Trump’s Tariff-Related Trade Policy: Big Economic, Political Risks | China Digs In

Updates: Policy/News/Markets, April 7, 2025

— All major stock markets in Asia are plunging as tariff turmoil deepens. In Japan, the Nikkei 225 was down more than 7%. Japan’s exchange operator briefly called a halt to trading in Nikkei stock futures on Monday. European stocks tanked 6% on the open. Bitcoin and oil prices fell sharply, too. U.S. equity futures signal another major downturn on the open this morning. Meanwhile, the Chinese Communist Party’s flagship newspaper, People’s Daily, said in a commentary that Chinese policymakers are well-prepared to cope with U.S. tariffs by using policy tools including monetary and fiscal easing. — Tariffs update: The 10% tariffs have now gone into effect on all of America’s trading partners except Canada and Mexico. Additional, “reciprocal” tariffs will go into effect on dozens of other nations on Wednesday. China faces the toughest levies — at least 54% — and it hit back with its own toll on U.S. goods. China indicated that it isn’t planning to give in to the U.S. “We don’t make trouble, but we have no fear of trouble,” read a statement posted Saturday evening by the state-run Xinhua News Agency. The EU is expected to announce retaliation this week. EU trade ministers meet in Luxembourg to begin discussing how to react to President Donald Trump’s tariff package. (Canada and Mexico are already subject to tariffs of 25% that were announced several weeks ago. Those tariffs were levied in a bid to curb illegal immigration and fentanyl trafficking into the United States via its southern and northern neighbors.) Also, a new 25% tariff that went into effect on Thursday on car and car parts exported to the U.S. partially exempted cars made in Canada and Mexico that meet the terms of free trade agreements with those countries. This dispatch focuses on various angles of the ongoing trade wars, including on the ag and financial sectors. History shows it is easier to start trade wars than to end them. (Bloomberg Economics) — Over 50 nations seek talks amid Trump’s sweeping tariffs. More than 50 countries have reached out to the Trump administration to open negotiations following the sweeping new tariffs announced earlier this month, according to White House National Economic Council Director Kevin Hassett. “They’re doing that because they understand that they bear a lot of the tariff,” Hassett said on ABC’s This Week, emphasizing the global ripple effect of the policy. 🌐 Key global responses: 🇻🇳 Vietnam: Top leader pledged zero tariffs on U.S. goods. (See related item in Trade Policy section.) 🇹🇭 Thailand: Prime Minister Paetongtarn Shinawatra signaled openness to talks, proposing “friend-shoring” as a model for rebalancing trade. 🇬🇧 United Kingdom: PM Keir Starmer called for a “cool and calm” response, noting the UK’s 10% levy was “better than a lot of other countries.” 🇹🇼 Taiwan: President Lai Ching-te offered zero tariffs and committed to increasing Taiwanese investments in the U.S. What’s next: The administration is expected to prioritize bilateral talks with key allies and strategic economies. Countries seeking exemptions or reductions may need to offer reciprocal market access, investment commitments, or trade reforms (especially non-tariff trade barriers). Trump digs in on tariffs, ties deals to trade deficit elimination. President Donald Trump reinforced his hardline trade stance over the weekend, declaring that no tariff rollbacks will occur unless the U.S. achieves a zero trade deficit with targeted countries — a dramatic escalation in rhetoric as markets reel from the economic fallout. Speaking from Air Force One after a Florida golf trip, Trump dismissed concerns that his sweeping tariffs — including a 10% across-the-board levy and a 34% rate on Chinese goods — are fueling the ongoing sell-off that’s erased trillions in U.S. equity value. “I don’t want anything to go down,” he said. “But sometimes you have to take medicine to fix something.” Trump’s demand: no deals unless they completely eliminate bilateral trade deficits. “We’re not going to have deficits with your country,” he told reporters, referencing recent talks with unnamed global leaders. “To me, a deficit is a loss.” Key Trump quotes: · “We’re going to have surpluses or, at worst, break even.” · “We’re not going to lose a trillion dollars for the privilege of buying pencils from China.” · “Europe… they want to talk, but there’s no talk unless they pay us a lot of money… for present but also for past.” Despite rising fears of recession and market turmoil, Trump insisted inflation is not a serious concern, brushing aside fears about the impact on consumers, including during back-to-school shopping season. The administration plans to implement sector-specific tariffs on top of the existing measures. Industries affected would be exempt from this month’s reciprocal foreign tariffs — a carve-out likely aimed at managing domestic political fallout. In a notable twist, Trump also broadened the tariff target list to include Europe. He went as far as demanding yearly payments and retroactive compensation in exchange for restored trade ties — a statement that’s likely to inflame already-tense transatlantic relations. Equity futures fell and the yen surged following the remarks, signs of deepening investor anxiety. Outlook: Trump’s “surplus or bust” strategy introduces a significant new hurdle to global trade negotiations and amplifies risks of protracted economic strain. With higher tariffs just taking effect and more under consideration, markets and foreign governments now face a White House unwilling to compromise unless trade imbalances are not just narrowed — but fully erased. (More on the Trump administration’s trade policy positions in the Trade Policy section.) — Navarro hits back at Musk over tariff criticism, defends Trump trade policy. On Fox’s Sunday Morning Futures, Peter Navarro, senior trade adviser to President Trump, offered a sharp rebuttal to Elon Musk’s recent criticisms of the administration’s aggressive tariff policies. Dismissing Musk’s concerns as self-serving, Navarro claimed the Tesla CEO is more focused on protecting his global supply chain than addressing U.S. economic priorities. “Tesla assembles cars in Texas,” Navarro noted, “but many of its parts come from China, Mexico, Japan, and Taiwan.” He argued that this international sourcing gives Musk a vested interest in opposing tariffs, framing the CEO’s stance as misaligned with broader American interests. Navarro also rejected Musk’s proposal for a zero-tariff agreement with Europe, suggesting Musk lacks a full understanding of the “complexities of global trade.” According to Navarro, the current tariff strategy is aimed at neutralizing “non-tariff cheating” by foreign nations — practices he claims give international competitors an unfair edge. Despite Musk’s recent barbs, including personal jabs at Navarro’s credentials, the trade adviser brushed off any animosity. “This isn’t personal,” he said, “It’s about putting America first.” Navarro stood firmly behind Trump’s tariff-centered trade strategy, forecasting a revitalization of domestic manufacturing and even a