Trump Signals Softer Stance on China Tariffs, But Keeps Threats Alive

Policy/News/Markets Updates: Jan. 24, 2025

Other topics in today’s dispatch includes: (1) WTO chief says don’t ‘hyperventilate’ over Trump tariff threats; (2) Were Trump tariff concerns exaggerated? (3) More Trump volatility next week; (4) GOP eyes trillions in spending cuts to fund tax reductions; (5) Trump’s virtual Davos speech: tariff threats, oil price moves, and banking criticism; (6) Bank of Japan raises key interest rate to 0.5%; (7) John Ratcliffe confirmed as CIA Director in bipartisan vote; (8) Hegseth clears Senate hurdle, moves closer to confirmation as Defense Secretary; (9) Federal judge blocks Trump’s birthright citizenship order; (10) Trump is headed to Asheville, North Carolina, and then Los Angeles; (11) Trump is headed to Asheville, North Carolina, and then Los Angeles; (12) Trump orders release of long-secret files on JFK, RFK, and MLK assassinations; (13) Alcoa expects lower production of aluminum this year, comments on possible U.S. tariffs; (14) Railroads ride fuel savings to steady gains; (15) CEO pay soars as profits rise; (16) U.S. Treasury expands measures to avoid debt ceiling breach; (17) Boeing strike and defense charges slam Q4 earnings; (18) Retail closures surge in the U.S.; (19) U.S. colleges experienced a surge of 4.5% in enrollment last fall; (20) Soybeans remain main U.S. ag export sales to China; (21) Argentina implemented significant reductions in export taxes across various ag commodities; (22) India struggling to sign sugar export contracts; (23) Cotton AWP eases slightly; (24) Trump opens door for Keystone XL revival amid lingering doubts; (25) Trump’s trade executive order: 23 tasks for U.S. agencies; (26) Trump threatens tariffs while mapping out sweeping trade overhaul; (27) Shein details cotton sourcing to comply with U.S. forced labor law; (28) Updates on Trump Cabinet nominee panel votes; (29) Bipartisan bill to combat wildfires passes the House; (30) Brazil’s exports to China in 2024: Soybean slump, oil exports rise; (31) U.S. lawmakers introduce bill to revoke China’s trade designation; (32) Chinese EV makers file challenges to tariffs at EU court; (33) Small-town America embraces Buc-ee’s boom; (34) Nebraska’s largest feedlot project underway; (35) Germany’s pork sector faces mounting challenges; (36) Brazil’s beef industry unfazed by potential new Trump tariffs; (37) Saudi Arabia’s poultry boom: A bid for food self-sufficiency; and (38) Texas seeks $11 billion federal reimbursement for border security costs.

