News/Markets/Policy Updates: Feb. 5, 2025
Other topics include: (1) China’s retaliatory tariffs significantly smaller in scale vs broad U.S. tariffs on Chinese goods; (2) Trump suggests U.S. takeover of Gaza, upending longstanding policy; (3) USAID shakeup impacts ag industry and food aid; (4) Federal unions sue Trump over ‘buyout’ plan; (5) Treasury assures security of payment system amid Musk team’s access; (6) Americans prioritize health care access, safety, and chronic disease prevention; (7) Summing up Trump 2.0 so far; (8) Japanese yen is appreciating; (9) Gold rose to a record high above $2,870 an ounce; (10) U.S. steel industry struggles amid rising prices; (11) Nissan and Honda merger talks collapse; (12) Alphabet falling 7.3% in premarket trading after Google parent reported disappointing revenue; (13) Disney streaming dips, but profits hold strong; (14) Fed officials signal patience on monetary policy (15) Prolonged dryness threatens Ukraine’s winter crops; (16) Senate Ag Committee holds hearing on farm economy; (17) Oil prices mixed amid U.S./China tensions and renewed Iran sanctions; (18) DOE extends LNG export study comment period; (19) China slams Trump’s tariffs amid fentanyl dispute; (20) China lodges complaints with U.S. over Panama Canal remarks; (21) China delays wheat imports amid ample supply; (22) China’s antitrust watchdog laying groundwork for potential probe into Apple’s policies; (23) China extended its support for the yuan; (24) Trump’s Cabinet confirmations advance, despite some delays; (25) Democrats maneuver to hold GOP House seat vacancy; (26) Egg prices scramble bakeries and restaurants; (27) Egg producers push for urgent bird flu response; (28) Navarro frames tariffs as a ‘drug war’ strategy, not a trade war; (29) Brazil watches U.S. trade signals amid tariff concerns; (30) Trump administration starts flying detained migrants to Guantánamo Bay.
— USPS reverses course on China, Hong Kong shipments amid tariff changes. The U.S. Postal Service (USPS) has reversed its decision to halt certain international shipments from China and Hong Kong, now stating it will accept “all international inbound mail and packages” from the region. This follows an earlier announcement that briefly paused such shipments, causing confusion and weighing on shares of Chinese e-commerce giants like Alibaba and JD.com. The move comes as USPS works with U.S. Customs and Border Protection to implement new tariff collection mechanisms after President Donald Trump revoked the “de minimis” rule, which previously allowed packages under $800 to enter the U.S. duty-free. The policy change is part of a broader effort to crack down on a trade loophole used by Chinese e-commerce retailers like Temu and Shein. Analysts believe its impact may be limited, as many retailers have already shifted away from USPS for international shipping. According to a Government Accountability Office report, USPS’ share of global mail has declined significantly in recent years, with private carriers like FedEx and UPS absorbing much of the volume. Concerns over drug shipments. The White House has cited security concerns as a factor in its recent trade actions, alleging that Chinese cartels exploit mail shipments to smuggle illicit drugs, including fentanyl. White House trade adviser Peter Navarro stated that “Chinese cartels have used this loophole to smuggle in not just fentanyl but all sorts of drugs.” — China’s retaliatory tariffs are significantly smaller in scale compared to the broad U.S. tariffs on Chinese goods. While China is targeting $14 billion in U.S. imports, the U.S. has imposed tariffs on $525 billion worth of Chinese exports. Experts suggest this is a strategic move by Xi Jinping to demonstrate strength while keeping room open for negotiations with Trump. Additionally, China’s economy, which relies heavily on exports, is facing internal challenges such as a domestic real estate bubble, limiting its ability to escalate the trade war further. — Trump suggests U.S. takeover of Gaza, upending longstanding policy. President Donald Trump floated the idea of a U.S.