trafficking issues, citing reduced fentanyl seizures as evidence of progress. Mexican officials will continue negotiations with the U.S. to solidify tariff relief, which could benefit up to 90% of Mexico’s exports.

— Colorado River’s future in jeopardy amid federal funding freezes and staffing cuts. Federal funding freezes and staffing cuts under the Trump administration are raising concerns about the future of the Colorado River, a vital water source for 40 million people, 30 tribes, and seven U.S. states, as well as parts of Mexico. As states negotiate new operational guidelines for the river, set to replace the 2007 interim rules expiring in 2026, the loss of funds and Bureau of Reclamation employees threatens conservation projects and infrastructure stability. Lawmakers are urging the Interior Department to restore funding and halt workforce reductions, warning that further disruptions could undermine crucial multistate agreements and conservation efforts.

— Mark Carney to replace Justin Trudeau as Canada’s prime minister. Carney won the battle against Chrystia Freeland to replace Justin Trudeau as leader of Canada’s Liberal Party and the nation. This leadership race comes at a critical time as Canada faces economic and sovereignty challenges posed by the Trump administration’s tariffs and threats. Carney will take over as prime minister in the days ahead after being sworn in by Canada’s governor general.

The candidate:

Mark Carney (59): A former Goldman Sachs banker and former Bank of Canada and Bank of England governor, leading in polls. Focused on economic growth, housing, and replacing Trudeau’s carbon tax with a consumer-focused pricing system. A former central banker, Carney has never run for office, but his economic knowledge makes him adept to take on Trump, analysts said.

The future of Canada’s leadership remains uncertain, hinging on who becomes the new prime minister. Carney, who is not an elected member of Parliament, is expected to call federal elections fairly quickly.

While federal elections must be held by October, the Liberals have seen a boost in polling since Justin Trudeau’s resignation, narrowing the Conservative Party’s lead. Current polls suggest that both Carney and Freeland could outperform Conservative leader Pierre Poilievre, with Canadians also favoring them as negotiators with Donald Trump.

“The stakes are high,” said Carney on Sunday, speaking to Liberal Party members in Ottawa. “We have made this the greatest country in the world, and now our neighbor wants to take us. No way. Impossible.”

What the polls say. According to a recent poll by the polling firm Leger, the Conservatives hold a 41% to 33% advantage over a Carney-led Liberal Party, a significant improvement for Carney’s Liberals from late January, when Leger had the Tories up by 18 percentage points. Other polls indicate a much tighter race.

FINANCIAL MARKETS

— Equities today: U.S. equity futures are down as concerns about the U.S. economy are reducing risk appetite among investors. Treasury yields are lower as investors moved towards safer fixed-income assets, driving Treasury yields down. Two-year Treasury yields have fallen sharply on bets the Federal Reserve will resume cutting interest rates. The Cboe Volatility Index — which measures expectations for S&P 500 swings over the next month — last week rose to a level rarely seen since the Covid era. Stock markets in Asia and Europe also fell in response.

Equities Friday and for the week: All three major indices scored gains Friday after the jobs data and comments from Fed Chair Jerome Powell. But all three registered losses for the week, with the Dow down 2.37%, the Nasdaq fell 3.10% and the S&P 500 fell 3.45%. On Friday, the Dow rose 222.64 points, 0.52%, at 52,801.72. The Nasdaq rose 236.97 points, 0.70%, at 18,296.22. The S&P 500 was up 31.68 points, 0.55%, at 5,770.20.

— U.S. dollar erases post-election gains amid tariff concerns. The U.S. dollar has nearly wiped out its post-election gains due to new tariffs imposed by President Donald Trump and mounting concerns about their impact on the U.S. economy.

Tariff impact: Initial optimism from pro-business policies and tax cuts has been overshadowed by tariffs on Canada, Mexico, and China, leading to fears of slower economic growth and inflation.

Economic concerns: Tariffs are increasing costs, disrupting supply chains, and reducing trade volumes, prompting investors to reassess their dollar positions.
Market Reactions: Major indexes like the S&P 500 and Dow Jones have suffered significant declines.