— Trump signals softer stance on China tariffs, keeps threats alive. President Donald Trump expressed a preference for avoiding tariffs on China, describing them as a “tremendous power” but reiterating his willingness to use them if necessary. In an interview with Fox News’ Sean Hannity (link), Trump noted that while tariffs provide leverage over Beijing, he’d rather not implement them. “We have one very big power over China, and that’s tariffs, and they don’t want them,” Trump said. “And I’d rather not have to use it. But it’s a tremendous power over China.” Markets responded positively, with China’s yuan strengthening and stocks rising following the comments. Analysts observed that Trump’s rhetoric on China has softened since his campaign trail threats of tariffs as high as 60%. Trump’s remarks reflect a balancing act in his foreign policy approach. Trump has downplayed immediate actions against Chinese-owned TikTok and maintained diplomatic ties with Beijing, hosting Vice President Han Zheng at his inauguration. However, Trump remains critical of certain Chinese exports and continues to link Beijing’s influence to resolving broader global issues, such as the war in Ukraine. His stance underscores ongoing diplomatic and economic complexities in U.S./China relations. “The most important question on tariffs hasn’t been answered yet. Markets are taking it a little bit positively because expectations were for very aggressive tariffs on day one. So, there is a little bit of a relief rally based on that.” — Marija Veitmane, Head of equity research at State Street. Trump also addressed other international challenges, including Russia and North Korea, emphasizing negotiations and sanctions as key tools in his foreign policy arsenal. (Farm Journal ) — WTO chief says don’t ‘hyperventilate’ over Trump tariff threats. World Trade Organization (WTO) Director-General Ngozi Okonjo-Iweala called for a measured approach to tariff discussions, urging leaders to “chill” and avoid overreacting. Speaking ahead of President Donald Trump’s address to the Davos forum, she noted the tendency to use tariffs to address issues unrelated to trade. “Sometimes the problem is not actually coming from trade but from macroeconomic imbalances,” she said, pointing to factors like domestic consumption and savings disparities. While tariffs may temporarily reduce trade deficits, Okonjo-Iweala warned of inflationary consequences and potential harm to export competitiveness. Her remarks were echoed by EU economy chief Valdis Dombrovskis during the panel discussion. — Were Trump tariff concerns exaggerated? No, says Tom Essaye of the Sevens Report. He notes that markets rallied this week as “Day One” of the Trump administration brought no immediate tariff threats, which eased investor fears. However, this relief may be premature. According to Essaye, the risk of tariffs remains very real and could cause significant market volatility in the near term. While no tariffs were announced yet, the Trump administration has directed federal agencies to review trade relationships for potential misconduct, with findings expected by April 1. It’s after this date that tariff risks could escalate. History provides a cautionary tale, he reminds: the 2017 tariff announcements triggered a 5% pullback in the S&P 500, and current market valuations (21X-22X forward P/E compared to 17X-18X then) leave no room for error. If tariffs are implemented poorly, they could amplify inflation concerns, hurt growth, and push valuations lower, potentially resulting in a 20% market decline. Essaye warns that while this week’s rally reflects an overreaction to fears, the fundamental risks of tariffs remain significant and could disrupt markets throughout the year. (Bloomberg) — More Trump volatility next week. Bloomberg reported today: “Wall Street optimism abounds that Trump — who famously cited rising share prices as a scorecard on his governance in the first term — will refrain from implementing the most aggressive aspects of his policy agenda, an agenda that has stoked fears about the inflationary outlook and the nation’s finances.” Added Bloomberg: “It’s a gamble, of course, with fresh Trump fireworks expected next week, in an already jam-packed trading period thanks to the Fed policy gathering and the start of the big tech earnings season.” Trump in a speech Thursday said he would “demand” that the Fed lower interest rates immediately. — USDA Secretary nominee Brooke Rollins got a good confirmation hearing report card from farm-state lawmakers and other ag industry stakeholders. We have details in the Farm Policy section. (Farm Journal ) — GOP eyes trillions in spending cuts to fund tax reductions. House Republican committee chairs proposed sweeping spending cuts and budget savings, totaling $2.5 to $3 trillion, during a closed-door meeting to support their reconciliation package, according to Punchbowl News. The package aims to fund massive tax cuts while addressing deficit concerns. Key areas for cuts: · Medicaid: Up to $2 trillion, including work requirements and per capita funding caps. · Student loans: $500 billion through reduced borrowing limits, caps on forgiveness programs, and repealing Biden-era repayment plans. · SNAP (Food Stamps): $100–250 billion, with expanded work requirements and increased state cost-sharing. · Federal benefits: $66 billion, targeting employee retirement contributions and health programs. · Immigration fees: $27 billion via asylum, visa, and parole application fees. · Infrastructure and energy: $31 billion through higher tonnage fees, EV charges, and resource sales. The GOP’s ambitious roadmap seeks to appease deficit hawks and comply with reconciliation rules that prohibit increasing deficits after a decade. However, achieving consensus within the narrow Republican majority remains a political challenge, with Democrats vocally opposing cuts to social safety nets. Of note: The House Budget Committee will consolidate these proposals into reconciliation instructions, aiming to finalize the bill before April. — Trump’s virtual Davos speech: tariff threats, oil price moves, and banking criticism. President Donald Trump, appearing virtually at the World Economic Forum in Davos, Switzerland, targeted European Union nations with tariff threats, urging them to produce goods in the U.S. or face penalties. Despite postponing his promise to impose tariffs on China, Trump floated a 25% tariff on Canada and Mexico, drawing warnings of retaliation from both countries. During the address, Trump pressured OPEC to lower crude prices, which briefly affected oil markets, though similar demands from previous administrations have often failed. He also criticized Wall Street giants JPMorgan and Bank of America, accusing them of discriminating against conservative clients — claims the banks have dismissed. Link to our special report for details. — Bank of Japan raises key interest rate to 0.5%. The Bank of Japan increased its key interest rate by a quarter-percentage point to 0.5%, marking the highest level since 2008. Governor Kazuo Ueda is pushing forward with efforts to normalize monetary policy. Bloomberg Economics predicts two additional hikes in April and July. The yen strengthened as markets interpreted the upward revision of inflation expectations as a hawkish signal. “We’ll raise rates and adjust policy if our outlook is realized,” Ueda said in his post-decision press conference, repeating his existing stance. At the same time, he didn’t indicate the BOJ had any specific timing in mind for its next move. “We have no preconception on the pace of rate hikes, given it’s dependent on the future state of the economy and prices,” he said. — John Ratcliffe confirmed as CIA Director in bipartisan vote. The Senate on Thursday confirmed John Ratcliffe as the next director of the CIA in a 74–25 bipartisan vote, following a brief delay in the confirmation process. Ratcliffe, a former U.S. representative for Texas and director of national intelligence during Trump’s first administration, was sworn in shortly after the vote. Despite opposition from a small group of Senate Democrats, Senate Intelligence Committee Chair Tom Cotton (R-Ark.) and Vice Chair Mark Warner (D-Va.) emphasized the urgency of the confirmation, citing the “dangerous” global geopolitical climate. Ratcliffe faces critical challenges, including countering cyber threats from China, managing tensions involving Russia, Iran, and North Korea, and addressing technological competition in areas like AI and quantum computing. — Hegseth clears Senate hurdle, moves closer to confirmation as Defense Secretary. Donald Trump secured a significant win Thursday as the Senate narrowly advanced his pick for defense secretary, Pete Hegseth, in a 51-49 vote. Despite losing the support of moderate Republican Senators Lisa Murkowski (Alaska) and Susan Collins (Maine), Hegseth, a former Fox News anchor and Army veteran, garnered backing from key GOP senators like Joni Ernst (Iowa), Thom Tillis (North Carolina), and Mitch McConnell (Kentucky). The controversial nomination, once at risk of collapse, is now on track for final Senate confirmation by Friday night, followed by a cloture vote on the nomination of Kristi Noem for secretary of Homeland Security. We have more congressional action on Trump nominees in the Congress section. Meanwhile, several major Cabinet fights are still looming. Robert F. Kennedy Jr., the health and human services nominee, and Tulsi Gabbard, the DNI nominee, are scheduled to have confirmation hearings next week. — Federal judge blocks Trump’s birthright citizenship order. A federal judge has temporarily blocked President Donald Trump’s executive order seeking to end birthright citizenship, deeming it “blatantly unconstitutional.” Democratic-led states have argued that the order violates the 14th Amendment of the U.S. Constitution, which grants citizenship to all children born on U.S. soil and “subject to the jurisdiction thereof.” The Trump administration contends that the clause allows exclusions for children of undocumented immigrants and certain non-permanent residents. The administration has pledged to challenge the decision. — Trump is headed to Asheville, North Carolina, and then Los Angeles, which is still battling wildfires. Trump has criticized former President Joe Biden for his administration’s response in North Carolina, and he’s has disdain for California leaders for water policies that he claimed worsened the recent blazes. — Trump orders release of long-secret files on JFK, RFK, and MLK assassinations. President Trump signed an executive order to declassify and release long-hidden records on the assassinations of President John F. Kennedy, Senator Robert F. Kennedy, and civil rights leader Martin Luther King Jr. The decision comes after decades of speculation, conspiracy theories, and public demand for transparency regarding these pivotal events in American history. Trump declared, “Everything will be revealed,” during a signing ceremony in the Oval Office. The executive order mandates the Justice Department and the Office of the Director of National Intelligence to present a release plan within 15 days for JFK files and within 45 days for RFK and MLK files. The JFK assassination in November 1963 and the subsequent killing of alleged assassin Lee Harvey Oswald have long fueled debates over potential conspiracies. Documents released previously suggest Oswald’s Soviet and Cuban connections, but many questions remain unanswered. Similarly, Robert F. Kennedy’s 1968 assassination by Sirhan Sirhan and Martin Luther King Jr.’s murder the same year by James Earl Ray have been subjects of scrutiny. Controversial FBI documents released in recent years allege efforts to undermine King’s leadership and character, which further complicates public understanding of his death. In a nod to historical connections, Trump handed the pen used to sign the order to Robert F. Kennedy Jr., who has been nominated to lead the Department of Health and Human Services. RFK Jr. has previously argued that the CIA played a role in his father’s and uncle’s deaths and has supported parole for Sirhan.

