Trade War Escalates as China, Mexico, Canada Retaliate

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March 04, 2025

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by Lily Kuo, David J. Lynch and Amanda Coletta (Washington Post) China and Canada will impose their own tariffs on billions of dollars worth of U.S. goods, and Mexico plans to announce new levies soon, as Trump’s tariffs take effect. -- ... China imposed tariffs of up to 15 percent on a raft of U.S. farm products and blacklisted more than 20 U.S. companies, marking a major escalation in a brewing battle between the world’s two largest economies. The move targets some of the United States’ most important exports to China, including soybeans, meat and grains.

Trump is increasing tariffs on Chinese products by 10 percentage points, bringing the total tax on some Chinese products to 45 percent. He is also imposing 25 percent tariffs on goods from Mexico and Canada, in the most serious threat yet to 31 years of free-trade treaties in North America. The levies went into effect at 12:01 a.m. Eastern time Tuesday, after Trump confirmed Monday that he would not extend a month-long delay on his plan.

On Monday evening, Canadian Prime Minister Justin Trudeau decried Trump’s “unjustified decision” and said he would respond with tariffs on roughly $107 billion worth of U.S. products. About $21 billion in U.S. goods would be hit immediately. The remainder would take effect in 21 days, Trudeau said.

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Trump said he did not expect Beijing to “retaliate too much,” but only hours later, China’s State Council, the equivalent of its cabinet, announced a 15 percent tax on U.S. goods including chicken, wheat and corn. Other American products — including soybeans, sorghum, beef, pork, seafood, dairy products and fruits and vegetables — will be subject to a 10 percent levy.

Fifteen U.S. companies, including Leidos and General Dynamics Land Systems, were placed on a list that bars them from importing goods that can be used for military purposes. Another 10 American companies were barred from trading with or investing in China.

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China is the largest market for American farm products, accounting for 17 percent of total U.S. agricultural exports in 2023, according to data from the U.S. Department of Agriculture.

China last year imported almost $20 billion in soybeans, corn, cotton and the other U.S. farm products that will be subject to the new tariffs, according to USDA data. Those products accounted for about 80 percent of all U.S. agricultural exports to China. READ MORE

Related articles

Sen. Roger Marshall: ‘Patriot’ Farmers Will Support Tariffs Despite Pain (Wall Street Journal)
US tariffs on Canada and Mexico take effect as China takes aim at US farm exports (Associated Press)
USDA Prepares to Protect Farmers in a Trade War: President Trump’s new tariffs on imports from Canada, Mexico and China have gone into effect. While the economic consequences are unknown, Secretary of Agriculture Brooke Rollins has promised to have a plan ready for farmers, if needed. (AgWeb)
Trump administration mulling tariff exemptions for key agriculture products: The president paused duties on autos and auto parts imported from Canada and Mexico, raising hopes other industries could also win exemptions from the heavy new tariffs. (Politico)
Local farmers worry trade wars could hurt 'razor-thin margins' (Frederick News Post)
Trump Weighs Agriculture Carveouts to Canada, Mexico Tariffs (Bloomberg/Yahoo! Finance; includes VIDEO)
Trump says ‘bear with me’ as tariffs squeeze American farmers (Bloomberg/The Edge Malaysia)
OPINION: The overlooked dependency: Canada's response to tariffs should include fuel ethanol (Toronto Sun/Yahoo!)
Spooked by tariffs, funds purge bullish corn bets in near-record fashion (Reuters)
US enacts 10% tariff on Canadian biofuels, Canada weighs retaliatory tariff on biodiesel (Ethanol Producer Magazine)
CERAWEEK Canada could restrict its oil exports to US if Trump trade war escalates (Reuters)
Iowa farmer discusses ethanol retaliatory tariff fears (Brownfield Ag News; includes AUDIO)
Trump trade war to sap Canadian, Mexican and US growth, OECD says (Reuters)

Excerpt from Wall Street Journal: American farmers will support President Trump’s tariffs even if it hurts them monetarily, Republican Sen. Roger Marshall of Kansas said on Monday evening, in a rare instance of a GOP lawmaker and Trump ally admitting that the new duties could have negative economic effects.

