Rabobank expects a trade war with major consequences
A trade war between the United States (US) and China will have major consequences for trade in agricultural raw materials. The American farmer will be the victim of this, RaboResearch expects.
Outlook 2025: Fat tariffs lead to slim margins
In the 2025 Outlook RaboResearch outlines the expectations for 2025. As a result of the change of power in the US and the appointment of Donald Trump as the next President, a trade war is expected before 2025. This will involve many sectors, including the agricultural sector. Partly as a result, significant shifts in international trade are also taken into account.
China is expected to be Trump’s main target. As soon as Chinese exports are hit by high US tariffs, there is a good chance that China will retaliate and crack down on imports of American soy, among other things.
Impact on US soy
China is the largest export destination for American soy, but also of great importance for the export of American corn. If these export markets disappear, prices will fall with dire consequences for US farmers. The US cannot completely dispose of its surplus soy in other markets, but China can obtain soy elsewhere, such as in Brazil.
Ukrainian ag exports expected to fall
Other trade flows will also change, RaboResearch expects. Ukrainian agricultural exports are expected to decline even if the war with Russia does not escalate further. Ukraine’s wheat exports, which have been large so far, are expected to decline.
Wheat price up
The wheat price is expected to rise. RaboResearch assumes that global wheat consumption will exceed production, resulting in a shortage of 10 million tons in the current 2024/’25 season. The world wheat supply will reach the lowest level in the past 10 years in 2025, the US Department of Agriculture (USDA) expects.
La Niña impact on markets
La Niña could also have consequences for production and international trade in 2025. The effect of this weather phenomenon appears to be limited this time, but it can still have an impact on the agricultural commodity markets.
China vs EU: Trade issues
In addition to a trade war between China and the US, there are also trade problems between the EU and China. In the agricultural sector this revolves around pork and dairy. China is considering countermeasures with import duties on pork and dairy from the European Union (EU), in response to European import duties on Chinese electric cars. RaboResearch has not examined this impending trade conflict between the EU and China in this report.