-led reconstruction of Gaza, effectively discarding decades of American support for Palestinian statehood. Speaking alongside Israeli Prime Minister Benjamin Netanyahu, Trump’s proposal followed Arab nations’ rejection of his earlier suggestion to relocate Palestinians. The former real estate developer envisioned turning Gaza into a “Riviera of the Middle East” and credited himself for a tentative Israel/Hamas ceasefire. He also lamented that he would “never get a Nobel peace prize” despite believing he deserves one. Saudi Arabia rejected “any infringement on the legitimate rights of the Palestinian people, whether through Israeli settlement policies, land annexation or attempts to displace the Palestinian people from their land.” One Arab official also questioned whether his remarks — made alongside Israeli Prime Minister Benjamin Netanyahu — would risk the ceasefire between Israel and Hamas, Bloomberg reported. Netanyahu called the idea “something that could change history.” Sen. Chris Van Hollen (D-Md.) called Trump’s proposal — which would involve permanently resettling Palestinians in Gaza — “ethnic cleansing by another name.” — USAID employees face administrative leave amid spending cuts. Most U.S. Agency for International Development (USAID) employees will be placed on administrative leave starting Friday as the agency becomes a focal point in efforts by Trump and Elon Musk to reduce federal spending. As we noted Tuesday, over 20,000 employees — about 1% of the federal workforce — have accepted a buyout deal that ensures taxpayer-funded salaries through September. This falls short of the White House’s goal of having 5% to 10% of federal staffers turn in their notice to cut down on government spending, but officials say the number continues to climb as tomorrow’s deadline for accepting the offer nears. (It is also far fewer than the 62,000 federal workers that on average have retired each year over the past decade.) Not on board with this are the unions that represent federal workers. They’ve urged their members to spurn the deal, and, along with other critics, including former officials, have questioned whether the offer is legal — and whether the promised pay is really guaranteed. USAID provides money to various countries and non-governmental organizations. The agency sends money to around 130 countries, including Ukraine, Yemen, Afghanistan, and Syria, according to the Congressional Research Service. In 2023 the agency managed more than $40 billion and no fewer than 10,000 employees. Secretary of State Marco Rubio is now advocating for internal reforms and a narrower focus instead of shutting it down entirely — contrary to Elon Musk’s claim. However, Musk lacks the authority to dismantle it, as Congress established it as an independent entity in 1998 under the State Department’s supervision. Any attempt to close it would require congressional approval, which is unlikely to secure the 60 votes needed in the Senate. A Wall Street Journal commentary (link) says, “The USAID uproar is a taste of the pushback that Elon Musk and Donald Trump are going to face as they work to shrink and reform the executive branch.” — USAID shakeup impacts ag industry and food aid. Lawmakers on the House and Senate Agriculture Committees warn that President Trump’s overhaul of USAID is jeopardizing food aid deliveries and U.S. agricultural producers relying on federal contracts. USAID, which spends about $4 billion annually on international food assistance, has billions in commodity purchases stuck in limbo due to funding freezes and staff furloughs. House Ag ranking member Angie Craig (D-Minn.) criticized the disruptions, blaming Elon Musk’s attacks on USAID for harming rural economies. Sen. Jerry Moran (R-Kan.) urged State Secretary Marco Rubio to release stalled shipments before aid perishes. Meanwhile, Sen. Chuck Grassley (R-Iowa) defended Trump’s broader reforms but hesitated to support cuts to food aid. — Federal unions sue Trump over ‘buyout’ plan. More than 20,000 federal employees have accepted the Trump administration’s “deferred resignation” program, prompting a lawsuit from worker unions. The suit, filed in Massachusetts federal court, argues that the Office of Personnel Management lacked the authority for the initiative, which offers months of full pay for those who voluntarily leave. Unions also highlight Elon Musk’s involvement, comparing the program to his controversial Twitter/X layoffs. The case raises concerns about workforce expertise loss and increased politicization of federal jobs. — USDA FSA employees face job uncertainty amid agency changes. Recent developments could impact USDA Farm Service Agency (FSA) employees in county and state field offices nationwide: · Job insecurity: A Jan. 21, 2025, memorandum from the acting Secretary may introduce hiring and regulatory changes affecting job