“Even though Canada and Mexico were the number one trade partners for Kansas agriculture, I think that my farmers are willing to be patriots and stand beside President Trump to make their families safer,” Marshall said outside the Senate chamber. Trump should consider policies to soften the blow of tariffs on the agricultural sector, Marshall added, similar to the subsidy payments he doled out to farmers during his first term to counteract tariff retaliation from the Chinese government. Those could involve strengthening renewable fuels policies like E-15 ethanol rules, 45Z tax credit, and enhancing renewable airline fuels, he said. READ MORE

Excerpt from AgWeb: While the full economic consequences of the trade war remain to be seen, Secretary of Agriculture Brooke Rollins has promised to have a plan, such as the Market Facilitation Program (MFP), ready for farmers, if needed. In 2019, MFP provided direct payments to producers impacted by retaliatory tariffs, resulting in the loss of traditional exports.

“Everything is on the table right now. Everything. I know that President Trump, whom I speak with regularly, realizes the state of the farm economy in this country,” Rollins said on Sunday at Commodity Classic. “The last time, I know, he pushed Secretary Perdue to ensure we were able to make whole–as best as we could–some of those, and hopefully most of those, if not all, who had been hurt. We’re building the team at USDA to ensure we have the structure and the plan in place to allow us to move very quickly.”

In an interview with Farm Journal at Commodity Classic, USDA Economist Seth Meyers says he has been instructed by Secretary Rollins to be ready for a relief program, and he’s started calculating what possible relief could look like.

“Calculating something right today would not be helpful because we don’t know where we’re going to be, but absolutely, the Secretary instructs: ‘You need to be ready, have your pencil sharpened and have your tools available. Think about how you would proceed,’” Meyers says. “We are ready in that backstop. It won’t be easy. We’ve talked a lot about different countries. We’ve talked about reciprocal trade, but we are indeed sharpening our pencils to be able to do what she’s asked us to do.”

Here are the key details of the U.S. tariffs and retaliation from Canada, Mexico and China.

U.S. Tariffs Imports.jpg

(Farm Journal)

Canada responded swiftly with plans to impose 25% tariffs on nearly $100 billion of U.S. imports over two tranches. Mexican President Claudia Sheinbaum plans to announce retaliatory tariff and non-tariff measures against the U.S. at an upcoming rally in Mexico City’s central square.

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Impact on Farm Machinery
Equipment makers are concerned about the additional duties, especially after a rough year for the industry.

“We have spent decades laying down supply chains across the world. Our industry is global — 30% of all equipment made in the U.S. is destined for export. Canada is our largest market outside of the U.S.,” says Johan “Kip” Eideberg, senior vice president – government and industry relations, Association of Equipment Manufacturers (AEM). “If we want to create more jobs here in America, we need to sell more equipment and that means selling to customers outside of the U.S.”

As detailed in From the Factory to Your Fields: Where Farm Equipment Is Made, the ag equipment manufacturing industry is fully integrated across the three North American allies involved in the so-called “trade wars.”

“Anytime you disrupt those tightly connected supply chains — and tariffs would be a direct disruption — it’s going to have a serious impact on equipment manufacturers and on our farmers,” Eineberg says. “Given that Canada is our largest export market, we’re sending almost $10 billion worth of goods to Canada every year, there’s a lot at stake here.”

In 2018, Eineberg estimates, tariffs on steel, aluminum and farm inputs from China drove up the cost of making equipment in the U.S. by about 9 percentage points.

“Obviously, manufacturers will try to absorb as much of that as they can, but inevitably some of it will be passed down to the consumer, which in this case is our farmers and ranchers,” he adds.

