Check our advice monitor on ProFarmer.com for updates to our marketing plan.
President Trump’s ‘Liberation Day’ announcement proved momentous, with broad selling immediately ensuing across the marketplace as traders looked to remove further risk ahead of potential retaliation and the looming economic unknowns. This came after traders seemingly shook off USDA’s bigger-than-expected corn figure in its Prospective Plantings Report, with increased use, as evidenced by USDA’s March 1 stocks data, helping spur short-covering gains. While the ag complex eventually stabilized following Trump’s tariff announcement, a rebuttal from China sent futures into a tailspin, with the soy and livestock complexes, along with cotton, seeing the greatest impact. Market participants, far and wide, will feel the effects of the recent tariffs, though demand for agriculture products will be particularly important going forward. Secretary Rollins attempted to soften the tariff blow by making a timely announcement of funding for several biofuel infrastructure projects across the U.S. We cover all of these items and much more in this week’s newsletter.
China hits back: 34% tariff on U.S. goods sparks escalation in trade war…China announced it will impose a 34% retaliatory tariff on all U.S. imports beginning April 10 in direct response to President Donald Trump’s tariff hike on Chinese goods. The move deepens an already fraught economic relationship between the world’s top two economies.
President Trump recently raised cumulative tariffs on Chinese imports to 54%, including a sharp 34% increase unveiled earlier this week. Framing the move as a counter to “unfair foreign trade practices,” the administration has simultaneously levied tariffs on other global partners, sparking global trade anxiety.
Besides tariffs, Beijing rolled out several punitive actions: · Unreliable entities list: Eleven U.S. firms are now barred from doing business in China. · Rare earth export limits: Key materials critical to EVs and defense are now under stricter export controls. · Agricultural hit: Select U.S. chicken exporters have been suspended by China’s customs authority.
Economic fallout · U.S.: American consumers may face higher prices and inflation, with global demand possibly cooling due to ripple effects. · China: Growth could shrink by up to 2.4 percentage points in 2025, deepening its ongoing deflationary challenges. Beijing may turn to domestic stimulus and new markets in Southeast Asia, Africa, and Latin America to cushion the blow.
Global implications: This standoff has serious implications for global trade and supply chains. As countries hit by U.S. tariffs seek new alliances, China might find fresh diplomatic and economic partners. However, the scale of U.S. demand remains difficult to replace.
What’s next? With both sides doubling down, hopes for swift resolution are dim. The Trump administration may come back with additional tariffs or other action on China. Analysts warn of prolonged disruptions, shifting trade flows, and intensified economic nationalism.
Ag market impact: Commodity trader and analyst Richard Crow says “The Brazil bean basis surged by more than 40 cents as the cash markets decoupled. China’s import tariffs would suggest that China shift as much of its demand as possible to origins outside the U.S.The final demand for any commodity is subject to how the world economies hold together.” Crow also notes that the release of the Census export corn export numbers suggests corn exports could exceed the number used in USDA’s balance sheet.
Of note: Tariff uncertainty risks chilling investment. “Trump’s tariff plan probably represents a shift for markets to quickly move from max uncertainty to max pessimism,” Jeff Buchbinder, the chief equity strategist for LPL Financial, told the New York Times.
Markets price in five Fed rate cuts by year-end amid tariff fallout…CME Fed funds futures have shifted sharply in the wake of recent tariff actions, with markets now expecting no change at the May 6–7 FOMC meeting. However, expectations for the remainder of the year suggest five rate cuts — one at each of the Fed’s June, July, September, November, and December meetings. Each cut is projected to be 25 basis points, which would bring the target Fed funds rate down to 3%–3.25%, from the current 4.25%–4.5%.
U.S. Employment report: Strong hiring meets rising unemployment in March…The U.S. labor market in March painted a nuanced picture: while hiring remained robust, signs of strain began to surface. Employers added 228,000 nonfarm jobs, outpacing forecasts, yet the unemployment rate inched up to 4.2% from 4.1%, reflecting underlying economic headwinds.
Highlights
Payroll growth: Job creation beat expectations (125,000–185,000 range), thanks to gains in health care, transportation, warehousing, and retail, along with strike-returnees boosting overall numbers.
- Private sector: +155,000 jobs, with notable rebounds in construction and leisure.
- Federal jobs: Continued to decline amid spending cuts and efficiency layoffs.
· Unemployment rate: The number of unemployed rose to 7.1 million, driven in part by federal layoffs and uncertainty stemming from new trade policies.
· Wage growth: Average hourly earnings climbed to $36.00, extending an upward trend as inflationary pressures linger.