— Equities today: Asian and European shares were mixed but mostly higher overnight. U.S. Dow opened around 100 points lower but then shaved some of those losses. Global stocks are ending the week at record highs after President Donald Trump appeared to soften his approach toward tariffs on China (see related item above). The yen strengthened after the Bank of Japan raised interest rates. The U.S. dollar index is solidly lower and hitting a five-week low. Emerging-markets currencies are on course for their best week since July 2023. Europe’s benchmark Stoxx 600 index is on track for a fifth weekly advance after hitting a record. The dollar slipped to a one-month low as investors switched to higher-yielding assets. In Asia, Japan -0.1%. Hong Kong +1.9%. China +0.7%. India -0.4%. In Europe, at midday, London -0.14%. Paris +0.9%. Frankfurt +0.3%.

Equities yesterday: All three major indices finished with gains, with a late rally bringing the Nasdaq into positive territory. The Dow gained 408.34 points, 0.92%, at 44,565.07. The Nasdaq was up 44.34 points, 0.22%, at 20,053.68. The S&P 500 gained 32.34 points, 0.53%, at 6,118.71.

(Bloomberg)

— Alcoa expects lower production of aluminum this year, comments on possible U.S. tariffs. “The U.S. imports two-thirds of its primary aluminum from Canada,” Alcoa CEO William Oplinger said on the company’s earnings call. “This was true both before and after the Section 232 tariffs on aluminum implemented by President Trump in his first term, who also granted an exemption to the tariffs for Canada, and select other countries.” Tariffs on Canadian aluminum “would represent a threat to U.S. industrial competitiveness,” he added, estimating increased cost to U.S. consumers at about $1.5 billion to $2 billion a year.

— Railroads ride fuel savings to steady gains. U.S. railroads are leveraging lower fuel prices to boost profitability despite sluggish industrial conditions. Union Pacific reported a 7% rise in net profit to $1.76 billion in the last quarter, driven by a 23% drop in fuel spending and tighter operational controls. The savings, alongside improved fuel efficiency, helped reduce overall operating expenses by 4%, even as $40 million in added labor costs from a crew staffing agreement were incurred.

CSX also cut fuel expenses, but its earnings dropped 17% to $733 million.

Both railroads faced declines in coal revenue, with Union Pacific’s coal earnings plunging 29%. However, intermodal volume buoyed Union Pacific’s performance, jumping 16% in the fourth quarter, fueled by a surge in imports at Southern California ports.

— CEO pay soars as profits rise. JPMorgan raised CEO Jamie Dimon’s compensation to $39 million for 2024 after achieving the highest annual profit in U.S. banking history. Meanwhile, Disney boosted Bob Iger’s total pay by 30% to $41.1 million for the fiscal year ending September, reflecting the company’s efforts to navigate a transformative year.

— U.S. Treasury expands measures to avoid debt ceiling breach. The U.S. Treasury announced new accounting measures to prevent exceeding the federal debt limit, reinstated earlier this month. Acting Treasury Secretary David Lebryk informed Congress on Jan. 23 that the Treasury has halted full investments in the Government Securities Investment Fund for federal employees, promising to restore the fund once the debt limit is raised or suspended. This move follows recommendations by former Treasury Secretary Janet Yellen. President Trump has nominated Scott Bessent as Yellen’s successor, pending Senate confirmation. Analysts project the Treasury can avoid a debt ceiling breach until the third quarter of 2025 through these measures.

— Boeing strike and defense charges slam Q4 earnings. Boeing Co. reported a steep fourth-quarter loss as fresh charges and a prolonged strike disrupted operations. Preliminary results showed a $15.2 billion sales figure — below Wall Street’s $16.76 billion expectation — and a $5.46 per-share loss. CEO Kelly Ortberg, facing the fallout of $1.7 billion in defense charges and $1.1 billion in commercial airplane accounting charges, emphasized stabilization efforts. Boeing’s defense unit grappled with setbacks on programs like the KC-46 tanker and Air Force One, while a strike by 33,000 workers slowed production and deliveries. Despite securing $24 billion in cash, the company’s commercial jet and defense divisions recorded sharp operating losses. With stock down 1.8% in after-hours trading and competitor Airbus SE outperforming, Boeing’s recovery remains uncertain.

— Retail closures surge in the U.S. Store closures in the U.S. are spiking, with more retail locations shuttering last year than any year since 2020, according to an analysis by Coresight Research. The advisory firm projects this trend to intensify, with 2025 closures expected to more than double 2024’s total.

— In a surprise, U.S. colleges experienced a surge of 4.5% in enrollment last fall, according to the National Student Clearinghouse Research Center. Interesting stat: A rise of 5.5% in the 2024 freshman incoming class came primarily from “older” first-year students.