AEM is also sounding the alarm on the compounding effect of tariffs, specifically due to the tight integration of manufacturing cycles on both sides of the border. There are often cases, Eineberg says, where components and raw materials are shuttled three to five times across the border between different factories in the manufacturing process. That means each time a piece of steel or other raw material being manufactured into a component for a tractor crosses the border, the tariffs multiply.

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Impact on Rural America and Fertilizer
American Farm Bureau President Zippy Duvall expressed alarm about potential harm to farmers resulting from imposing stiff tariffs on the top three agricultural markets by value for the U.S.

“Farm Bureau members support the goals of security and ensuring fair trade with our North American neighbors and China, but, unfortunately, we know from experience that farmers and rural communities will bear the brunt of retaliation.” Duvall says.

Of note, more than 80% of the U.S. supply of potash, a key fertilizer product, comes from Canada.

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Impact on Soybeans
During the 2018 trade war with China, U.S. agriculture experienced more than $27 billion in losses, with soybeans accounting for 71% of those losses, according to the American Soybean Association (ASA). Unlike in 2018, farmers are in a more tentative financial situation in 2025. Commodity prices are down nearly 50% from three years ago, while the costs for land and inputs, such as seed, pesticides and fertilizer, are high.

In an ASA statement, it says for years the organization’s farmer-members have consistently maintained their position that they do not support the use of tariffs, which threaten important markets and raise input costs for farmers, as a negotiation tactic.

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Soybeans by far make up the largest volume of ag products exported to China.

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“Soybean producers face huge, disproportionate impacts from trade flow disruptions, particularly to China,” Ragland says. “And we know foreign soybean producers in Brazil and other countries are expecting abundant crops this year and are primed to meet any demand stemming from a renewed U.S.-China trade war.”

Impact on Corn and Ethanol Demand
Market analysis shows tariffs won’t solve the U.S. trade deficit and instead will just shift business to other countries, says Neil Caskey, CEO, National Corn Growers Association (NCGA).

“We issued a study back in the fall that documented the implications of tariffs and specifically retaliation in a trade war — it’s not good for corn farmers, farmers in general,” he says. “We did that in conjunction with the American Soybean Association, and it concluded a trade war is really only good for Brazil, and we hope to avoid that.”

The top two destinations for corn and ethanol are Mexico and Canada. According to Krista Swanson, chief economist, NCGA, 40% of U.S. corn exports go to Mexico and more than 40% of U.S. ethanol exports are shipped to Canada.

“[Corn] is a commodity [those countries] consume way more than what they produce, so they’re going to have to get it from somewhere,” she says. “There’s definitely some concern about losing corn [exports], but how much is lost is left to be seen because it depends on what happens with shifting trade flows.”

Impact on Beef and Pork Sectors
U.S. meat export could be impacted by the tariff war as well, with China singling out pork and beef for a 10% counter tariff. READ MORE

Excerpt from Politico: Amid deep concern from farm state lawmakers over the fallout for the U.S. agriculture sector, officials are discussing waiving the 25 percent duty on some agriculture products, including Canadian potash, a key ingredient in fertilizer, according to two people familiar with the conversations granted anonymity to discuss the ongoing deliberations.

Canada is the world’s leading supplier of the mineral; the United States sources the vast majority of its potash from its northern neighbor.

“You cannot export a potash mine,” said Jamie Tronnes, the executive director of the Center for North American Prosperity and Security, a group that pushes for stronger ties between the U.S. and Canada. “It’s in the ground [in Canada]. You can’t just get it.”

GOP lawmakers began lobbying for exemptions for potash well before the tariffs went into effect Tuesday, arguing that supply shortages or price spikes will further drive up food prices.

On Wednesday, they were joined by House Ag Chair G.T. Thompson (R-Pa.), who said in an interview that he’d asked the White House for exemptions for agricultural inputs, emboldened by President Donald Trump’s Wednesday afternoon announcement pausing the North American tariffs on autos and auto parts at the urging of auto makers.

It’s the first time Thompson has explicitly said he was pushing for a carve-out, following efforts by other GOP lawmakers, including Sen. Chuck Grassley (R-Iowa) and Rep. Zach Nunn (R-Iowa).