stock market rally as outcomes of the administration’s approach. “Tariffs are a necessary tool to level the playing field. Elon Musk is looking out for Tesla — Trump is looking out for America,” Navarro said. — Rollins labels Trump trade policy part of a “new American economic strategy.” Sunday on CNN’s State of the Union, USDA Secretary Brooke Rollins weighed in on President Trump’s tariff policies but stopped short of confirming whether the tariffs are here to stay. Rollins framed the tariffs as part of a broader “new American economic strategy,” emphasizing their strategic value in reshoring U.S. jobs and enhancing national security. According to Rollins, the administration has observed increased international engagement since the tariff policy took effect, though she avoided giving a clear answer on whether the tariffs would be permanent or negotiable in future trade talks. While sidestepping the permanence question, Rollins made clear that President Trump remains committed to using tariffs as a tool to advance American economic interests — suggesting the policy will remain a cornerstone of Trump’s economic agenda, at least for the foreseeable future. Rollins discussed farm aid packages in relation to Trump’s tariff policies. She again highlighted the administration’s commitment to supporting farmers who may face economic hardships due to retaliatory tariffs from trade partners. She assured viewers that USDA is prepared to implement aid measures similar to those used during previous trade disputes under Trump’s prior administration, such as tapping into the Commodity Credit Corporation fund for economic relief. However, she acknowledged that the agency is still assessing the potential impacts of the new tariffs and does not yet have a clear timeline for releasing aid. Rollins emphasized that while the administration is working on infrastructure for potential relief programs, the full economic consequences of the tariffs may not be evident until later in the year, particularly for row crop farmers currently in planting season. She reiterated the importance of protecting American agriculture and ensuring farmers are supported through these challenging times. — U.S. farmers brace for blows as China strikes back in escalating trade war. U.S. agricultural losses could top previous trade wars, as new Chinese tariffs hammer key U.S. exports, according to a tariff impact assessment article from the New York Times (link). For possible trade-related aid to U.S. farmers, see The Week Ahead (link) released Saturday. A new chapter in U.S./China trade tensions has opened — and it is American farmers who may pay the steepest price. On Friday, China announced a sweeping 34% retaliatory tariff on U.S. agricultural imports, triggering fears of tens of billions in lost revenue and deep market disruptions for one of America’s most vulnerable sectors. According to the NYT, China imported $27 billion worth of American agricultural and related products in 2024, making it the third-largest market behind Mexico and Canada. Those numbers are now in jeopardy. “If these tariffs go into effect for a significant period, we’re likely looking at a disruption that is likely to be severe, and likely worse than the 2018 trade war,” said David Ortega, a food economics professor at Michigan State University. Deja vu, but worse. During the first Trump administration, a prolonged U.S./China trade war shaved off an estimated $25.7 billion from U.S. agricultural exports to China. The current move by Beijing, made in response to new global tariffs announced by President Trump earlier this week, may eclipse even those staggering losses. Ortega warned of more than immediate financial pain. “We saw acreage reductions, market share losses, and long-term structural shifts in global trade flows,” he told the Times. More on U.S./China developments in the China section. What’s getting hit — and who stands to gain. Soybeans — a cornerstone of U.S. agricultural exports — will now face a 60% tariff in China. That’s twice as high as during the 2018 standoff. The American Soybean Association (ASA) estimates that this could cost U.S. farmers $5.9 billion annually. Meanwhile, Brazilian growers, who gained traction in China last time around, are expected to benefit again. “ASA strongly encourages the administration to swiftly negotiate and address tariff and non-tariff barriers for U.S. agriculture exports,” the group urged in a statement. Other top targets include cotton, sorghum, beef, pork, and seafood — each with over $1 billion in exports to China last year. Economic ripple effects. Commodities took a hit on Friday: soybeans and cattle futures dropped over 2.5%, while oats and lean hogs saw steeper declines. Major agricultural corporations were similarly bruised. Shares of Archer Daniels Midland fell nearly 9%, Tyson Foods 6%, and agricultural chemical companies like Mosaic dropped around 10%. Ian Sheldon, a professor of agricultural policy at Ohio State, warned in the Times that the consequences extend beyond China: “We will lose more market share in China, and the potential to divert that elsewhere in the world will be stymied by the fact that the tariffs implemented yesterday were so broad and across so many potential export markets… Their revenue will fall because commodity prices will fall,” Sheldon added. “And farmers are already facing a margin squeeze right now.” Chinese suspensions & sanitary claims. Beyond new tariffs that take effect April 10, China’s General Administration of Customs announced import bans from six U.S. facilities — five in poultry and one in sorghum — citing health and safety concerns. While companies like Darling Ingredients said they’d received no prior complaints, the USA Poultry & Egg Export Council predicts the suspension could slash U.S. chicken exports to China by 59%, costing hundreds of millions of dollars. — WTO chief warns Trump tariffs could shrink global trade by 1% in 2025. Ngozi Okonjo-Iweala, the director general of the World Trade Organization (WTO), said in a statement that Trump’s tariffs “could lead to an overall contraction of around 1% in global merchandise trade volumes this year, representing a downward revision of nearly four percentage points from previous projections,” and that she was “deeply concerned about this decline and the potential for escalation.” Of note: Apollo Global Management says 41% of S&P 500 firms’ revenues come from abroad. — California strikes a trade tone: Newsom seeks tariff exemptions amid Trump trade plan. California Governor Gavin Newsom announced plans to seek exemptions from retaliatory tariffs on state-made goods, aiming to shield the world’s fifth-largest economy from potential fallout tied to Donald Trump’s proposed 10% blanket tariff on imports. In a statement posted to X, Newsom pledged that California would not “sit idly by” and called on allies to engage directly with the state, signaling a proactive trade diplomacy push. “We make up 14% of the U.S. GDP,” Newsom said. “We’re not scared to use our market power to fight back.” On his podcast, Newsom emphasized that California is committed to maintaining open, stable trade ties, even if U.S. federal policy takes a protectionist turn.