Policy and economic context: President Trump’s recent move to impose broad tariffs on imported goods is introducing a new layer of economic uncertainty. Analysts warn that these trade policies could curb business investment and consumer demand, with potential labor market repercussions in the quarters ahead. Since February, over 200,000 federal workers have been laid off, contributing to the uptick in joblessness and clouding the near-term outlook.
Outlook: Resilience with risks. Despite the solid pace of hiring, economists caution that tariff-related disruptions and ongoing government downsizing may weaken labor market momentum. With unemployment rising and confidence under pressure, businesses could scale back hiring as they adjust to shifting economic conditions. April’s report may be a clearer test of how well the job market can withstand mounting policy shocks.
JPMorgan raises recession odds to 60% after Trump tariff move…JPMorgan Chase now sees a 60% chance of a U.S. — and possibly global — recession following Donald Trump’s latest round of reciprocal tariffs, up from a 40% estimate earlier. While not a certainty, the bank warns the policies could trigger a downturn this year. Economists led by Bruce Kasman note the current economic landscape suggests any recession may be mild, but also caution that recessions are “inherently unpredictable.”
Oil glut and tariffs drive prices to 4-year lows; crude oil hits $61.95 — lowest since 2021…Crude oil prices have plunged to their lowest level in four years, trading at $61.95 per barrel as of April 4 — a 7.47% drop from the previous close. Both Brent and WTI benchmarks are nearing lows not seen since late 2021, with the energy market under pressure from a perfect storm of supply increases, economic anxiety, and evolving geopolitical shifts.
Key drivers behind the drop
- OPEC+ production surge: Starting this month, OPEC and its allies have begun unwinding pandemic-era output cuts, adding millions of barrels per day to global supply. The move has triggered fears of a market glut.
- Tariff-fueled economic jitters: New U.S. tariffs under President Trump on imports from Canada, Mexico, and China are raising the risk of a global trade slowdown — potentially curbing energy demand, even though oil imports are technically exempt.
- Geopolitical shifts: Hopes for a resolution in the Russia-Ukraine conflict could ease sanctions and unleash more Russian oil into the market. Meanwhile, earlier price-supporting tensions — such as U.S. strikes on Houthi militants — have faded into the background.
Market & policy implications: While the price drop may bring short-term relief at the gas pump, it spells trouble for oil-dependent economies and energy companies whose margins rely on higher prices. Analysts expect continued market turbulence as traders respond to OPEC+ actions and the broader impact of trade policy shifts.
Kennedy admits errors in HHS layoffs, vows reinstatement of critical health programs…Health and Human Services Secretary Robert F. Kennedy Jr. acknowledged Thursday that roughly 20% of recent mass layoffs at the department were likely mistakes, with a reinstatement process now underway. The layoffs, part of a sweeping government overhaul led by Elon Musk’s Department of Government Efficiency (DOGE), initially cut 80% of federal positions as part of a strategy to streamline operations.
Among the 10,000 affected were employees from key agencies including the CDC, FDA, and NIH. One major error: the shuttering of the CDC’s Lead Poisoning Prevention and Surveillance Branch, which Kennedy confirmed will be reinstated. Also impacted were FDA inspectors and NIH researchers critical to public health oversight.
Kennedy defended the initiative, projecting $1.8 billion in annual taxpayer savings, but acknowledged the missteps were an expected byproduct of such drastic cuts. The HHS workforce dropped from 82,000 to 62,000, with divisions cut from 28 to 15 and regional offices halved.
Despite initial support for increased efficiency, public backlash has mounted due to disruptions in programs addressing lead contamination, avian influenza, and pharmaceutical safety. Kennedy reiterated that reinstating essential personnel and programs was “always part of the plan,” as the department now works to stabilize critical services.
Brown, Craig lead 102 House Democrats in urging USDA to reverse emergency food assistance cuts…House Agriculture Vice Ranking Member Shontel Brown (D-Ohio) and Ranking Member Angie Craig (D-Minn.) led a letter (link) signed by 102 House Democrats to USDA Secretary Brooke Rollins, expressing alarm over the Trump administration’s decision to halt $500 million in Commodity Credit Corporation funding for food banks under The Emergency Food Assistance Program (TEFAP). The lawmakers cite rising food insecurity affecting over 47 million Americans, including 1 in 5 children, and warn of consequences for both families and farmers. The letter requests clarification from USDA on the permanence of the cuts, the status of prior food purchases, and any plans to mitigate the impact — asking for a response by April 18.