“I absolutely am weighing in … things like potash, nitrogen, I’d throw peat moss in there, too, because that’s important to horticulture and mushroom growers,” Thompson said. “I’m not bashful about weighing in with the White House. I got a great relationship with everyone, including the president. The worst thing that can happen is they’ll say no.”

Nunn said Wednesday in an interview that the Trump administration had been open to his and other farm state lawmakers’ request. “They’re being receptive, that’s what we would expect,” he said. READ MORE

Excerpt from Frederick News Post: Mark Townsend, associate agriculture extension educator for Frederick County through the University of Maryland, said farmers and exporters are “freaked the hell out.”

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Townsend said he worries the trade war will hurt Frederick County farmers, particularly given the rise of Brazil’s competing soybean production.

“On a global side of things, this makes us non-competitive,” he said. “Brazil is going to eat our lunch.”

David Burrier, a farmer out of Union Bridge and a vice president of the Frederick County Board of Directors for the Maryland Farm Bureau, said China has heavily invested in Brazil and other South American countries.

“We absolutely don’t want to lose our number-one buyer,” Burrier said.

MARKETS

The markets for corn and soybeans reacted before Tuesday’s news.

“The money we are losing in the market was ahead of this tariff,” Burrier said.

A look at the futures markets for both corn and soybeans on the Chicago Mercantile Exchange paint the picture.

Feb. 4 marked the high-water mark for soybean futures. The March and May markets closed at $10.75 and $10.88 per bushel, respectively, according to the CME Group.

Those markets closed at $9.84 and $9.99, respectively, per bushel on Tuesday, before rebounding slightly Wednesday to $9.97 and $10.11, respectively, according to the CME Group.

Townsend said on Wednesday morning that it was a “pretty nasty, dramatic” decline.

Corn markets experienced similar trends.

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Another concern would be avian flu impacting the grain markets, according to both Burrier and Townsend. Both added that such concerns had not been reflected in markets yet.

Townsend said imports from Canada could create further issues.

The Fertilizer Institute estimates that 85% of potash imports come from Canada. Additionally nearly 10% of U.S. nitrogen fertilizer needs are met by Canadian suppliers.

Increased input costs and soft markets led Townsend to say he worried this season will bring “razor-thin margins, if not negative” ones.

“We sure would hope this brings everyone to the table,” Burrier said.

PRECEDENT

Trump implemented a similar trade war with China during his first term as president. READ MORE

Excerpt from Bloomberg/The Edge Malaysia: Still, retaliatory tariffs already erased all of this year’s gains for corn and soybeans. That’s hurting farmers whose income has been under pressure for the last three years as the cost of seeds, fertilizer and equipment went up and crop prices declined. Revenue from cash crops is expected to fall for a third year in 2025. And that was before any tariffs were in place.

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Curt Covington, senior director of institution credit at AgAmerica, the country’s largest independent farm lender, said he’s seeing the most distressed borrowers since the financial crisis. Barry Benson, head of agribusiness banking at First National Bank of Omaha, said roughly a third of the lender’s producers already had “some sizable losses” that required a degree of restructuring last year. If 2025 is worse, more and bigger reorganizations may be necessary, he said.

Other measures taken by Trump have also had an impact on growers. That includes a funding freeze as the administration reviews a number of Biden-era projects including the Inflation Reduction Act, the former president’s signature climate law.

$30 Billion

Agriculture Secretary Brooke Rollins has promised payments will be dispensed, and said growers should soon get the first tranche of $30 billion in assistance passed by Congress in December under Joe Biden. In a speech on Friday, she acknowledged farmer concerns about tariffs and financial relief in a speech.

“I want you to know that your concerns are heard and that I will always be your greatest champion, second only to President Trump,” she said.