— President Trump said Sunday evening that he is not intentionally engineering the ongoing equity sell-off, “but sometimes you have to take medicine to fix something.” He cited the trade deficit with China as his rationale for pressing on with his tariffs plan despite the recent pain in the markets. The comments came as U.S. stock futures dropped, pointing to big losses at Monday’s open, with Dow futures sliding around 4%. “I’m willing to deal with China,” Trump added, “but they have to solve their surplus.” He added that he spoke with European and Asian leaders over the weekend on the tariffs rolled out by his administration, which are expected to take effect in the coming week.

More Trump comments: President Trump called his wide scale tariffs a “beautiful thing to behold” that will eventually be largely supported even as the stock futures dropped Sunday evening. “They are already in effect, and a beautiful thing to behold. The Surplus with these Countries has grown during the ‘Presidency’ of Sleepy Joe Biden,” Trump blasted out on Truth Social Sunday night. “We are going to reverse it, and reverse it QUICKLY. Someday people will realize that Tariffs, for the United States of America, are a very beautiful thing!”

— The coming week will provide further insights into the economic outlook:

• April 9: Release of the Federal Reserve’s March meeting minutes.
• April 10: March CPI data and initial jobless claims.
• April 11: Producer Price Index (PPI) and preliminary consumer sentiment data.

— The financial system is sounding alarms reminiscent of pre-recession periods. Tariff-induced uncertainty, dollar flight, and rising credit risk are signals. The high-yield corporate debt market suffered its worst hit since the pandemic year of 2020. The ICE BofA index showed that spreads widened by a full percentage point to 4.5%, indicating growing investor concern about defaults. It could mean genuine fear that tariffs are beginning to squeeze the economy’s most vulnerable borrowers. In times of global uncertainty, investors usually flock to the U.S. dollar. Not this time. The greenback fell sharply against the euro, yen, and pound, signaling a rare vote of no-confidence in U.S. economic leadership. Though it rebounded slightly on Friday, sustained weakness would mark a troubling shift, analysts note.

— Black Monday for U.S. equities? CNBC host and market commentator Jim Cramer warned that America is in store for another “Black Monday” market crash similar to the record 1987 collapse if President Trump doesn’t curtail his tariff plan. Cramer — who noted that the 1987 crash saw the Dow fall by 22.6% in a single day — said the bloodbath could be repeated after the brutal two-day sell-off following the announcement of Trump’s sweeping tariffs against nearly 90 countries. “If the president doesn’t try to reach out and reward these countries and companies that play by the rules, then the 1987 scenario… the one where we went down three days and then down 22% on Monday, has the most cogency,” Cramer said on his show Saturday, referencing the worst single day fall in the history of the Dow. “We will not have to wait too long to know. We will know it by Monday,” he added.

(Bloomberg)

— Market sentiment shifts away from ‘buy the dip.’ A growing number of investors are backing away from the long-standing strategy of “buying the dip.” Instead of taking advantage of lower equity prices, many are choosing to sit on the sidelines — and stack up cash. In just the first few days of April, investors funneled over $60 billion into money-market funds, pushing total assets in these funds to an all-time high of $7.4 trillion, according to Crane Data. That’s the highest level recorded since the firm began tracking the data in 1972. The move reflects a more cautious market mood as concerns about elevated interest rates, inflation persistence, and global economic uncertainty weigh on sentiment. With yields on cash alternatives remaining attractive, the opportunity cost of staying out of the market has diminished — further discouraging risk-taking behavior. Analysts will focus on upcoming earnings and inflation data, which could help determine whether this cash hoarding continues or gets redirected into risk assets.

— Trump officials brush off market rout, defend global tariffs as path to “historic” boom.

• Trump’s team doubles down on sweeping global tariffs amid $5.4 trillion market loss
• White House insists inflation and recession fears are overblown
• Defiant rhetoric signals tariffs are here to stay, despite economic backlash

Defiant. Despite a historic $5.4 trillion loss in global markets and the S&P 500 hitting its lowest level in nearly a year, President Donald Trump’s top economic advisers rejected the panic and doubled down on a controversial new round of tariffs. Appearing across Sunday political shows, Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and White House economic adviser Kevin Hassett offered a unified message: markets are overreacting, and the tariffs are just the beginning. “The tariffs are coming,” Lutnick said bluntly on Face the Nation. “He [Trump] announced it and he wasn’t kidding.” Bessent dismissed recession concerns outright, even as JPMorgan economists forecast a downturn this year. On Meet the Press, Bessent described markets as “organic animals” and insisted investors underestimate Trump’s resolve.

Tariffs as a legacy play. Insiders say Trump views the sweeping tariffs — now including a blanket 10% duty on all imports (except Canada and Mexico), with tailored levies of up to 50% kicking in this Wednesday — as a core part of his legacy. Officials described them as essential to reshaping the global economy and reviving U.S. manufacturing. “After 20, 30, 40, 50 years of bad behavior, you can’t just wipe the slate clean,” Bessent said, referring to trade practices of other countries.

Peter Navarro, White House trade adviser, predicted a strong rebound in equity markets, even claiming the Dow could reach 50,000 by the end of Trump’s term.

Fed, markets, and economists push back. Fed Chair Jerome Powell warned Friday that the tariff package is “significantly larger than expected” and could stoke inflation while dragging growth. Former Treasury Secretary Larry Summers called the recent market crash one of the worst post-WWII selloffs, likening it to 1987, 2008, and 2020.

Despite those warnings, Kevin Hassett acknowledged prices “might go up some,” but brushed off broader inflation fears. He emphasized future tax and spending cuts as an eventual offset for households.

Beyond Wall Street, global allies have begun pushing back. Vietnam, hit with a 46% levy, offered to remove all tariffs on U.S. imports over the weekend — a sign that negotiations are possible, but slow-moving. But even with offers to negotiate, some Trump officials say it is not just nominal tariffs but the nontariff trade barriers that need to be negotiated.