— Ag markets today:

• Grains lower overnight. Corn, soybeans and wheat faced price pressure overnight in reaction to Argentina cutting grain and soy export taxes through midyear. As of 7:30 a.m. ET, corn futures were trading 2 to 5 cents lower, soybeans were 9 to 14 cents lower, and wheat was 5 to 7 cents lower. The U.S. dollar index is down around 450 points, and front-month crude oil futures are about 50 cents higher.
• December feedlot placements expected to rise despite Mexico cattle ban. Analysts expect USDA’s Cattle on Feed Report this afternoon to show the large feedlot (1,000-plus head) inventory down 0.3% from year-ago at 11.894 million head as of Jan. 1. The report is expected to show a 1.1% increase in the number of cattle moved into feedlots last month, despite a ban on Mexican feeder cattle imports that went into effect in late November. Marketings are anticipated to be up 1.2% from December 2023.
• Cold Storage Report also out this afternoon. USDA will detail frozen meat stocks at the end of December. The five-year average is an 18.3-million-lb. increase in beef stocks and a 2.5-million-lb. rise in pork stocks during the month.
• Cash cattle trade steady/firmer. Cash cattle trade has been relatively light so far this week, but what activity took place suggests prices will rise again. Deals in the Southern Plains were mostly steady to $1.00 higher, with some light trade in the northern market as much as $2.00 higher.
• Cash hog index continues steady climb. The CME lean hog index is up another 21 cents to $81.93 as of Jan. 22, the ninth straight daily gain during which prices have risen $1.50. February lean hog futures finished Thursday 19.5 cents above today’s cash quote, suggesting traders expect the slow but steady climb to continue near-term.

— Soybeans remain main U.S. ag export sales to China. Data from USDA for export sales activity to China for the week ended Jan. 16 included activity for 2024-25 of net sales of 6,000 metric tons of corn, 888,643 metric tons of soybeans, and 7,271 running bales of upland cotton. Activity for 2025 included net sales of 3,899 metric tons of beef and 805 metric tons of pork.

— Argentina implemented significant reductions in export taxes across various ag commodities, a move that has been perceived as bearish by the market. This decision comes as part of President Javier Milei’s efforts to support farmers struggling with drought conditions and low global prices.

The Argentine government announced the following reductions in export tariffs:

• Soy meal and oil: Reduced from 31% to 24.5%
• Unprocessed soybeans: Decreased from 33% to 26%
• Corn and wheat: Lowered from 12% to 9.5%
• Sunflowers: Lowered from 7% to 5.5%.

These tax cuts are set to take effect on Jan. 27, and will remain in place during most of the harvest season, with the majority of agricultural activity expected to occur in the second quarter.

The market’s bearish response to this news can be attributed to several factors:

• Increased supply: Lower export taxes are likely to incentivize Argentine farmers to sell their crops more aggressively, potentially flooding the market with additional supply.
• Enhanced competitiveness: The tax cuts make Argentine agricultural exports more competitive in the global market, particularly compared to major competitors like Brazil.
• Potential price pressure: Increased exports from Argentina could lead to downward pressure on global commodity prices, especially for soybeans, corn, and wheat.
• Short-term focus: The tax cuts are temporary, scheduled to revert in July, which may encourage farmers to sell their crops quickly, potentially leading to a surge in supply in the short term.

— India struggling to sign sugar export contracts. Indian traders are struggling to sign export contracts even after New Delhi allowed the export of 1 MMT as mills are seeking a hefty premium, which overseas buyers are unwilling to pay, four trade sources told Reuters. Before the export approval earlier this week, Indian prices were at a big discount to global prices, making exports profitable. However, Indian prices surged nearly 10% after the 1 MMT export quota was announced while global prices declined, reducing the export incentive for mills. Indian mills have until September to export via the quota, so they are in no hurry to sign deals, instead waiting for global prices to rise.

— Cotton AWP eases slightly. The Adjusted World Price (AWP) for cotton is at 53.71 cents per pound, effective today (Jan. 24), down from 53.98 cents per pound the prior week. But that remains still above the mark of 52 cents that would trigger an LDP. The price conditions for USDA to announce a special import quota for cotton have not been met since the one announced Jan. 2.

— Agriculture markets yesterday:
• Corn: March corn rose 5 1/2 cents to $4.89 3/4, closing nearer the session high.
• Soy complex: March soybean futures climbed 9 1/2 cents to $10.65 1/2 and closed mid-range. March meal futures sank 50 cents to $315.30. March bean oil rallied 62 points to 45.04 cents.
• Wheat: March SRW wheat closed unchanged at $5.54, near mid-range. March HRW wheat lost 4 cents to $5.70 3/4 and nearer the daily low.
• Cotton: March cotton futures rallied 33 points to 67.47 cents and closed nearer session highs.
• Cattle: April live cattle rose 95 cents to $200.725, near the session high and hit a new contract high. February live cattle closed up $1.05 to $201.10 and scored a record-high for nearby futures of $201.45. March feeder cattle rose $1.00 to $274.075, near the session high and hit a contract high. Expiring (January) feeder cattle futures today hit a record high of $277.85.
• Hogs: Resurgent wholesale prices spurred nearby hog gains Thursday, with nearby February futures rising 65 cents to $82.125, whereas most-active April slipped 7.5 cents to $87.20.

— USDA nominee Brooke Rollins pledges support for Trump agenda, offers assurances for farmers; Focus on aid, biofuels, immigration, and trade in confirmation hearing. Link to our Jan. 23 special report on the hearing.

Brooke Rollins, President Trump’s nominee for Secretary of Agriculture, underscored her alignment with the Trump administration’s agenda during her Senate Agriculture Committee hearing. Rollins committed to supporting farmers affected by potential retaliatory tariffs and pledged to be a strong advocate for agriculture on issues ranging from biofuels to immigration policy.

Rollins highlighted her initial focus on four critical areas:

• Economic and disaster aid: Emphasizing the rapid and efficient delivery of aid authorized by Congress in December, Rollins promised “excellence” in handling these funds. “The day I got the call from President Trump … within a few hours of accepting the nomination, I began to immediately pivot to ‘How do we distribute this disaster and economic aid?’” Rollins said during the hearing. Part of that process, she said, is filling out senior roles at USDA who can help allocate the $10 billion in economic aid Congress allocated to farmers in their December stopgap package. Rollins will also be partially responsible for doling out $21 billion in disaster aid to states affected by natural disasters.
• Animal disease management: With outbreaks like H5N1 and New World Screwworm looming, Rollins stressed eradicating these threats as a top priority.
• Farm bill development: Collaborating with lawmakers to craft a new farm bill. Senators on both sides of the aisle encouraged Rollins, who held various roles during Trump’s first White House residency, to leverage her access to the president’s ear to advance their efforts in renewing the farm bill this year and bolstering the agriculture industry. “It is also clear that she has the relationships across this new administration and an understanding of the processes in which decisions are made in the executive branch, to best position our producers for success,” Senate Ag Committee Chair John Boozman (R-Ark.) said in opening remarks.
• Modernizing USDA: Rebuilding and revitalizing the department to better serve the agricultural community. By expressing her intent to “rethink” the current USDA structure, Rollins signals that she may propose significant changes to how the department operates and fulfills its various responsibilities across its 29 agencies and over 106,000 federal employees.

