Brief:
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The U.S. agricultural trade deficit is set to hit a record $42.5 billion next year. The U.S. Department of Agriculture predicts low commodity prices will continue to depress profit opportunities for farmers.
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A USDA report on Tuesday forecasted the trade deficit in fiscal year 2025 to grow roughly 40% over this fiscal year’s projected $30.5 billion shortfall. Exports to nearly all major trading partners are expected to remain flat or decline with the exception of horticulture.
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Increasing competition with Brazil, lower crop prices and tight beef supplies are driving a decline in U.S. export values, according to the USDA. Meanwhile, agricultural imports have grown with rising demand for sugar, horticulture and tropical products.
Insight:
GOP lawmakers have accused the Biden administration of not doing enough to expand export markets with new free trade agreements that could offset losses from top agricultural buyer China.
“The current sharp decline in U.S. agricultural exports is directly attributable to and exacerbated by an unambitious U.S. trade strategy that is failing to meaningfully expand market access or reduce tariff and non-tariff barriers to trade,” a group of Republican senators wrote to the Biden administration in March.
U.S. exports in 2025 are forecast at $169.5 billion, down a little more than 2% from the previous year’s predictions, while imports are expected to hit a record $212 billion, up nearly 4%.
U.S. corn and soybean growers are producing record crops but seeing lower demand among global markets amid widespread economic malaise. China, in particular, has shifted away from U.S. commodities in favor of self production or increased imports from Brazil.
Meanwhile, U.S. lawmakers with the Agricultural Trade Caucus are urging Colombia to reconsider its investigation into U.S. dairy products, calling the action a “baseless” trade barrier keeping goods from entering the country.
“Pursuing baseless, protectionist investigations can only undermine such cooperation and trade facilitation between our two countries,” U.S. congressional members wrote this month to Colombia’s trade ministry.
For the second year in a row, China is expected to be the third-largest agricultural trading partner of the U.S., falling behind only Mexico and Canada.
Higher transportation costs and the rising value of the U.S. dollar have also limited export opportunities, according to the USDA report. The strength of the dollar — and the recovering domestic economy — have buoyed imports, exacerbating the deficit.