Some White House logic raised eyebrows. When asked why the U.S. imposed tariffs on Heard Island and McDonald Island — a desolate, penguin-inhabited Australian territory — Lutnick quoted Trump: “Look, I can’t let any part of the world be a place where China or other countries can ship through them.”

According to Trump’s former legislative affairs director Marc Short, the market had assumed tariffs were a negotiation tactic — just like in Trump’s first term. “But he’s hearing different advice now,” Short said. In an interview cited by Bloomberg, Short predicted an eventual market-driven reversal, but “not soon.”

A recession could derail other Trump priorities, including his push to extend tax cuts, and pose a political risk as Americans begin to feel the pinch of higher prices.

Bottom line: Trump’s team is betting big — economically and politically — that tariffs can trigger a structural reset of global trade. Whether markets, voters, and inflation cooperate is another matter entirely.

— The first quarter earnings season is taking flight this week, led by some of the most influential names in corporate America. Here’s a look at the key players set to kick things off:

• Delta Air Lines (DAL), the top U.S. carrier, is scheduled to release its quarterly results on Wednesday, offering an early read on consumer travel demand and airline margins.
• JPMorgan Chase (JPM), the largest U.S. bank by assets, will report on Friday, providing insight into the banking sector’s resilience amid shifting interest rate expectations.
• Wells Fargo (WFC), a smaller yet significant rival in the banking space, is also due to report Friday, with analysts watching closely for signs of cost discipline and credit health.
• BlackRock (BLK), one of the world’s biggest asset managers, joins the earnings lineup Friday, and could shed light on investor sentiment and flows in the ETF and wealth management space.

Equities Friday and weekly change:

(Exchanges)

— How have the new tariffs changed the risk of a U.S. recession? That is what the New York Times asked Jason Furman, a professor of economics at Harvard and former economic adviser to President Barack Obama. Furman’s response:

— In a note titled “There Will Be Blood,” JPMorgan’s chief economist, Bruce Kasman, raised the likelihood of a global recession to 60%, up from 40%, following President Donald Trump’s announcement of sweeping tariffs on imports. These tariffs, described as the largest tax hike since 1968, are expected to have far-reaching economic consequences, including higher consumer prices, disrupted supply chains, and retaliatory measures from trade partners.

The tariffs, which impose a 10% levy on all imports (except Canada and Mexico) and even higher rates on goods from 60 countries with trade deficits with the U.S., have been criticized as a “substantial macroeconomic shock.” JPMorgan warns that the effects will likely be magnified by declining business sentiment and disruptions in global supply chains. The bank estimates that the tariffs will raise the U.S. average tax rate by 22 percentage points to 24%, equivalent to approximately 2.4% of GDP. This is expected to cost American consumers around $700 billion annually.

The announcement has already rattled global markets, with significant declines in major indices like the S&P 500 and sharp drops in stocks reliant on international supply chains. Economists predict that these tariffs could lead to stagflation — a combination of slow economic growth and rising inflation. Federal Reserve Chair Jerome Powell on Friday warned of higher inflation and slower growth, complicating monetary policy decisions.

Retaliatory tariffs from countries like China are further exacerbating fears of a trade war, which could deepen the economic downturn. While JPMorgan acknowledges that policy changes could mitigate these risks, the current trajectory suggests a significant threat to both U.S. and global economic stability.

— Tariffs stir turmoil: Analysts split on Fed’s next move. Financial analysts are voicing diverging views on the potential fallout from President Trump’s newly announced tariffs, which raise import duties to levels unseen since the early 20th century. The dramatic policy shift is expected to heighten inflation while slowing economic growth, casting a shadow over the Federal Reserve’s rate path.

Inflation on the rise: Experts largely agree that the tariffs will increase costs for businesses and consumers. J.P. Morgan’s Tai Hui warns of sustained inflation due to supply chain disruptions. Oxford Economics forecasts core inflation at 3.9% for 2025, with overall CPI inflation potentially hitting 4.5% later next year.

Recession risks loom: As noted previously, JPMorgan has upped the global recession risk to 60%, while Capital Economics places U.S. recession odds at 30% by year-end. Firms including PNC and Nationwide have revised GDP forecasts downward, with some predicting near-zero growth by late 2025.

Implications for the Federal Reserve

Scenario 1: Delayed Rate Cuts
Morgan Stanley believes that the inflationary impact of tariffs will delay any Fed action until 2026, revising their forecast for the federal funds rate to end that year between 2.5% and 2.75%.

Scenario 2: Accelerated Easing
Conversely, Morningstar analysts suggest the economic drag could force the Fed to cut rates sooner and faster. Bond markets are now pricing in up to four cuts by the end of 2025, possibly beginning as early as June.

David Seif, chief economist for developed markets at Nomura, told the New York Times: “We went from zero Fed cuts this year to one, so we actually raised our expected number of cuts. But all we did was pull forward cuts we previously expected in 2026 by a few months. We think the Fed will hold rates steady until December 2025. Ultimately, we think the increase in inflation from these tariffs will be significant, and we expect core PCE will rise to above 4.5 % year over year in 2025. This inflation will, we think, be a higher priority for the Fed than below-trend growth. The framework of our view — that the Fed will prioritize fighting tariff-induced inflation — has been consistent since Trump was elected. We moved the timing of Fed cuts forward primarily because the tariffs look set to hit all at once instead of being phased in. This means that the inflation hit will be sharper, but it will also be shorter. With tariffs coming into effect so quickly, we see a good chance that monthly inflation readings will turn more benign later in the year, thereby allowing the Fed to start cutting rates in December.”

Scenario 3: Wait and See
Fed Chair Jerome Powell has signaled a cautious stance, noting both inflationary and growth concerns. The Fed’s March projections still anticipate two rate cuts in 2025, though timing remains uncertain.

Bottom line: Trump’s tariff escalation has thrown a wrench into the Fed’s calculus. Analysts are split on whether inflation or stagnation will take the driver’s seat in shaping monetary policy. For now, the central bank remains in a holding pattern, navigating one of the most complex economic environments in recent years.