Dollar performance: The U.S. Dollar Index (DXY) hit a four-month low, down over 4% this year — the worst performance since 2008.

Outlook: While a potential rebound is possible if trade tensions worsen, the outlook remains uncertain, hinging on trade policy developments.

— Malanga: Budget progress overshadowed by tariff uncertainty. Dr. Vince Malanga, President of LaSalle Economics, says that fortunately, the budget resolution, which includes an extension of the 2017 tax cut, passed the House by the narrowest of margins. However, he notes the Senate version is significantly different, requiring reconciliation. Neither version includes full retroactive expensing of capital equipment investment, despite presidential support. With a possible government shutdown looming, formal legislation may not be enacted until mid-spring.

Tariffs, now back on with exemptions, have blunted budget progress, contributing to market turbulence and consumer confusion, Malanga notes. Business decisions are being delayed, capital expenditures are weakening, and the economy is barely growing this quarter. Fiscal drag is beginning to assert itself, suggesting further weakness ahead.

Tariff-induced inflationary pressures are not a primary concern, as energy prices are declining, Malanga observes. He says the labor market is showing warning signs, with jobless claims rising in the Capital area and weak aggregate hours worked. Employers may start cutting payrolls if demand remains soft, pressuring income and spending.

The housing market remains sluggish, with fiscal drag from DOGE replacing prior government stimulus. Malanga says the Federal Reserve may need to ease monetary policy quickly and meaningfully to support housing and capital spending. However, he adds there is concern that an undue focus on tariffs and tax cuts could delay needed agility from the Fed.

AG MARKETS

— Mid-Mississippi River to open for navigation on March 10. The National Grain and Feed Association (NGFA) announced that the Mid-Mississippi River will officially open for navigation at 7:00 a.m. CT on Monday, March 10. Following NGFA Barge Freight Trading Rule 18(J), a special three-person committee declared the opening after the MV Philip M. Pfeiffer reached Dubuque, Iowa, on March 8, with a suitable empty dry cargo covered barge.

— Proposed U.S. surcharge on China-made vessels threatens ag exports. The proposed U.S. surcharge on China-made vessels, ranging from $500,000 to $1.5 million per vessel call, could significantly impact U.S. agricultural markets. Increased shipping costs may add $16 to $24 per metric ton to grain shipments, reducing competitiveness against Brazilian exports, analysts note. Higher costs could lower international demand for U.S. products, disrupt supply chains, particularly at smaller ports like Oakland, and contribute to market uncertainty. While immediate effects on commodity prices may be limited, long-term challenges for U.S. farmers and the agricultural sector are likely.

— Traders eye potential grain contract cancellations amid trade tensions. Traders are closely monitoring potential cancellations of U.S. grain contracts as tariffs and trade uncertainty with Mexico, Canada, and China escalate, Bloomberg reports. Over 11 million metric tons of grains have been sold but not yet shipped to these top trading partners, according to USDA data for the week ending Feb. 27. Mexico, the largest buyer of U.S. corn, may cancel part of its 7.6 million tons of contracted cargo, Bloomberg adds. China holds 1.4 million tons of outstanding soybean sales, while Canada has a smaller amount of unshipped grains.

— Agriculture markets Friday and the week:
• Corn: May corn rose 5 1/4 cents to $4.69 1/4 and gave up 1/4 cent on the week.
• Soy complex: May soybean futures fell 2 1/4 cents to $10.25, near mid-range and for the week down 3/4 cent. May soybean meal lost 50 cents to $304.40, near mid-range and for the week up $4.20. May bean oil rose 25 points to 43.42 cents, near mid-range and down 70 points on the week.
• Wheat: May SRW wheat fell 2 3/4 cents to $5.51 1/4 and gave up 4 1/2 cents on the week. May HRW fell a penny to $5.64 3/4 and marked a weekly loss of 8 1/4 cents.
• Cotton: May cotton futures rose 86 points to 66.07 cents, nearer the daily high and on the week gained 82 points.
• Cattle: April live cattle led the livestock complex higher Friday, leaping $4.00 to $200.275 at the close. That represented a weekly jump of $7.625. April feeder futures surged $3.725 to $278.15, which marked a weekly gain of $5.15.
• Hogs: April lean hog futures settled 70 cents higher to $87.35 and closed near session highs, marking an impressive $3.675 gain on the week.