Kevin Leavitt, a farmer from Maine, tapped a $45,000 grant from the US Department of Agriculture’s Rural Energy for America Program to help build a solar array to power greenhouses on his organic vegetable farm. If he doesn’t receive the money he’s due, that would put the operation, where he’s raised crops like tomatoes, cucumbers, lettuce and kale since 2015, “on the trajectory to close up,” he said.

Leavitt is not alone. At least 10 farms in Maine are waiting for outstanding payments of more than $1 million, according to Sarah Alexander, executive director of the Maine Organic Farmers and Gardeners Association. And while the USDA has begun releasing some funding, assistance including $300 million that was promised to distressed farm borrowers last December is still tied up.

On Tuesday, the Illinois Department of Agriculture said the USDA is ceasing reimbursements for the Local Food Purchase Assistance Program, which allows the state to buy food from growers to distribute to communities in need. Funding was also cut off for the Resilient Food Systems Infrastructure Program, which offers new streams of revenue for small and mid-sized agricultural producers.

Bank Loans

“Cutting funds for these programs is a slap in the face to Illinois farmers and the communities they feed,” said Governor JB Pritzker, who is widely thought to have presidential ambitions for 2028.

Delays in receiving federal payments can also make it more difficult for farmers to secure loans from banks, said John Boyd Jr., a fourth-generation farmer and the founder of the National Black Farmers Association.

“It doesn’t help with agricultural lenders when they look out here and see the uncertainty that this administration is putting in place,” Boyd said. “If you can’t get access to credit, the next thing for a farmer is they wind up on the auction block in foreclosure.”

To be sure, many in the industry are still optimistic. The Purdue University survey of farmer sentiment rose to the highest since 2021 in February, even as nearly half of respondents thought the industry was at risk of a trade war that would result in a significant decrease in agricultural exports.

Trump also gave farmers $28 billion in funds during his last administration to cushion the blow of his trade war with China. That could happen again this time around.

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“Any type of tariff situation would just add costs onto farmers, or it could reduce our price that we receive for our wheat, which is already below break-even,” said Michelle Hennings, executive director at the Washington Association of Wheat Growers. After several years of low grain prices and higher input costs, “many farmers are left with almost nowhere left to cut.” READ MORE

Excerpt from Toronto Sun/Yahoo!: Yet, amidst the standard political theatre lies a powerful, overlooked weapon in Canada’s trade arsenal: America’s deep dependence on Canadian markets for its fuel ethanol.

Ethanol isn’t just a trade footnote — it’s a vital lifeline for American farmers and a subsidy mechanism for ethanol producers in Republican strongholds. If Canada wants to send a message, targeting U.S. ethanol imports could be the move that finally gets Washington’s attention.

For years, Canada has quietly been the biggest buyer of American ethanol, absorbing nearly 40% of total U.S. ethanol exports — more than 1 billion gallons annually. This isn’t just trade; it’s economic life support for America’s heartland. Midwestern corn farmers, whose crops feed ethanol plants, depend heavily on Canadian consumption. If Canada tightens its border to American ethanol, the economic tremors will ripple through Republican states — fast — jeopardizing tens of thousands of jobs and shaking an industry that many U.S. politicians have built their careers on protecting.

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Here’s what Canada can do:

1. Implement a targeted import tax on U.S. ethanol — generating revenue to support Canadian industries forced to pay U.S. tariffs. Even at a 25% rate, the cost increase for gasoline would be just 1.5 cents per litre. Meanwhile, the impact on U.S. ethanol would be significant: a direct hit to a US$4.3 billion export market that depends on Canada to stay afloat.

2. Fix Canada’s Clean Fuel Regulations — disallow foreign credit generation and/or apply a credit multiplier to domestically produced ethanol, ensuring Canadian producers remain competitive and that rural communities continue to benefit from local ethanol production.

These measures wouldn’t just be defensive, they present an opportunity to strengthen Canada’s energy independence and invigorate rural economies.

For decades, Canadian ethanol has been a success story creating jobs, boosting local economies, and supporting environmental goals. By leveraging our ethanol sector, we send a clear trade message to Washington: Canada will no longer serve as a wide-open market for subsidized American ethanol.