(Bloomberg)

— China’s soymeal prices surge amid U.S. trade tensions. On the first trading day after a holiday, China saw a sharp rise in soybean meal prices as fears of a renewed U.S./China trade war rattled supply chains. Rapeseed meal prices also jumped up to 2%, and corn futures rose nearly 1%. While Brazil’s soybean shipments will support China in the short term, Cofco Futures warns of tighter supplies and rising costs by Q4, when U.S. soybeans typically take over global market share.

— Trade turbulence hits grains: China targets soy, Vietnam lifts corn. In a week dominated by global tariff maneuvering, commodity markets continue to digest the implications of geopolitical shifts. Analyst and trader Richard Crow offers insight into how each grain is responding:

China’s retaliation slams U.S. soybeans. Soybeans are bearing the brunt of China’s retaliatory tariffs, shaking a market highly dependent on Chinese demand. “The soybean market is the one market with the largest concentration of export demand from a single country,” Crow explains. Over the past five years, China has accounted for 54% to 64% of all U.S. soybean exports. But Crow warns that America’s dominance is slipping. “The leverage from the U.S. has been lost with the growth of soybean production in Brazil,” he notes. Brazil’s geographical advantage — especially in freight — positions it well to replace the U.S. as a primary supplier over the next two to three years.

The market collapse is already driving U.S. producers to rethink plans. “With the collapse of the bean market, the acreage switch from beans may be greater than the planting intentions,” Crow adds. Planting season is shaping up to be a pivotal moment for U.S. agriculture.

Corn finds a lifeline in Vietnam. Corn saw a bullish uptick following reports of President Trump engaging in trade talks with Vietnam’s leadership. The Southeast Asian nation is the fourth-largest holder of a trade deficit with the U.S. and currently imports 10 to 12 million tons of corn — very little of which comes from the U.S. “A trade agreement with Vietnam could give U.S. corn a new market,” says Crow. While the deal remains speculative, Vietnam’s openness to increase trade to ease tariff threats was enough to give corn futures a much-needed boost.

Other top importers — Mexico, Canada, Colombia, and Japan — remain in focus. “What Japan does in retaliation will be important to the export market,” Crow notes, hinting at further volatility.

Wheat anchored in crop fundamentals. Unlike its peers, wheat remains largely immune to the tariff drama for now. “Wheat is a market based on crop development,” Crow says plainly. Its pricing and volatility will continue to hinge on yield forecasts, weather patterns, and global planting reports.

Global risks: Inflation, recession, and unknowns. Crow cautions that markets are entering uncharted territory. “Emotions and what is reality are hard to measure,” he reflects. The scale of new tariffs — especially from the Trump camp — adds to uncertainty. “The magnitude of Trump’s tariff is something markets have not had to handle,” he says, warning that consequences for the U.S. and global economies may include “inflation, stagflation, and recessions.”

— U.S. exports play a major role in supporting U.S. agricultural markets across various commodities. Summary of the percentage of U.S. production exported for corn, soybeans, wheat, cotton, sorghum, beef, pork, dairy, and poultry from 2020 through 2024 based on available data:

Corn: In 2024, the U.S. exported 62.35 million metric tons of corn. Total production in recent years has averaged around 380-400 million metric tons annually, meaning exports accounted for approximately 15-16% of total production.

Soybeans: Over the past five years (including 2020–2024), the U.S. exported an average of 49% of its total soybean production annually.

Wheat: In 2024, the U.S. exported 21.57 million metric tons of wheat. With annual production averaging around 50 million metric tons, exports accounted for approximately 43% of total production.

Rice: Approximately 40-45% of U.S. rice production has been exported annually during this period. Exports in 2024 reached 3.8 million metric tons, marking a 39% increase compared to 2023. This aligns with the historical export share of U.S. rice production. Export composition: Rough rice and milled rice (including brown and parboiled varieties) dominate U.S. rice exports, with milled rice accounting for 52–56% of total exports.

Cotton: In the 2023–2024 marketing year, the U.S. exported around 12.3 million bales of cotton out of a total production of 16.3 million bales, which represents approximately 75% of total production.

Sorghum: In 2024, the U.S. exported 5.7 million metric tons of sorghum out of a total production of approximately 11.4 million metric tons, meaning exports accounted for about 50% of total production.

Beef: In 2024, the U.S. exported 2.818 billion pounds (1.28 million metric tons) of beef out of total production estimated at around 27 billion pounds (12.25 million metric tons), representing approximately 10% of total beef production.

Pork: In 2024, the U.S. exported a record volume of 3.03 million metric tons of pork out of a total production estimated at around 12 million metric tons annually, meaning exports accounted for roughly 25% of total production.

Dairy: U.S. dairy exports reached $8.2 billion in value in 2024, representing approximately 17% of total dairy production when compared to domestic consumption and export data trends.

Poultry (broiler meat): In recent years, about 17% of U.S. broiler meat production was exported annually.

— Agriculture markets Friday and the week:

(Exchanges)

— U.S. oil prices dropped below $60 a barrel on fears President Donald Trump’s global tariffs would push the U.S., and maybe the world, into a recession. Futures tied to U.S. West Texas intermediate crude fell more than 3% to $59.74. The move comes after back-to-back 6% declines last week. WTI is now at the lowest since April 2021.

— Oil markets plunged Friday as trade tensions and tariff war slam prices. In a dramatic slide, oil prices plummeted roughly 7% on Friday, reaching their lowest levels in over three years. Brent crude settled at $65.58 per barrel, down $4.56 (6.5%), while U.S. West Texas Intermediate (WTI) closed at $61.99, a $4.96 (7.4%) drop. Both benchmarks hit intraday lows not seen in four years — $64.03 for Brent and $60.45 for WTI.

Over the past week, oil prices experienced significant declines:

• Brent Crude fell from $74.95 on April 2 to $66.17 on April 4, a decrease of $8.78 or approximately 11.7%. This was Brent’s worst weekly performance in 18 months.
• West Texas Intermediate (WTI) dropped from $71.71 to $62.37 on April 4, a decline of $9.34 or about 13%. This marked WTI’s largest weekly drop in two years.