stability. — Treasury assures security of payment system amid Musk team’s access. The U.S. Treasury confirmed that Elon Musk’s efficiency team had only “read-only” access to coded data within the government’s payment system. According to a letter sent to Sen. Ron Wyden (D-Ore.), the system remains “robust and effective,” with no valid payment requests from government agencies being rejected due to the team’s involvement. The statement comes after Democratic lawmakers raised concerns about the system’s integrity. — Americans prioritize health care access, safety, and chronic disease prevention. A new Gallup and Emory University survey (link) reveals that Americans want government health officials to focus on improving health care access and costs, ensuring safe food and water, and reducing chronic diseases. The findings come as the Department of Health and Human Services prepares for a leadership overhaul following Robert F. Kennedy Jr.’s nomination. Kennedy’s emphasis on food safety resonates with Republicans, with 24% citing it as the government’s top health priority. The survey also indicates that many believe the U.S. has lost ground in tackling the opioid crisis, mental health, diet, health care access, and disease prevention over the past decade. — Summing up Trump 2.0 so far: “It’s only been a little more than a couple of weeks since the inauguration, but it feels like so much has happened: we are living through DOG(E) years.” Stephen Jen, Chief executive, Eurizon SLJ Capital, in a note to clients. Meanwhile, President Trump said he “left instructions” for the U.S. military to have Iran “obliterated” if it assassinates him. (The Justice Department has accused several men of plotting to kill him on Iran’s behalf.) |
| FINANCIAL MARKETS |
— Equities today: Asian and European shares were mostly weaker overnight. U.S. stock indexes are set to open lower. There are several Fed officials scheduled to speak today including: Barkin (9:00 a.m. ET), Goolsbee (1:00 p.m. ET), and Bowman (3:00 p.m. ET). In Asia, Japan +0.1%. Hong Kong -0.9%. China -0.6%. India -0.4%. In Europe, at midday, London +0.1%. Paris -0.2%. Frankfurt -0.1%.
Equities yesterday: All three major indices registered gains as fears eased about a trade war erupting between the US and other countries. The Dow rose 134.14 points, 0.30%, at 44,556.04. The Nasdaq gained 262.06 points, 1.35%, at 19,654.02. The S&P 500 was up 43.31 points, 0.72%, at 6,037.88.
— Japanese yen is appreciating on the foreign exchange market after Japanese wages rose at the fastest pace in nearly three decades, supporting the Bank of Japan’s latest rate hike and keeping the BOJ on track for more monetary policy tightening.
— Gold rose to a record high above $2,870 an ounce as the opening salvos of the U.S./China trade war stoked haven demand.
— Inflation watch: U.S. steel industry struggles amid rising prices. The U.S. steel industry just had its worst year since 2020 due to weak manufacturing demand. Executives are advocating for measures to curb low-cost imports, with Canada and Mexico making up 35% of last year’s steel imports. Recently, U.S. Steel increased flat-rolled steel prices by $50 per ton, while Nucor raised prices by $25 per ton. These hikes are already impacting manufacturers, forcing them to raise their own prices.
— Nissan and Honda merger talks collapse. Nissan Motor and Honda Motor are likely to end their merger discussions after failing to agree on terms, according to local media. The proposed deal aimed to consolidate the two automakers under a single holding company by August 2026, strengthening their position against rising Chinese competitors like BYD. However, Honda pushed for Nissan to undergo restructuring, while Nissan struggled with workforce reductions. Growing tensions ultimately led to Nissan’s decision to back out, the Nikkei reported. Following the news, Nissan shares dropped 4.9%, while Honda shares surged 8.2%.
— Alphabet is falling 7.3% in premarket trading after the Google parent reported disappointing revenue because of a slowdown in its cloud business. The results raise concerns about Alphabet’s AI spending.
— Disney streaming dips, but profits hold strong. Disney+ lost subscribers in its fiscal first quarter and expects a modest decline in the second quarter. Despite this, Disney’s streaming business remained profitable. The company also saw revenue growth across its entertainment, sports, and experiences segments, with earnings and revenue exceeding expectations.