What’s at stake isn’t just trade policy — it’s Canada’s right to a fair energy future. As America moves forward with tariffs, they should know they risk more than just diplomatic tensions. Canada’s ethanol market holds a strategic card that affects America’s farming heartland. The real question for Washington isn’t whether they can stack the deck with tariffs on Canadian goods — it’s whether American farmers are prepared for the consequences when Canada finally plays its ethanol card. READ MORE

Excerpt from Reuters: An imminent trade war between the United States and its two largest agricultural trading partners sent bullish Chicago corn speculators running for the hills last week.

But very few bears were made of the ordeal.

On Thursday, U.S. tariffs against most Mexican and Canadian goods were postponed until April. However, the levies had gone into effect on Tuesday and the market reaction was harsh, especially with Mexico the top destination for U.S. corn. READ MORE

Excerpt from Ethanol Producer Magazine: The U.S. government on March 4 implemented new tariffs on a variety of goods from Canada, Mexico and China, including a 10% tariff on biofuels entering the U.S. from Canada. Future retaliatory tariffs could also impact U.S. biofuel exports.

The government of Canada on March 4 announced it would move forward with retaliatory tariffs. Biofuels are not yet on that list, but the Canadian government has indicated it will consider a tariff on U.S. biodiesel imports. The country included biodiesel and biodiesel blends containing less than 70% petroleum in a list of goods it will consider including in a second round of retaliatory tariffs. That list is subject to a 21-day public comment period.

China has also issued retaliatory tariffs on a variety of U.S. goods, and Mexico has signaled its intent to do so by next week.

Canada is a top U.S. trading partner for both ethanol and biodiesel, and Mexico was the top destination for U.S. distillers grains exports last year.

According to data published by the USDA, the U.S. exported more than 1.91 billion gallons of ethanol last year at a value of $4.31 billion. Exports to Canada accounted for 35% of that volume, with approximately 4% of exports destined for Mexico.

U.S. exports of distillers grains reached 12.22 million metric tons in 2024 at a value of $3.2 billion. Mexico and Canada accounted for 21% and 5% of that volume, respectively.

Canada also accounted for 88% of the 585,324.4 metric tons of biodiesel and biodiesel blends of B30 exported last year. The value of biodiesel exports to Canada was estimated at $743.77 million for the year.

Canada accounted for 25% of U.S. ethanol imports and 31% of U.S. biodiesel imports in 2024, at 32.16 million gallons and 430,526.5 metric tons, respectively. The value of those imports was $116.48 million and $563.78 million, respectively.

The U.S. and Mexico to not have any significant trade related to biodiesel, and the U.S. imported only nominal volumes of ethanol from the country in 2024.

The U.S. does not currently have any significant ethanol or biodiesel trade with China, but did export 331,394 metric tons of distillers grains to the country last year at a value of $79.91 million. That volume accounts for less than 3% of total U.S. distillers grains exports for 2024.

The USDA does not currently report trade data on renewable diesel or sustainable aviation fuel (SAF).

In addition to biofuels and coproducts, the emerging trade war could impact biofuel feedstocks, such as corn and soybeans.

“For years now, Canada and Mexico have been among the best trading partners for the U.S. renewable fuels industry,” said Geoff Cooper, president and CEO of the Renewable Fuels association. “Over a third of our ethanol exports went to Canada in 2024, putting it clearly on top. Mexico was likewise the No. 1 market for the ethanol industry’s top coproduct—distillers grains—taking in more that 20 percent of total exports. For 2024, the combined value of ethanol industry exports to these two countries is estimated at $2.5 billion. For this reason—and to secure a stronger continental economy overall that benefits all countries—we urge all parties to work together to maintain the fair and efficient flow throughout North America of lower-cost, lower-carbon ethanol and valuable high-protein feed for livestock and poultry.”