Tariffs and trade. Sen. Michael Bennet (D-Colo.) asked Rollins’ whether she would “go into the Oval Office” and inform Trump about unintended consequences of trade policies if need be, while panel ranking member Amy Klobuchar (D-Minn.) sought answers on how USDA might mitigate economic risk to farmers “beyond just extra payments to make up for it.” Rollins addressed concerns about the impact of Trump’s tariffs on farmers, assuring lawmakers of USDA’s readiness to deploy aid packages similar to those from Trump’s first administration. Rollins said she talked to former USDA chief Sonny Perdue about how to handle retaliatory trade action that could hurt U.S. agriculture, saying she’ll be “prepared to execute something similar” to Trump’s first administration. She framed tariffs as essential tools in advancing U.S. economic interests while acknowledging the need to mitigate their impact on agriculture. “In my nearly nine years with President Trump, I’ve seen his dedication to making deals for America and its farmers,” Rollins stated, emphasizing her role as a voice for agriculture in policy discussions.

Sen. Mitch McConnell (R-Ky.) asked Rollins to get U.S. producers “back in the trade business.” She said USDA has many available tools to expand markets to eliminate the trade deficit and she immediately would work to lower it. Rollins said she will ensure USDA can “bring in new trade partners to expand access for new trade products and all [ag products], whether it’s specialty crops or the row crops or the livestock industry.”

Biofuels and renewable energy. Lawmakers questioned Rollins on her position regarding biofuels, citing past criticism from the Texas Public Policy Foundation. Rollins distanced herself from outdated reports and reaffirmed Trump’s commitment to biofuels, including regulatory efforts to make E15 fuel available year-round. She pledged to collaborate with other agencies to support initiatives like the Renewable Fuel Standard and the 45Z Clean Fuels Production Credit.

Immigration and workforce challenges. Sen. Dick Durbin (D-Ill.) questioned Rollins’ potential support for mass deportations. He said Illinois farmers and ag producers depend on immigrants to maintain profitability and stay in business. “Forty percent of farm workers are undocumented,” Durbin said. “If they are deported, what are the farmers going to do?” Durbin said a third-generation dairy farmer told him his family’s dairy operation would go out of business if their undocumented workers were deported. “Can we expect this administration to be raiding farms and going after the immigrant farm workers?” Durbin asked. Acknowledging concerns about the impact of mass deportations on agriculture, Rollins said, “we just don’t know” how many agricultural workers would be deported. Rollins supports Trump’s agenda for a secure border while committing to minimize disruptions to farms and dairies reliant on immigrant labor. She promised to work on modernizing the H-2A visa program and ensure critical workforce needs are met. “I know these cows need to be milked 24/7,” Rollins remarked, emphasizing the urgency of addressing labor shortages. Migrant workers play in the ag industry. “And I believe, sincerely, that he will execute his agenda that he has promised the American people, but that will never forget our ag community in so doing,” she said of President Trump. Rollins said she would make Trump aware of any potential effects on the nation’s agricultural sector that mass deportations or other policies might cause. “At the end of the day, we all know [Trump] to be the consummate deal-maker,” Rollins said.

Scrutiny over SNAP funding stance. Rollins expressed support for anti-hunger programs like the Supplemental Nutrition Assistance Program (SNAP) but stopped short of opposing potential funding cuts. While assuring senators of her “whole-hearted commitment” to such programs, she emphasized a duty to ensure taxpayer dollars are used efficiently, leaving cuts on the table. Sen. Ben Ray Luján (D-N.M.) voiced concern, stressing the real-life impact of SNAP funding on families struggling to put food on the table. Similarly, Sen. Tina Smith (D-Minn.) criticized Rollins’ lack of clarity on protecting benefits, pointing out the stark reality that average SNAP benefits are just over $6 a day. Both senators questioned whether Rollins could be an ally in addressing hunger challenges amid potential budget cuts.

Other Highlights

• Highly Pathogenic Avian Influenza (HPAI): Rollins identified tackling HPAI as a top priority, pledging to assemble a dedicated team to combat animal disease outbreaks. Ag Committee ranking member Amy Klobuchar (D-Minn.) asked how Rollins might address the bird flu outbreak that has contributed to fast-rising egg prices throughout the nation. Rollins said the current and future USDA teams will work together to continue addressing the matter and do all they can to protect the nation’s food supply against bird flu and other types of animal disease. She also acknowledged, “There is a lot I have to learn,” about bird flu and animal disease. Klobuchar urged Rollins to communicate with public health agencies to ensure producers have clear information from the federal government to combat the avian influenza outbreak.
• Mandatory COOL (Country of Origin Labeling): Rollins expressed willingness to explore WTO-compliant solutions for reinstating mandatory COOL, a priority for lawmakers like Sen. John Thune (R-S.D.).
• Workforce management: Rollins emphasized the importance of having USDA employees back in the office to maximize efficiency.
• Proposition 12: While supportive of federalism, Rollins pledged to address the interstate impacts of California’s Proposition 12 on agricultural producers nationwide.
• Says family’s oil investments won’t affect her policy decisions. Rollins addressed questions about her ability to prioritize agricultural policy over her family’s oil industry investments, saying it wouldn’t affect her policy decisions. Rollins assured senators that her policy decisions would remain independent of her family’s oil investments, emphasizing her track record of ethical leadership. “Anyone that has ever worked with me will tell you… that I have never not ever made a decision based on financial interest —ever,” Rollins said. “That certainly will not begin now.” She said she would be a “champion for all fuels” if confirmed.