FOOD & FOOD INDUSTRY

— Trump’s avian flu plan faces delays in lowering egg prices. The Trump administration’s recently announced $1 billion plan to combat avian flu is unlikely to reduce high egg prices in the short term, according to experts cited in a recent Barron’s article by Evie Liu (link). The spread of avian flu has decimated chicken populations, driving egg prices to an average of $4.95 per dozen in January, double from a year earlier.

The administration’s five-point plan includes biosecurity measures, financial relief for producers, and potential vaccination of egg-laying chickens. However, Pooran Sharma, an agricultural commodity analyst, cautions, “I don’t think any of these initiatives are going to offer immediate relief.”

Even if biosecurity and vaccination efforts succeed, replenishing lost chicken flocks could take up to a year. Brian Albrecht, chief economist at the International Center for Law & Economics, highlighted this timeline: “We’re talking about a year or longer for the breeding cycle.”

Temporary measures, such as increasing egg imports, might help ease the shortage. Turkey, a major egg exporter, plans to send 420 million eggs to the U.S. this year, but the gap remains significant. In 2024, U.S. egg production was approximately 109 billion eggs, already down by one billion from the previous year.

Bottom line: With demand for eggs being relatively inelastic, even a small supply disruption can lead to significant price increases. Additional regulatory changes, like allowing surplus broiler chicken eggs into the market, could help, but the benefits may not materialize immediately.

Politics has also surfaced regarding the topic, with some Democrats more than pleased to point out the surging price of eggs.

ENERGY MARKETS & POLICY

— Oil prices steady amid tariff concerns and rising OPEC+ output. Oil prices remained stable on Monday as fears over U.S. import tariffs’ impact on global growth and fuel demand, along with rising output from OPEC+ producers, dampened risk appetite. Brent crude dipped 11 cents to $70.25 a barrel, while U.S. West Texas Intermediate (WTI) fell 17 cents to $66.87. WTI marked its seventh consecutive weekly loss, its longest streak since November 2023, and Brent recorded a third straight week of declines. Analysts cited tariff uncertainty, Saudi oil price cuts, and deflationary signals from China as contributing factors to the weakness. The market is also weighed down by concerns about U.S. growth, potential easing of Russia sanctions, and increased OPEC+ production. Investors are now looking to upcoming reports from the International Energy Agency and OPEC for further insights.

Of note: Money managers reduced gross long positions in West Texas Intermediate by 2,266 lots to 172,576, close to lows not seen since 2010, in the week ended March 4, according to the Commodity Futures Trading Commission. Long-only bets on Brent were cut by 41,583 lots for the biggest raw-number decline since July, according to figures from ICE Futures Europe.

— Oil Prices rose Friday amid sanction threats but closed below session highs. Brent crude was up $1.10 (1.58%) to $70.56 and WTI gained $1.06 (1.6%) to $67.42, after President Trump threatened sanctions on Russia over its actions in Ukraine. Prices retreated from intraday highs of $71.40 and $68.22, respectively. Despite Friday’s gains, Brent fell 3.8% for the week, its biggest drop since November, while WTI declined 3.6%, its worst performance since January. Price volatility was fueled by OPEC+'s output increase, rising U.S. crude inventories, and signals of potential policy changes from Russia and the U.S.

— Clean energy tax credits face GOP scrutiny. Hundreds of billions in clean energy incentives from the Inflation Reduction Act (IRA/Climate Act) are under pressure as Republicans consider scaling back Biden-era tax credits. Companies with investments in ongoing projects are concerned, with particular focus on the transferability of tax credits drawing attention.

TRADE POLICY

— India and EU push for ambitious trade deal amid geopolitical tensions. India and the European Union are set to hold a new round of trade talks in Brussels from Monday to Friday, aiming to finalize a comprehensive trade agreement by the end of the year. The negotiations, relaunched in June 2022, follow an earlier attempt between 2007 and 2013 that failed to reach a deal after 16 rounds of discussions. The renewed urgency comes as geopolitical tensions rise and the threat of tariffs from President Trump looms.