— Fed officials signal patience on monetary policy. Federal Reserve officials have reiterated their cautious approach to monetary policy, emphasizing the strength of the U.S. economy. San Francisco Fed President Mary Daly stated that policymakers can take their time assessing economic shifts, including tariffs and immigration policies, without rushing decisions. Fed Vice Chair Philip Jefferson echoed this sentiment, acknowledging economic uncertainty while predicting a gradual easing of monetary policy over time. Both officials reaffirmed the Fed’s commitment to returning inflation to its 2% target but stressed there is no urgency to alter the current stance.
| AG MARKETS |
— Ag markets today:
- Corn and wheat firmer, beans mildly weaker this morning. Corn and wheat futures mildly favored the upside overnight and are trading near session highs early this morning while soybeans have slipped a little. As of 7:30 a.m. ET, corn futures were trading fractionally to 3 cents higher, soybeans were mostly a penny lower and wheat futures were 4 to 6 cents higher. The U.S. dollar index was down around 450 points, and front-month crude oil futures were around 75 cents lower.
- Beef plants cutting production amid deeply negative margins. Beef packer margins are deep in the red at well over $100.00 per head. As a result, packers have slashed production, with weekly estimated slaughter under 600,000 head. Highly negative packer margins, reduced slaughter runs and the availability of fresh contracted supplies may end the 11-week run of historic cash cattle prices.
- Cash hog index, pork cutout continue to climb. The CME lean hog index is up another 31 cents to $84.08 as of Feb. 3, extending its rise from the seasonal low in early January. The pork cutout firmed 95 cents on Tuesday to $94.76, the highest since Dec. 27, as all cuts except bellies strengthened.
— Ag trade: South Korea purchased 85,000 MT of U.S. milling wheat and tendered to buy up to 140,000 MT of corn from the U.S., South America or South Africa. Jordan tendered to buy up to 120,000 MT of optional origin milling wheat. Iran passed on a tender to buy 120,000 MT of corn, 120,000 MT of feed barley and 60,000 MT of soymeal.
— Prolonged dryness threatens Ukraine’s winter crops. Ukraine is experiencing the lowest soil moisture levels of the last seven seasons, raising concerns about yields in 2025, the Ukrainian national agricultural academy said. “The total amount of precipitation for November-January was only 79.6 mm and was significantly inferior to the long-term average of 117 mm,” APK-Inform consultancy quoted the Academy as saying. Scientists said the insufficient amount of precipitation during most of the winter period and very low reserves of moisture in the soil “cause special concern for grain producers.”
— Uncertainty surrounds the return of USDA’s July Cattle report. It remains unclear whether USDA’s National Agricultural Statistics Service (NASS) will reinstate the July Cattle Inventory report. In April 2024, NASS canceled the July Cattle report due to budget constraints, leaving the industry with only the January report for annual data. Industry groups, including the National Cattlemen’s Beef Association, have urged NASS to reverse its decision. Bipartisan lawmakers have called on USDA to reinstate the report. NASS estimates it would take approximately $550,000 to fund the report.
Of note: A House appropriations subcommittee approved language directing NASS to reinstate the report.
— Agriculture markets yesterday:
• Corn: March corn futures rose 5 3/4 cents to $4.94 1/2, nearer the session high.
• Soy complex: March soybeans rallied 16 3/4 cents to $10.75, marking a four-month high close. March soymeal surged $10.30 to $314.00, closing just short of the intraday high. March soyoil closed down 75 points at 45.76 cents, ending well off the day’s low.
• Wheat: March SRW futures surged 10 1/4 cents to $5.77 and settled near session highs. March HRW futures closed 9 cents higher, near session highs. March HRS futures rose 5 1/4 cents to $6.21 3/4.
• Cotton: March cotton rose 90 points to 66.94 cents, forging a high-range close.
• Cattle: April live cattle futures sunk $1.50 to $198.65 and closed nearer session lows. March feeder cattle futures plunged $2.25 to $268.25, nearer session lows.
• Hogs: April lean hogs closed up $3.40 to $89.75, near the daily high.
| FARM POLICY |
— Senate Ag Committee holds hearing on farm economy. The Senate Ag panel is convening a hearing today titled “Perspectives from the Field: Farmer and Rancher Views on the Agricultural Economy, Part 1.” The session will feature testimonies from leaders of major agricultural organizations, offering insights into the state of the farm economy.