And then…

• She got the call to be USDA Secretary from Trump in the parking lot of the Walmart in Newton, Mississippi, while driving to the Texas A&M game.
• Sen . Jim Justice (R-W.Va.) gushed about Trump’s nominee and said that “Brooke is stuck on on!”
• Rollins’ mother, Helen Kerwin, was elected to the Texas House of Representatives last year, the oldest freshman in the Texas legislature, highlighting her family’s history of public service. Kerwin has introduced a bill to reduce PFAS, or perfluoroalkyl and polyfluoroalkyl, in sewage sludge used as fertilizer.
• Sen. Roger Marshall (R-Kan.) opened his questions with Rollins by asking, “Just want to know if you agree with me that whole milk is the most nutritious drink known to human kind and belongs in our school lunches?” He asked the question as he poured a glass of milk and took a drink, producing laughs from those in the room. Rollins replied, “Senator, I don’t know that you have met my mom yet. But this is all we had in our refrigerator growing up, not anything else, just whole milk. She is absolutely never going to let us forget this, the fact that this is coming up. But, yes, this is — this hits home to me very, very quickly.” Meanwhile, House Ag Chair GT Thompson (R-Pa.) reintroduced a bill to bring back whole milk to school lunches.
  

  

  (Congressional hearing)

— Oil prices dip amid Trump’s push for lower costs and trade policy uncertainty. Oil prices fell on Thursday after President Donald Trump urged Saudi Arabia and OPEC to lower oil costs during his address at the World Economic Forum. Brent crude dropped 71 cents, 0.9%, to $78.29 per barrel, while U.S. WTI declined 82 cents, 1.09%, to $74.62.

Trump’s call, aimed at benefiting consumers, raised concerns among U.S. oil producers and global suppliers about future investment viability in oil and gas projects. Additional bearish sentiment arose from a smaller-than-expected drop in U.S. crude inventories and rising gasoline stocks, according to the EIA.

Further uncertainty was fueled by Trump’s proposed tariffs on key trading partners and threats of additional sanctions against Russia, as well as his declaration of a national energy emergency to relax environmental restrictions. Analysts warned of ongoing oil market volatility due to unclear U.S. trade and energy policies, alongside expectations of higher U.S. oil supplies.

— Trump opens door for Keystone XL revival amid lingering doubts. President Donald Trump has revoked a Biden-era executive order that killed the Keystone XL pipeline, rekindling debate over the controversial project. However, its revival appears unlikely, as South Bow Corp., the pipeline developer spun off from TC Energy, has moved on. CEO Bevin Wirzba confirmed last year that the company has no plans to revisit the multibillion-dollar Canada-to-Nebraska pipeline. Since President Joe Biden’s 2021 revocation of Trump’s original permit, portions of the pipeline have been dismantled, and most permits have expired. Experts argue that restarting the project would require beginning the process from scratch. “We don’t need their oil and gas,” Trump said Thursday in a remote presentation to the World Economic Forum in Davos, Switzerland. “We have more than anybody.”

— Trump’s trade executive order: 23 tasks for U.S. agencies. President Donald Trump’s trade executive order outlines 23 tasks assigned to various federal agencies, requiring detailed reports to the White House by April 1, 2025 (with one exception due April 30). Key players include the Office of the U.S. Trade Representative (USTR), the Commerce Department, and the Treasury Department, with assistance from State, Defense, and other agencies. Here is a summary of what Politico identified as the key tasks by department:

Commerce Department is tasked with investigating trade deficits, reviewing anti-dumping laws, assessing China’s intellectual property regime, and examining the Biden administration’s import restrictions, among others.

USTR will identify unfair trade practices, oversee a mandatory review of the U.S.-Mexico-Canada Agreement, evaluate trade agreements, and consider expanding tariffs on Chinese goods.

Treasury will study the feasibility of an External Revenue Service, address exchange rate practices, and review Biden’s executive order on outbound investment for national security threats.

One notable task involves the White House Office of Management and Budget assessing how foreign government subsidies impact U.S. procurement, with a report due by April 30.

— Trump threatens tariffs while mapping out sweeping trade overhaul. In his first 36 hours back in the White House, Donald Trump threatened to impose tariffs on the U.S.’ top four trading partners, including Mexico, Canada, China, and the European Union. While no immediate levies were enacted, Trump signed an executive order laying the groundwork for broader trade policy changes, including studies on economic and national security impacts, currency manipulation, and trade agreement reviews.

Analysts see the threats as negotiation tactics, but Trump’s rhetoric underscores his focus on using tariffs to address issues like fentanyl trafficking, border security, and defense spending. The order’s provisions could allow Trump to act more systematically on trade policy in the months ahead. Reports on proposed changes are due by April 1, leaving room for potential early actions.

Despite these moves, some experts view the lack of immediate tariffs, particularly on China, as a sign of tempered aggression. However, administration officials suggest tariffs could play a role in revenue generation to support fiscal goals, such as extending tax cuts and funding campaign promises.

Bottom line: Observers anticipate a turbulent trajectory for U.S. trade policy as the administration pursues its aggressive tariff-driven agenda.

— Shein details cotton sourcing to comply with U.S. forced labor law. Fast-fashion retailer Shein informed the UK parliament that it strictly sources cotton from locations outside China to comply with the U.S. Uyghur Forced Labor Prevention Act (UFPLA). The company stated it obtains cotton from Australia, Brazil, India, the U.S., and, in limited cases, from parts of the Middle East, Europe, Africa, and Southeast Asia. The U.S. law, aimed at preventing forced labor in supply chains, has led to several Chinese companies being barred from exporting textiles to the United States. Shein noted that the U.S. is its largest market.

— The House has adjourned until Feb. 4. House Republicans will be in Florida next week for their annual policy retreat at the Trump National Doral Miami.

— Bipartisan bill to combat wildfires passes the House. The Fix Our Forests Act, a bipartisan effort to address the United States’ wildfire crisis, passed the House of Representatives with a 279-141 vote — with 64 Democrats joining 215 Republicans in support. This marks an increase in Democratic support compared to the previous version of the bill, which passed in September 2024 with 55 Democratic votes. Introduced by Reps. Bruce Westerman (R-Ark.) and Scott Peters (D-Calif.), the bill aims to streamline forest management processes and enhance wildfire prevention.

