Trade War Returns: How New US Duties Will Affect Soybean and Corn Markets — ASAP Agri
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On 4 March, the U.S. reignited a trade war reminiscent of the one in 2018 during Trump’s first term. However, this new “2.0” version casts a wider net. While the previous tariffs mainly targeted China, the latest measures also hit Mexico and Canada.
These new U.S. actions — along with retaliatory measures from affected countries — have sparked concerns, but more importantly, they’ve fueled uncertainty in financial markets. Inflation remains the biggest worry in the U.S., raising alarms about economic stability. As a result, both the S&P 500 and the U.S. dollar have dipped below pre-election levels from early November 2024.
At the same time, the extent to which this new trade war will impact agricultural markets depends largely on how the targeted countries respond.
China strikes back
On 4 March, the U.S. imposed an additional 10% tariff on Chinese imports, following a similar hike in January. In retaliation, China introduced counter-tariffs on U.S. agricultural goods, including a 10% duty on American soybean imports and a 15% duty on U.S. corn and wheat.
The reaction in U.S. commodity markets — especially on the Chicago Board of Trade (CBOT) — was swift and dramatic, with speculative funds amplifying the downward trend.
American farmers are set to take the first hit, a reality Trump acknowledged in a statement urging them to shift focus toward domestic markets. Given China’s already low appetite for corn this season, soybeans are the most vulnerable. A repeat of the 2018 scenario is likely, with Brazil once again emerging as the big winner. Back then, China’s share of U.S. soybean imports plummeted from 35% in 2017 to just 10% in 2018, as Brazil stepped in to fill the gap.
Mexico and Canada: uncertainty prevails
The situation with Mexico and Canada remains fluid. Late on 4 March, the Trump administration signaled a willingness to negotiate, leaving room for a potential shift in strategy. Until a resolution is reached, market volatility is expected to persist.
If trade barriers hold, Mexico — the world’s second-largest corn importer — could reduce purchases from the U.S., where it currently sources most of its supply. If restrictions continue, Brazil may again emerge as the main alternative.
Canada, meanwhile, faces growing pressure in the global canola and rapeseed market. The country exports 90% of its canola production, either as raw seeds or processed products like oil and meal, with the U.S. serving as its primary buyer — typically purchasing 90% of Canada’s exported canola oil.
If trade restrictions persist, Canada could experience an oversupply of canola seeds for both the current and upcoming seasons. This would likely push prices down in both Winnipeg and on Euronext. However, with negotiations still ongoing, the final outcome remains uncertain.
Implications for Ukrainian agricultural market
The latest U.S. trade measures and the resulting global shifts present both risks and opportunities for Ukraine's agricultural sector.
A potential global oversupply of rapeseed, driven by excess Canadian production, could put downward pressure on Ukrainian rapeseed prices.
Conversely, Ukrainian corn may benefit from shifting global trade flows. If Mexico and other key buyers reduce their reliance on U.S. corn, Brazil alone may not be able to cover the increased demand. This could create opportunities for Argentina and Ukraine, the world's third- and fourth-largest corn exporters, to step in and fill the gap.
ASAP Agri will present an in-depth analysis of Ukrainian grain export prospects for the 2025/26 season, with a special focus on corn, at the International Grain Conference Grain Ukraine 2025, taking place on 29-30 May in Kyiv. Be among the first to explore key trends and challenges shaping the upcoming season — save the date!
Olivier Bouillet, Head of Insights & Analytics at ASAP Agri