The selloff followed China’s announcement of sweeping new tariffs — 34% on select U.S. imports starting April 10 — escalating global trade tensions in response to President Trump’s latest tariff hikes. The growing tit-for-tat sparked fears of a global recession and stagflation, sending markets reeling.

OPEC+ compounded the pressure by fast-tracking its planned production increase to 411,000 barrels per day in May, more than triple April’s bump.

Though oil was spared from direct tariffs, economists warn the broader economic damage could drag down demand. Reflecting these concerns, Goldman Sachs trimmed its December 2025 price forecasts for Brent and WTI by $5, to $66 and $62 respectively. HSBC also revised its 2025 global demand growth estimate downward —from 1 million barrels per day to 0.9 million.

— Vietnam urges Trump to delay 46% duties amid economic fallout fears. Vietnam’s top leader, To Lam, has formally urged President Trump to delay a planned 46% tariff on Vietnamese imports by at least 45 days, warning that the move could devastate Vietnam’s export-driven economy and drive up costs for American consumers. In a letter dated Saturday and obtained by the New York Times, Lam asked Trump to appoint a U.S. representative to negotiate with Vietnamese Deputy Prime Minister Ho Duc Phoc. He also requested an in-person meeting in Washington at the end of May, emphasizing the urgency of finding a mutual solution to avoid economic harm and regional instability. “For the benefit of both our peoples and to contribute to peace, stability and development in the region and the world.” — To Lam, in his letter to President Trump

Vietnam has offered to eliminate tariffs on U.S. goods, which currently average 9.4%, to avert what economists say would be one of the most punishing tariff regimes globally. Trump described their phone conversation as “very productive,” though no agreement has been reached.

The 46% tariff, set to go into effect Wednesday, would be among the highest globally. Vietnam sends 30% of its exports to the U.S. — putting 5.5% of its GDP at risk, per ING. Vietnam is a key supplier for American brands like Nike (50% of footwear made there), Adidas, and Lululemon. Economists warn the move could reverse prior U.S. gains in shifting manufacturing away from China.

Strategic whiplash. Just two years after the U.S. elevated ties with Vietnam to a comprehensive strategic partnership, this sharp turn has left Hanoi reeling. The country had been seen as a reliable U.S. partner in countering China’s ambitions in the South China Sea. But now, analysts fear Trump’s tariff-first approach could push Vietnam back toward Beijing.

Trump claims Vietnam “charges the U.S. 90%,” likely referencing a $123.5 billion trade surplus — a figure Vietnam disputes.

The Vietnamese gov’t had already taken steps to appease the Trump administration:

• Agreed to LNG import deals from the U.S.
• Lowered tariffs on select American goods.
• Approved SpaceX’s entry to provide satellite internet via Starlink.
• The Trump Organization is also developing a $1.5B resort in Lam’s home province.

Vietnam’s economy is vulnerable. With a growth target of 8% needed to reach World Bank middle-income status, Lam faces mounting pressure ahead of Vietnam’s party congress next year. Meanwhile, American consumers are likely to feel the squeeze. With Vietnam a linchpin in global supply chains, the tariffs could raise prices across apparel, electronics, and more.

— Trump admin doubles down on tariffs, sidelines global negotiations. The Trump administration has taken a hardline stance on global trade, implementing sweeping tariffs while deprioritizing negotiations with foreign governments.

• Implementation first, diplomacy later. White House officials made it clear: enforcing new tariffs takes precedence over negotiating deals to reduce or exempt them. Treasury Secretary Scott Bessent emphasized that the administration is engaging with U.S. companies, not foreign governments, signaling a domestic-facing trade strategy.
• Trump’s trade policy rationale. President Trump cited the need to correct trade imbalances, protect American manufacturing, and push back against unfair foreign trade practices, including currency manipulation. By invoking a national emergency under the International Emergency Economic Powers Act, the administration has solidified the legal grounds for its aggressive trade posture.
• Limited exemptions, mixed messages. Canada & Mexico received temporary exemptions, tied to negotiations around border security and anti-smuggling efforts. While Trump called a recent exchange with Vietnam’s General Secretary To Lam “productive,” officials downplayed the idea of broader negotiations, reiterating that talks are informal unless deals are actively pursued. Vietnam has the fourth-largest trade surplus with the U.S., and has already lowered tariffs vis-a-vis the U.S. ahead of the tariff announcement — without any reprieve.
• How to deal with Trump and his trade policy. Jonathan Grady, founding principal of The Canary Group, an artificial intelligence-driven forecasting service based in New York, wrote this commentary for Nikkei Asia: “For Trump, the best deals are not just made on paper — they are made in the story that gets told. Trump’s past trade disputes were often defused with big, flashy deal announcements that let him take credit, even with minimal policy change. America’s partners should use the same playbook to sidestep tariffs and maintain stable trade relations. Most assume policymakers should focus on negotiating trade agreements. But with Trump, that is a mistake — policy talks alone fall short. In a trade war with Trump, the deal is not the deal — the headline is. They do not need to win on policy; they need to win the optics.”

— Canada’s 300% dairy tariff: Trade war flashpoint or paper tiger? As U.S. President Donald Trump focuses on tariffs, Canada’s dairy duties — some as steep as 300% — are under renewed scrutiny. But despite the alarming figures, actual impact on U.S. dairy exports remains minimal, thanks to quota-based trade rules and protections under the USMCA. A Bloomberg report (link) asks, So, is this really a trade war trigger — or just political theater?

Canada imposes massive tariffs — 200% to 300% — on dairy imports above a specific quota. This system, known as “supply management,” is designed to stabilize dairy prices and prevent gluts or shortages. Farmers are assigned production limits, and any overproduction can literally go down the drain.

What it means for U.S. dairy. Technically, almost 99.9% of U.S. dairy exports to Canada enter duty-free — within limits set by the U.S.-Mexico-Canada Agreement (USMCA), brokered during Trump’s first term. While Canada expanded access under the deal, U.S. industry groups argue that non-tariff barriers — like cheese composition rules and subsidies for local processors — still stifle U.S. competitiveness.