Key provisions:

• Expedited reviews: Faster environmental assessments for critical projects without compromising standards.
• Interagency collaboration: Establishment of a Fireshed Center to unify federal, state, tribal, and local fire management efforts.
• Community protection: New investments in fire detection, suppression technologies, and programs for high-risk areas.
• Litigation reform: Limits on lawsuits delaying forest management projects.

Supporters emphasize the bill’s importance in combating destructive wildfires, such as those recently experienced in Los Angeles.

Critics, including environmental groups, worry it might weaken protections for forests and endangered species.

Outlook: With increased bipartisan backing compared to a 2024 version, the bill now heads to the Senate, where further debate and potential amendments are anticipated. The increased bipartisan support in the House suggests growing recognition of the need for comprehensive wildfire prevention measures, but challenges may still lie ahead in reconciling various stakeholder concerns.

— EPA Administrator nominee Lee Zeldin was approved by the Senate Environment and Public Works Committee. This advances Zeldin’s nomination to the full Senate for a confirmation vote. The committee vote was largely along party lines, with a final tally of 11-8 in favor of advancing the nomination. Sen. Mark Kelly (D-Ariz.) was the only Democrat to vote in favor of advancing Zeldin’s nomination. Sen. Shelley Moore Capito (R-W.Va.), the committee chair, praised Zeldin’s collaborative approach and his understanding of congressional processes. Sen. Sheldon Whitehouse (D-R.I.), the ranking Democrat, expressed concerns about Zeldin’s ability to stand against what he called the “big oil political juggernaut.”

— Senate panel advances Turner for HUD despite Democratic concerns. The Senate Banking Committee voted 13-11 along party lines to advance Scott Turner’s nomination as secretary of the Department of Housing and Urban Development. Democrats opposed the move, citing concerns over Turner’s unfinished FBI background check. If confirmed by the Senate, Turner — a former NFL player and developer — would oversee a $70 billion budget and 8,000 employees. During his confirmation hearing, he criticized HUD’s performance, highlighting rising housing costs and homelessness but provided limited details on his plans for reform.

— Senate panel approves Trump’s Energy secretary pick, Chris Wright. The Senate Energy and Natural Resources Committee voted 15-6 to advance Chris Wright’s nomination as energy secretary, sending it to the Senate floor. Wright, founder and CEO of Liberty Energy Inc., received bipartisan support, including from ranking Democrat Sen. Martin Heinrich (D-N.M.). A vocal proponent of the oil and gas industry, Wright has pledged to implement President Trump’s “bold energy agenda.” His confirmation would position him to oversee a 14,000-person agency and lead efforts to approve liquefied natural gas export projects under Trump’s Unleashing American Energy executive order.

— Senate panel advances Trump’s nominee for Interior Secretary, Doug Burgum. The Senate Energy and Natural Resources Committee voted 18-2 to advance former North Dakota Governor Doug Burgum’s nomination as Interior Secretary. Burgum, a key figure in President Donald Trump’s fossil fuels agenda, will oversee over 600 million acres of public land and federal energy resources if confirmed. Burgum’s Jan. 16 hearing highlighted his focus on bolstering baseload power generation with natural gas and coal while reducing reliance on renewables, which he claims have destabilized power grids. Democrats, including Sen. Martin Heinrich (D-N.M.), offered some bipartisan support despite concerns over Burgum’s plans to ease constraints on fossil fuel development and his criticism of environmental regulations.

— Brazil’s exports to China in 2024: Soybean slump, oil exports rise. Brazil’s exports to China dropped significantly in 2024, driven by a 19% decline in soybean export revenue due to reduced shipment volume (-2.6%) and a 20% price drop. Soybean’s share in Brazil’s export portfolio to China fell to 33%, though China still absorbed 73% of Brazilian soybean exports. Conversely, crude oil exports saw a 5.2% revenue increase, making it Brazil’s top export globally, accounting for 13% of total exports. China remained the largest buyer, receiving 45% of Brazil’s crude oil exports, with a slight 1% rise in value compared to 2023.

While the U.S. (13%) and Spain (11%) also played key roles in Brazil’s oil exports, China continues to dominate as Brazil’s leading export trade partner, highlighting its strategic importance in Brazilian international trade.

— U.S. lawmakers introduce bill to revoke China’s trade designation. As trade and tariffs take center stage ahead of Trump’s address to the World Economic Forum, a bipartisan group of U.S. lawmakers has introduced a bill seeking to revoke China’s permanent normal trade relations (PNTR) status. The status is a legal designation in the U.S. for free trade with a foreign state, and was granted to China in 2000. Rep. John Moolenaar, the Michigan Republican who chairs the House select committee on China, along with Representative Tom Suozzi, a New York Democrat, unveiled their Restoring Trade Fairness Act. The bill follows Trump’s recent executive order, which instructs the Commerce Secretary and the U.S. Trade Representative to assess legislative proposals regarding the future of PNTR with China. The legislation would not require Congress to renew the bill on an annual basis.

Key provisions of the bill

• Revoking PNTR status: The bill seeks to end China’s preferential trade status, which has allowed Chinese goods to enter the U.S. market under favorable conditions for over two decades.
• Phased tariff implementation: The legislation proposes a new tariff structure:
• A minimum 35% tariff on non-strategic goods from China
• A minimum 100% tariff on strategic goods
• These tariffs would be phased in over a five-year period
• Elimination of de minimis treatment: The bill aims to end the exemption for low-value shipments (under $800) from import duties and rigorous screening.
• Support for U.S. farmers and manufacturers: Revenue generated from the new tariffs would be allocated to assist U.S. farmers and manufacturers who might face retaliation from China.

Of note: Companion legislation was also re-upped in the upper chamber by Sens. Tom Cotton (R-Ark.) and Josh Hawley (R-Mo.) on Thursday.