“In any trade war, U.S. farmers and agriculture are going to be targets for retaliation,” said Paul Winters, director of public affairs and federal communications at Clean Fuels Alliance America. “Canada had already targeted or threatened retaliatory tariffs on biodiesel and feedstocks like soybean oil, distillers corn oil, and canola. Competing countries know that biofuel production is essential to farm security.

“The low RFS volumes set for 2023-2025 have spurred an increase in exports of biodiesel and renewable diesel – with Canada as a primary destination,” Winters continued. “Setting timely, robust RFS volumes is increasingly critical.

“Canada and Mexico are among our strongest trading partners,” said Chris Bliley, senior vice president of regulatory affairs at Growth Energy. “ In fact, Canada has been the largest destination for U.S. ethanol exports with 675MG in 2024 alone. We’re hopeful that tensions can be eased and resolution can be reached quickly since biofuel producers and farmers are on the front lines of any trade dispute, as we’ve seen with Canada’s proposed counter-tariffs on ethanol. More importantly, the President has expressed his goal to increase domestic demand for domestic products, and there's no better way to do that than to make E15 available year-round. If E15 became the standard fuel in the U.S. it would generate demand for an additional 2-2.5 billion bushels of corn every year. That's something that Congress and the Administration should keep in mind when trying to make trade fairer while still supporting domestic strength in the rural economy."

“Farmers are facing a troubling economic landscape due to rising input costs and declining corn prices,” said Kenneth Hartman, Jr., president of the National Corn Growers Association. “We ask President Trump to quickly negotiate agreements with Mexico, Canada and China that will benefit American farmers while addressing issues important to the United States. We call on our trading partners to work with the president to resolve these issues so that that we can restore vital market access.”

“Farmers are frustrated,” said Calab Ragland, president of the American Soybean Association. “Tariffs are not something to take lightly and 'have fun' with. Not only do they hit our family businesses squarely in the wallet, but they rock a core tenet on which our trading relationships are built, and that is reliability. Being able to reliably supply a quality product to them consistently.” READ MORE

Excerpt from Reuters: Canada may impose non-tariff measures on oil exports to U.S.
Canada considers tariffs on US ethanol amid trade tensions
Canadian Energy Minister says everything is on the table

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(Canada's energy minister Jonathan) Wilkinson told Reuters Canada is considering imposing tariffs on U.S. ethanol as part of a second tranche of trade penalties if Trump continues to escalate the trade war.

U.S. ethanol, a crucial trade product for U.S. farmers, is "absolutely on the list of things" that could be included if Trump, for example, moves forward with plans to impose 25% tariffs on Canadian goods in April, Wilkinson said.

Canada has threatened retaliatory tariffs on $155 billion of U.S. imports. Officials identified an initial tranche of $30 billion of goods that would face tariffs but said the remainder of the list is under consideration.

U.S. ethanol exports to Canada hit record highs in recent months to help Canada meet its clean fuel program. It is cheaper than Canadian ethanol, Wilkinson said, due to subsidies in the U.S. Renewable Fuel Standard.

U.S. farmers sent a record 1.54 million gallons of ethanol to Canada in September of last year, roughly double the figure three years prior, according to the U.S. Energy Information Administration. READ MORE

Excerpt from Brownfield Ag News: Kelly Nieuwenhuis is a past president of both the Iowa Corn Promotion Board and Siouxland Energy Cooperative. He tells Brownfield Canada is the top destination for U.S. ethanol exports. “We worked really hard in cooperation with the U.S. Grains Council to get that market,” he said. “We’re working really hard to try and maintain that export market to Canada.”

Nieuwenhuis says this would directly impact corn farmer profitability. “We feel tariffs are attacks on American consumers because it’s going to get passed onto consumers around the world.”

He says this isn’t unfamiliar territory for the ethanol industry. “We’ve dealt with tariffs in the past. Brazil used to be our number one export market for U.S. ethanol and then they placed an 18% tariff on our ethanol exports. That pretty much stopped that trade and it’s pretty much zero nowadays.” READ MORE; includes AUDIO