(Statistics Canada, Bloomberg)

Trump’s take. At an April 2 rally, Trump reignited the issue: “It’s not fair to our farmers. It’s not fair to our country.” He wants the tariffs gone. However, many of these grievances have been aired for decades across WTO forums, with mixed outcomes.

Other trade partners like the EU, Australia, and New Zealand have also criticized Canada’s dairy protectionism. Some accuse Canada of “dumping” cheap surplus dairy abroad while shielding its own market from foreign competition.

Why Canada won’t budge… yet. Despite internal critics who say the system inflates grocery bills and hurts low-income Canadians, the political power of dairy farmers — particularly in key electoral regions like Quebec and Ontario — makes reform unlikely. With national elections looming and 29% of Canadians viewing the U.S. as “an enemy” (per a March poll), few politicians want to appear soft on domestic dairy.

Upshot: Canada’s deeply entrenched dairy protections mean any real policy shift is unlikely without a major shakeup.

— Why U.S. farm revenues and grocery prices depend on Mexico, Canada, and China. The U.S. agricultural sector is highly dependent on trade with Mexico, Canada, and China. Disruptions in these partnerships could cut deeply into farm revenues and raise food prices for American consumers. Nearly half of all U.S. agricultural exports in 2024 went to Mexico, Canada, and China, while over 40% of agricultural imports came from Mexico and Canada, according to new research from Ty Kreitman via the Federal Reserve Bank of Kansas City (link). As the Bulletin notes: “These nations are deeply integrated into both the supply and demand chains of U.S. agriculture — any sudden policy shift or tariff increase could quickly ripple through farmgate revenues and supermarket prices.”

Canada is not only a key trade partner in food products but also a major fertilizer supplier, making its importance even more multifaceted.

(USDA, Kansas City Federal Reserve)

China’s leverage on U.S. soybeans. Although China contributes less to U.S. agricultural imports, it remains an essential export destination for bulk commodities like soybeans, sorghum, and cotton. In 2024, China purchased:

• 20% of U.S. soybean production
• 55% of sorghum
• 20% of cotton
• 18% of pistachios

(USDA, Kansas City Federal Reserve)

A prior dispute in 2018, when China imposed 25% tariffs on U.S. soybeans, offers a cautionary tale. The result? A dramatic fall in exports and prices, followed by a shift in global soybean production away from the U.S. “That episode highlighted just how vulnerable U.S. agriculture can be to retaliatory tariffs, especially in bulk commodities,” writes Kreitman.

Dairy, pork, and produce: Canada and Mexico’s critical role. Mexico remains a crucial market for U.S. corn, poultry, pork, and dairy, accounting for 5–7% of exports in each category. Canada, meanwhile, is a key destination for tree nuts, fruits, and vegetables, receiving about 5% of U.S. production in those groups.

What makes this concerning? These same categories make up a large portion of farm cash receipts, meaning any drop in export demand would “considerably reduce aggregate farm revenues,” the KC Fed explains.

(USDA, Bureau of Labor Statistics, Kansas City Federal Reserve)

From fields to grocery aisles: tariffs could hit food prices. On the import side, about 20% of U.S. fruits, vegetables, and tree nuts come from Mexico, with another 5% from Canada. These categories alone make up 17% of the Consumer Price Index (CPI) food-at-home basket. But it doesn’t stop there:

• 13% of cereals and bakery products are imported from Canada/Mexico
• 13% of nonalcoholic beverages
• 10% of processed foods (e.g., sweets, vegetable oils, condiments)

Collectively, these products represent 35% of the CPI’s food-at-home basket. The Kansas City Fed warns: “Tariffs on these products could contribute to higher food inflation for U.S. consumers if suppliers pass on the costs.”

A ripple effect with staying power. According to the Bulletin, the extent and persistence of food price increases would depend on supply chain flexibility and product substitutability. While some processed food prices might recover quickly, fresh produce — dependent on geographically concentrated growing regions — could see sustained inflation. “Many fresh fruits and vegetables have limited domestic substitutes, making them especially susceptible to prolonged price impacts.”

Policy implications. The takeaway from the Kansas City Fed’s research is clear: The U.S. agricultural sector’s overexposure to a few key trade relationships creates significant risk — both for farmers and consumers. Whether it’s a tariff dispute, a shift in trade policy, or broader geopolitical tensions, the financial outcomes for rural America and grocery store shoppers alike hang in the balance.

— This week’s congressional hearing highlights include House and Senate hearings with U.S. Trade Rep. Jamieson Greer, providing an opportunity for lawmakers to bring up the local impact of new import-export costs under Trump’s tariffs. Greer will discuss Trump’s trade policy with the Senate Finance Committee on Tuesday and with the House Ways and Means Committee on Wednesday. Link to more congressional action this week via The Week Ahead.

Of note: The Senate Ag Committee will hold a hearing Tues., April 8, on the nomination of Stephen Vaden to be USDA’s deputy secretary and Tyler Clarkson to be the general counsel.

— Voters sour on Trump’s economic stewardship, WSJ poll shows. A new Wall Street Journal poll reveals that voters disapprove of President Donald Trump’s handling of inflation by a margin of 15 percentage points, reflecting broad concern over rising prices and economic volatility. The survey also found that most voters oppose Trump’s focus on tariffs, a key element of his economic strategy that he has pledged to expand if re-elected. In total, negative perceptions of Trump’s overall economic leadership outweigh positive ones by 8 points.

Notably, the poll was conducted before last week’s market sell-off, suggesting economic skepticism could intensify further in the coming days.

— $80 million: The increase in annual revenue for a large meat company if it could harvest 1% more beef from each animal carcass it processes, according to industry officials. With America’s cattle supply at its lowest level since 1951, companies are embracing “white bone” programs, aiming to pick every carcass clean as they move down processing lines. Link to details via the Wall Street Journal.