The hearing includes two panels:
- Panel 1: Testimonies from Zippy Duvall (American Farm Bureau Federation) and Rob Larew (National Farmers Union).
- Panel 2: Representatives from key agricultural sectors, including cotton, corn, wheat, barley, sorghum, soybeans, peanuts, sugar beets, and rice.
This hearing comes just days after the Senate Ag Committee advanced Brooke Rollins’ nomination for Secretary of Agriculture. With agricultural policy at a crossroads, testimonies from industry leaders could influence legislative decisions, including the stalled farm bill and economic aid for farmers.
| ENERGY MARKETS & POLICY |
— Oil prices mixed amid U.S./China tensions and renewed Iran sanctions. Oil prices settled mixed on Tuesday as markets reacted to escalating U.S./China trade tensions and President Trump’s renewed “maximum pressure” campaign on Iran. WTI crude fell $0.46 (0.63%) to $72.70 per barrel, while Brent crude edged up $0.24 (0.32%) to $76.20. Prices initially dropped over 3% after China retaliated against new U.S. tariffs but later recovered as Trump moved to cut Iran’s oil exports to zero. Market volatility persisted, with analysts warning of further downward pressure if China devalues the yuan. While Trump delayed new tariffs on Mexico and Canada, he showed no urgency in negotiating with Xi Jinping. Investors are watching U.S. crude inventory data and OPEC+ production plans for further direction.
— DOE extends LNG export study comment period. The Department of Energy (DOE) has extended the public comment period for its Liquefied Natural Gas (LNG) Export Study, originally published on Dec. 20, 2024. The new deadline for submissions is now March 20, instead of the initial Feb. 18 date. DOE cited the large volume of responses — tens of thousands already filed — as a reason for the extension, emphasizing the benefit to stakeholders. The study follows former President Trump’s executive order pausing LNG export licenses after taking office.
| CHINA |
— China slams Trump’s tariffs amid fentanyl dispute. China accused the U.S. of ignoring its cooperation on combating fentanyl after President Trump imposed a 10% tariff on Beijing over the flow of illegal drugs. The tariffs, which took effect Tuesday, reignited a trade war between the two largest economies. In response, China imposed its own levies and launched an anti-trust probe into Google. Cooperation on fentanyl had been a rare bright spot in U.S./China relations, with former President Joe Biden previously brokering a deal to curb production. Trump hinted at a possible call with Chinese leader Xi Jinping but later downplayed its urgency. China called for dialogue over unilateral measures.
— China lodges complaints with U.S. over Panama Canal remarks. China’s foreign ministry said it had lodged complaints with the U.S. over “irresponsible” remarks regarding the Panama Canal and “attacks” on its cooperation with Panama over the waterway. “Currently, the cooperation between China and Panama under the framework of the Belt and Road Initiative is proceeding normally,” a ministry spokesperson said when asked about Panama’s decision to let its involvement in the infrastructure plan expire. “We hope that the relevant parties will remain confident, not be influenced by external interference, and make the right decisions based on the overall bilateral relationship and the long-term interests of the people of both countries.”
— China delays wheat imports amid ample supply. China has delayed up to 600,000 metric tons of wheat imports, primarily from Australia, and is offering some cargoes to other buyers due to sufficient domestic supply and reduced demand, Reuters reports. According to trade sources, at least four shipments — three from Australia and one from Canada — are being redirected to Southeast Asia. In total, eight to ten cargoes scheduled for January and February have been delayed, with no wheat arrivals booked for March. China is not expected to receive more wheat shipments until April.
— China’s antitrust watchdog is laying the groundwork for a potential probe into Apple’s policies and the fees it charges app developers. Link to more via Bloomberg.
— China extended its support for the yuan by setting its daily reference rate for the managed currency at a level stronger than 7.2 per dollar, as escalating trade tensions with the U.S. add to the depreciation pressure on the yuan.
| CONGRESS |
— Trump’s Cabinet confirmations advance, despite some delays. The Senate confirmed three Cabinet officials with bipartisan support: Energy Secretary Chris Wright, VA Secretary Doug Collins, and Attorney General Pam Bondi, though only Sen. John Fetterman (D-Pa.) backed Bondi.