— Chinese EV makers file challenges to tariffs at EU court. Chinese electric vehicle makers BYD, Geely and SAIC have challenged the EU’s import tariffs at the Court of Justice of the European Union (CJEU). Court filings show all three lodged their complaints at the General Court, the lower of two CJEU chambers, on Tuesday, a day before the deadline for filing challenges. Proceedings at the General Court last on average 18 months and can be appealed. The China Chamber of Commerce for Import and Export of Machinery and Electronic Products (CCCME), an industry body that has represented Chinese EV producers, also filed a complaint on Wednesday. CCCEU urged Beijing and Brussels to negotiate a compromise to avoid tariffs. In a statement on Friday, the CCCME confirmed its action on behalf of “authorized companies” and pledged to “continue to represent China’s EV industry through judicial litigation and resolutely defend the legitimate rights and interests of Chinese EV companies.”

— Small-town America embraces Buc-ee’s boom. Rural towns in the South are competing to host Buc-ee’s, the Texas-based gas station and convenience store chain famous for its massive size, high-paying jobs, and cult following, Bloomberg reports (link). Offering millions in tax breaks, towns like West Memphis, Arkansas, are betting on Buc-ee’s to revitalize their economies, boost tax revenue, and create hundreds of jobs with starting wages of $19-$20 an hour. Critics argue such incentives are better spent on manufacturing or tech industries, but local leaders see Buc-ee’s as a unique economic catalyst and cultural phenomenon. With locations as large as 75,000 square feet and iconic offerings like brisket, beef jerky, and plush beavers, Buc-ee’s draws millions of visitors annually, rivalling even major national parks.

— Nebraska’s largest feedlot project underway. Southwest Nebraska is witnessing the rise of Blackshirt Feeders, set to become the state’s largest cattle feeding operation. Located near Haigler in Dundy County, this feedlot promises to transform the industry and boost the local economy significantly. Operational as of January 2025, Blackshirt Feeders has received its first shipment of cattle and is on track to meet its initial capacity target by year-end. Project highlights:

• Capacity: 150,000 cattle at full scale (phased implementation by 2026).
• Timeline: Initial 50,000 cattle by end of 2024; additional 50,000 in 2025; full capacity by 2026.

Innovative features

• Environmental technologies: Roller-compacted concrete base, anaerobic digesters for methane production, advanced runoff management, and renewable natural gas generation.
• Sustainability focus: Offsetting water usage by retiring irrigated acres and managing manure through anaerobic digestion.

Economic impact

• Jobs: 120-130 positions with a $25 million annual payroll.
• Revenue: Annual cattle sales projected at $300 million, with a $366 million local economic impact.

— Germany’s pork sector faces mounting challenges. Germany’s first outbreak of foot-and-mouth disease in nearly 40 years has dealt a severe blow to its struggling pork industry, Bloomberg reports (link). Since the outbreak on Jan. 10, major export destinations like the UK, South Korea, and Mexico have banned German pork imports, costing the country at least €1 billion ($1.05 billion) in lost sales, according to the farm cooperatives group DRV (link).

This setback follows years of turbulence, including African swine fever outbreaks since 2020, which led to bans from key markets such as China. Meanwhile, rising feed and energy costs, exacerbated by Russia’s invasion of Ukraine, have accelerated the sector’s decline, with Spain overtaking Germany as Europe’s top pork exporter.

Declining domestic demand, driven by shifting dietary preferences and animal welfare concerns, has left the industry increasingly reliant on exports. Analysts note that while a stronger European economy in 2025 might boost local consumption, global trade dynamics—including potential policy changes under a second Trump administration—could play a critical role.

Adding to the uncertainty, China’s investigation into alleged dumping of EU pork could result in tariffs, intensifying competition within the European market. These pressures underscore the challenges facing Germany’s once-dominant pork sector.

(European Commission, Bloomberg)

(European Commission, Bloomberg)

— Saudi Arabia’s poultry boom: A bid for food self-sufficiency. Saudi Arabia is investing billions to expand its poultry industry, aiming for food self-sufficiency as it diversifies its economy beyond oil. The country has nearly doubled poultry production over the past decade, emerging as one of the world’s fastest-growing chicken producers, Bloomberg reports (link). In Shaqra, a key hub of this transformation, Tanmiah Food Co. processes around 150,000 chickens daily for global chains like McDonald’s, Popeyes, and Subway. Advancements in farming have dramatically improved outcomes, reducing chicken mortality rates from 20% to under 4% in just ten years. This shift underscores Saudi Arabia’s ambition to become the leading agricultural producer in the Middle East.

(Gira, Bloomberg)

— Brazil’s beef industry unfazed by potential new Trump tariffs. Brazilian beef exporters remain optimistic despite potential new tariffs from President Donald Trump’s administration. With U.S. cattle inventories at their lowest in seven decades, demand for Brazilian beef remains strong. Roberto Perosa, head of ABIEC, noted that Brazilian beef exports beyond the 65,000-ton annual quota already face a 26.4% tariff when entering the U.S. Despite this, Brazil exported $1.3 billion in beef products to the U.S. last year, making it the second-largest destination for Brazilian beef after China. Perosa highlighted a 66% rise in U.S. imports of Brazilian beef since 2023, reflecting the growing reliance on Brazil as a supplier. Talks to increase the tariff-free quota to 150,000 tons are uncertain under Trump’s renewed presidency. With limited U.S. cattle supplies, Perosa remains confident: “That partner is Brazil.”

— Texas seeks $11 billion federal reimbursement for border security costs. Governor Greg Abbott has called on the federal government to reimburse Texas for the $11 billion spent on border security since 2021. Citing what he called federal neglect, Abbott argued the Biden administration left the nation vulnerable to criminal and hostile foreign actors. The request aligns with a broader crackdown on illegal immigration under President Donald Trump’s second term, during which Trump praised Abbott’s efforts and pledged federal support. Texas’ Operation Lone Star has deployed over 10,000 National Guard soldiers and increased border infrastructure spending. However, the reception to Abbott’s request in Congress remains uncertain.

— NWS outlook: Elevated fire weather conditions continue in southern California, precipitation expected to bring relief Saturday into Sunday... ...Below average temperatures continue in the South and East, gradual warm up anticipated this weekend.

(NWS)

24: USDA Food Price Outlook
26: AFC and NFC football championships
27: First day IRS will begin accepting 2024 federal tax returns
28: Florida’s 1st and 6th special primaries
28-29: Federal Open Market Committee meets
31: Employers and financial institutions should send out W-2 and 1099 tax forms
31: USDA Cattle

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