— U.S./China relations spiral: Beijing arms for trade war as talks collapse. With communication between Beijing and Washington at a standstill, China has shifted from patient diplomacy to economic counterstrikes, signaling the dawn of a new and potentially longer trade war. Hopes of negotiation with the Trump administration have all but evaporated, replaced by rare-earth export restrictions, blacklists, and full-spectrum tariffs on American goods.

Tit-for-tat escalation reignites trade tensions. After months of trying — and failing — to reach out to the Trump administration, Chinese officials have responded forcefully to the latest volley of tariffs from Washington. On Friday, Beijing matched Trump’s aggressive 34% import tariff increase with sweeping measures of its own.

China’s retaliation marks a shift from previous restraint, according to the Wall Street Journal (link). For the first time, Beijing imposed tariffs on all U.S. imports — without exception—along with a rare-earth export restriction, trade blacklists targeting U.S. firms, and an antitrust investigation into DuPont’s operations in China.

President Trump, in characteristic fashion, responded via social media:
“CHINA PLAYED IT WRONG, THEY PANICKED — THE ONE THING THEY CANNOT AFFORD TO DO!”

No diplomacy, no deal. Efforts to revive communication have been rebuffed at every turn. Chinese Foreign Minister Wang Yi’s attempt to reestablish contact with U.S. National Security Adviser Mike Waltz in February was ignored. “The Trump administration is driving the agenda,” noted Ryan Hass of the Brookings Institution. “Beijing is almost entirely in a reactive posture.”

Early optimism — fueled by China’s dispatch of a senior envoy to Trump’s inauguration — fizzled quickly. “Trump and Xi are locked in a paradox of pressure and pride,” said Craig Singleton of the Foundation for Defense of Democracies. “Trump sees leverage and engagement as complementary. Xi is risk-averse and methodical.”

Strategic decoupling in full swing. According to WSJ analysis and data from the Peterson Institute for International Economics, the average U.S. tariff on Chinese goods has now soared to 76%, more than 20 times higher than pre-2018 levels. A senior Beijing economist told the WSJ: “That amounts to a declaration of ‘strategic decoupling.’ Can we find a pathway toward negotiations under such maximum pressure? The lack of communication between the two sides might make it difficult.”

China’s strategic calculus: Wait, retaliate, reposition. Despite mounting pressure, Chinese leadership has resisted looking eager to deal. Xi Jinping is reportedly wary of being seen as an “overeager suitor.” Instead, Beijing appears to be playing the long game, expecting Trump’s tariffs to hurt U.S. consumers and markets enough to force a policy shift. That assumption may already be under strain. Stock markets in the U.S. have taken a hit following the tariff announcements, while The China Finance 40 Forum estimated a more-than-50% drop in Chinese exports to the U.S. this year.

At a Beijing economic forum, U.S. policy consultant Craig Allen summed up China’s current belief: “Within the Chinese government, the view is that the U.S. is taking measures to alienate itself. They think the U.S. is on the wrong side and China is on the right side.”

No more back channels — and no leverage. Gone are the informal connections that helped facilitate talks during Trump’s first term — like the Jared Kushner-Cui Tiankai link. Attempts by current Ambassador Xie Feng to engage Trump ally Elon Musk also failed.

Meanwhile, China lost potential leverage over TikTok and the Panama Canal. CK Hutchison’s surprise sale of its Panama ports to a U.S. consortium caught Beijing off guard, with little hope of reversal. As for TikTok, Beijing has made clear it will not accept a forced sale of its prized algorithm.

Said one U.S. business leader to the WSJ: “Who wants that role [of mediator] now? No one.”

Outlook: The beginning of a trade war supercycle? Unless Trump pulls back — a scenario China believes may only happen if U.S. markets tank further — negotiations remain unlikely. For now, Beijing’s approach is rooted in holding firm, avoiding missteps, and hoping the geopolitical climate shifts. As the WSJ puts it, “Whoever is in the driver’s seat of U.S./China relations, it’s not Beijing.”

— NWS outlook: A lingering concern for heavy rainfall and flash flooding will exist over the Southeast and portions of the Gulf Coast through tonight... ...Severe weather concerns will persist into Monday across portions of the Southeast... ...Wintry weather with some accumulating snowfall expected around the Great Lakes and parts of the Northeast... ...Unsettled weather impact the Pacific Northwest and northern Rockies
through the early part of this week.

(NWS)

7: Crop Progress | Agricultural Trade Data Update
9: Crop Production Historical Track Records
10: CPI | Crop Production | WASDE
10: The Masters (golf)
11: PPI-FD | Consumer Sentiment
13: Passover begins
14: Crop Progress
15: 2024 income taxes due; last day for 2024 IRS, HSA contributions; first quarter 2025 taxes due
16: Retail Sales
17: Housing Starts and Permits; Cattle on Feed; National Hemp Report
18: Good Friday
20: Easter
21: Crop Progress | Chickens and Eggs
21: Boston Marathon
22: Existing Home Sales | Milk Production
23: New Home Sales
24: Durable Goods Orders | Cold Storage
25: Food Price Outlook | Consumer Sentiment
28: Crop Progress
29: International Trade in Goods | JOLTS | Consumer Confidence | Meat Animals - Prod., Disp., and Income | Milk - Prod., Disp., and Income | Poultry - Production and Value
30: ADP Employment | Employment Cost Index | GDP | Personal Income and Outlays incl. PCE Price Index | Ag Prices

Economic aid for farmers | Disaster aid for farmers | Farm Bureau summary of aid/disaster/farm bill extension | 45Z tax incentive program | Poultry and swine line speeds | U.S./China Phase 1 agreement | WASDE | Crop Production | USDA weekly reports | Crop Progress | Food prices | Farm income | Export Sales weekly | ERP dashboard | RFS | IRA: Biofuels | IRA: Ag | SCOTUS on WOTUS | SCOTUS on Prop 12 pork | Gov’t payments to farmers by program | Farmer working capital | USDA Ag Outlook Forum | Eggs/HPAI | NEC task force on HPAI, egg prices | Options for HPAI/Egg prices | Trump tariffs | Greer responses to lawmakers | Trump reciprocal tariffs |