Two more confirmations — Scott Turner for HUD and Russ Vought for OMB — are expected before the end of the week, bringing Trump’s total to 13 in his new term, outpacing his first term and Biden’s early confirmations.
Democrats are delaying Vought’s vote until Thursday evening by using the full 30-hour post-cloture debate.
Meanwhile, Robert F. Kennedy Jr. and Tulsi Gabbard cleared key committee hurdles, and despite Democratic objections, FBI nominee Kash Patel is likely to advance next week. Kennedy is considering regulatory changes regarding farmers’ use of pesticides and genetically modified seeds. If confirmed as HHS secretary, he will also play a key role in shaping major food policies, including contributing to the updated Dietary Guidelines for Americans.
Trump’s only setback so far was withdrawing Matt Gaetz’s nomination for attorney general, a move that even Republicans supported.
Upshot: Despite Democratic resistance, Trump appears poised to see his full Cabinet confirmed.
| ELECTIONS & POLITICS |
— Democrats maneuver to hold GOP House seat vacancy. Democrats in New York are seeking to delay filling a Republican House seat, potentially shrinking the GOP’s slim majority in Congress. New York Gov. Kathy Hochul and House Minority Leader Hakeem Jeffries (D-N.Y.) are considering postponing the special election to coincide with later primaries or general elections, citing voter turnout and cost concerns. This stands in contrast to their swift action in filling a Democratic vacancy last year. With Speaker Mike Johnson (R-La.) aiming to push key legislation through a razor-thin majority, the move could disrupt the GOP agenda and aid Democrats’ House ambitions in 2026.
Of note: Democratic Party leaders in New York’s 21st Congressional District have backed farmer Blake Gendebien for the anticipated special election to replace Rep. Elise Stefanik (R-New York), Trump’s pick to be UN ambassador. Stefanik won reelection last year by over 20 percentage points.
| FOOD & FOOD INDUSTRY |
— Egg prices scramble bakeries and restaurants. Soaring egg prices — up more than 36% due to avian flu — are forcing bakeries and restaurants to rethink operations. Some have seen egg costs nearly double, making it harder to keep prices affordable. Nationwide, chains like Waffle House are adding surcharges to cope with the egg shortage. Waffle House is implementing a 50 cent surcharge for every egg in a customer’s order, according to Reuters (link). The Georgia-based company, which has about 2,100 locations nationwide, is believed to be the first major restaurant chain to add an egg surcharge. “Rather than increasing prices across the menu, this is a temporary targeted surcharge tied to the unprecedented rise in egg prices,” the company said. “The continuing egg shortage caused by HPAI (Bird Flu) has caused a dramatic increase in egg prices,” Waffle House said in a statement. “Consumers and restaurants are being forced to make difficult decisions.” Other breakfast operators are similarly struggling to afford making omelets en masse, with some switching to liquid egg, which is cheaper.
Facts and figures. Roughly 104 million egg-laying birds have been put down over the past two years, with 29 million culled just since October. Over the past 30 days, USDA data shows 80 commercial flocks and 43 backyard flocks have been affected with a total of 22.75 million birds. Of that, Ohio has 39 commercial flocks with 8.79 million birds affected, Indiana has five commercial flocks and 2 backyard flocks totaling 3.07 million birds, North Carolina has three commercial flocks with 3.34 million birds, and Missouri has 13 commercial flocks and two backyard flocks with 4.29 million birds affected. Many of the largest numbers in each state have been commercial table egg layer birds.
The nationwide average price of a dozen eggs in December was $4.15, but now:
- A dozen eggs in the Midwest cost $7.08 wholesale, as much as seven times the price two years ago, according to USDA.
- In NYC, a dozen cage-free eggs cost $11.99 at Whole Foods. Some grocery stores in NYC and Chicago have placed limits on how many cartons customers can buy.