CONGRESS

— House Republicans push spending bill to avoid government shutdown. House Republicans unveiled a new spending bill on Saturday to fund the government through Sept. 30, increasing military spending by $6 billion while avoiding earmarks for local projects. Democrats criticized the bill as a “power grab” by the Trump administration and billionaire Elon Musk, raising doubts about its passage through a narrowly divided Congress. With a potential government shutdown looming, Speaker Mike Johnson (R-La.) faces the challenge of uniting Republicans to advance the legislation, while Democrats weigh the possibility of a Senate filibuster. Link for details on this topic as we covered Saturday in The Week Ahead.

— Upcoming changes in U.S. tax legislation. As the House of Representatives has passed a budget calling for up to $4.5 trillion in tax cuts over 10 years, many provisions from previous bills are set to expire at the end of 2025. Here are some key areas to watch:

Provisions set to expire:

Tax brackets: The 2017 tax law lowered federal income tax rates. Without extension, these rates will revert to pre-2017 levels.
Standard deduction: The standard deduction nearly doubled in 2017. It will shrink significantly without new legislation.
SALT (State and Local Tax Deduction): The $10,000 cap on state and local tax deductions may expire or be increased.
Child tax credit: The credit will revert from $2,000 to $1,000 per child without action.
Qualified business income: The 20% deduction for self-employed and small-business owners will disappear without extension.
Estate tax exemption: The exemption will decrease by more than half without an extension.

Some campaign pledges and potential changes include:

No taxes on social security benefits: Unlikely due to high costs.
No taxes on tips: Could be prioritized with restrictions.
No taxes on overtime pay: Questions remain about Social Security and Medicare contributions.
Deduction for vehicle-loan interest: Applies only to U.S.-made vehicles.
Tax on college scholarships and fellowships: Could lead to changes in how scholarships are structured.
End to electric vehicle tax credits: Could be canceled before the scheduled sunset in 2032.

Some revenue generators are under review. President Trump wants to bring in some dollars by cracking down on carried interest and wealthy sports team owners’ tax breaks.

Of note: Senate Finance Chair Mike Crapo (R-Idaho) is scheduled to speak at the U.S. Chamber of Commerce’s tax policy summit Wednesday.

HPAI/BIRD FLU

— USDA shifts avian flu strategy away from vaccines. USDA Secretary Brooke Rollins in an interview with Breitbart.com (link) said that USDA will no longer pursue vaccines for poultry and livestock in its avian flu strategy. Citing the ineffectiveness of vaccines in countries like Mexico, where vaccinated chickens continued to contract the disease, Rollins stated the focus will shift to biosecurity measures and repopulation efforts. This aligns with Health and Human Services Secretary Robert F. Kennedy Jr.'s stance against poultry vaccines. USDA’s $1 billion plan includes boosting egg imports and offering financial relief to farmers. President Donald Trump recently criticized the previous administration’s handling of the outbreak, emphasizing his administration’s immediate response.

WEATHER

— NWS outlook: Widespread record high temperatures possible across portions of the Upper Midwest and Northern/Central Plains... ...Critical Fire Weather Risk over parts of the Northern Plains today then Southern High Plains through the rest of the week

KEY DATES IN MARCH

8-20: FOMC blackout where Fed officials cannot comment on monetary policy or the economy.
11: USDA WASDE, Crop Production
12: CPI
13: PPI-FD
13: Purim Fun Jewish holiday
14: Final day of current continuing resolution (CR)
15: Tax filing deadline for partnerships and S corporations
18: NCAA men’s basketball finals
18-19: FOMC meets (interest rates)
20: Spring equinox
20: NCAA women’s basketball finals
21: USDA Chicken & Eggs report | Cattle on Feed | Milk Production
25: USDA Cold Storage report | USDA Food Price Outlook
27: USDA Hogs & Pigs report
27: MLB Opening Day
28: Personal Consumption Expenditures Price Index
29: Last day of Ramadan
31: USDA Prospective Plantings, Grain Stocks and Rice Stocks reports | Ag Prices

LINKS