- USDA predicts no end in sight, forecasting another 20% jump in prices this year.
Of note: 100,000 eggs were recently stolen from a distribution trailer in Pennsylvania, police said.
— Egg producers push for urgent bird flu response. Members of the United Egg Producers (UEP) are meeting with lawmakers this week, urging swift action to combat the ongoing bird flu outbreak, which has already led to the loss of 20 million birds in 2025. UEP is asking lawmakers to support a letter to USDA nominee Brooke Rollins, pressing for immediate steps like developing an animal vaccination strategy, enforcing biosecurity measures, and revising disaster assistance indemnity rates. “We are in the fight of our lives — and a fight to preserve our livelihoods,” said UEP Chair Mike West, whose company lost 1.3 million hens in 2024. Rollins has signaled that the bird flu response will be a top priority under Trump’s USDA.
| TRADE POLICY |
— Navarro frames tariffs as a ‘drug war’ strategy, not a trade war. Peter Navarro, Trump’s senior trade adviser, has characterized the administration’s new 10% tariff on Chinese imports as part of a “drug war” rather than a trade dispute. He emphasized that the move aims to pressure China to curb fentanyl production. Key takeaways from Navarro’s remarks at a Politico event include:
- Not a trade war: Navarro insists the tariffs are not about trade but national security.
- Drug trafficking focus: The administration frames the tariffs as a response to the fentanyl crisis.
- Potential escalation: Future tariff increases remain on the table.
- Trade deficit concerns: The administration is evaluating the economic impact of trade imbalances.
- Universal tariff possibility: A broad tariff is under consideration, possibly to fund tax cuts.
Bottom line: This marks a shift from Trump’s first term, with a more immediate and aggressive tariff strategy. The administration appears poised to take further economic measures, keeping options open while focusing on national security concerns.
— Brazil watches U.S. trade signals amid tariff concerns. While Brazilian officials acknowledge the risk of new U.S. tariffs, recent signals from Washington have somewhat eased concerns. Former foreign trade secretary Welber Barral highlighted that while Donald Trump has criticized Brazil’s tariffs on ethanol, no new measures have been announced. Brazil’s trade deficit with the U.S. may work in its favor, differentiating it from other tariff-targeted nations. The import tariff on U.S. ethanol, which has at times been zero, currently stands at 18%. However, experts warn that Trump’s broader trade policies, including his stance against multilateral organizations, pose long-term risks to Brazilian agribusiness.
| BORDER, IMMIGRATION, DEPORTATION & LABOR |
— Trump administration confirmed that it had started flying detained migrants to Guantánamo Bay. One military plane, carrying about a dozen people, left on Tuesday from Texas, according to the Wall Street Journal. Last week President Trump ordered that the detention camp and naval base in Cuba be made ready to house 30,000 of the “worst criminal illegal aliens.”
| WEATHER |
— NWS outlook: Unsettled weather to persist across the Western U.S. through the end of the week including a new threat of heavy rainfall for California on Thursday... ...Winter storm to impact the Midwest and Great Lakes region through the Ohio Valley, Mid-Atlantic and Northeast with a combination of snow, sleet and freezing rain later today through Thursday... ...Record high temperatures are expected across much of the Southern U.S. over the next few days.
| KEY DATES IN FEBRUARY |
6: USDA Farm Income forecast
7: January Employment | USDA Ag Trade Data Update
9: Super Bowl
11: USDA Crop Production, WASDE, world market circulars
12: Consumer Price Index report
13: Producer Price Index-FD | USDA outlook reports for several commodities
14: Retail Sales | Valentine’s Day
16: Daytona 500
17: Presidents Day; U.S. gov’t and market holiday
21: Univ. of Michigan Consumer Sentiment | Existing Home Sales | USDA Cattle on Feed
25: Consumer Confidence | USDA Food Price Outlook
27: Durable Goods Orders | GDP | USDA Outlook Forum | Outlook for U.S. Agricultural Trade report
28: Personal Income and Outlays (PCE Price Index) | International Trade in Goods | USDA Outlook Forum concludes
| LINKS |
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 | Trump tariffs |