Trump's Liberation Day is a blow to the farmer

The May wheat contract on the Matif closed yesterday €0,50 higher at €222 per tonne. On the CBoT, grains closed lower. Wheat closed down 0,2% to $5.39¼ per bushel. Corn closed down 0,9% to $4.57¾ per bushel. Soybeans were among the grains, down 0,5% to $10.29½ per bushel.

The big news came after the stock exchanges closed. That was of course Trump's speech in the rose garden (where mainly tulips can now be seen) of the White House. The US is introducing a minimum duty of 10% on all products entering the country. A considerably higher percentage applies to various countries. For example, China will be subject to an import duty of 54% (the 34% that was announced yesterday is in addition to the 20% import duty that Trump previously imposed), Cambodia will be subject to a duty of 49% and Laos to 48%. Products from the European Union will have to pay 20% import duties. Countries such as the United Kingdom, Australia and Brazil are doing relatively well with only the basic duty of 10%. Mexico and Canada are not on the list, but the previously announced import duty of 25% that has been postponed twice will now actually be introduced. It is unclear whether products that fall under USMCA (the successor to the NAFTA treaty) are also subject to the 25% tariff.

According to Trump, the import tariffs are now being equalized. For every levy that is levied by countries on products from the US, there is now a levy by America on products from those countries, according to the American president. According to experts, there is still some room for discussion on this. For example, Trump includes the turnover tax (VAT) for the EU, but that applies to all products that are traded in the EU.

Blow to the global economy
European Commission President Ursula van der Leyen called Trump's import duties 'a major blow to the global economy'. The EU wants to discuss the import duties and according to von der Leyen, countermeasures are in the making. What exactly they will be is not yet clear. The Australian Prime Minister said she was disappointed with Trump's duties, but announced that Australia is not considering countermeasures.

The average U.S. tariff has skyrocketed from 2,5% in 2024 to 22%, according to Olu Sonola, chief economist at credit rating agency Fitch. "We last saw a tariff like this around 1910," Sonola told Reuters. "This is a game changer, not only for the US economy but also for the global economy. Many countries are likely to go into recession and we can throw most economic forecasts out the window if these tariffs remain in place for an extended period of time."

American farmer pays the bill
Trump's plans are not greeted with much enthusiasm by American agricultural organizations. The fear is mainly about countermeasures that countries may take against American trade barriers. "More than 20% of farm income comes from exports and American farmers depend on imports for essential supplies such as fertilizers and specialized machinery," writes Zippy Duvall President of the American Farm Bureau Federation (AFBA) said in a statement. "Tariffs drive up the cost of imported products, and countertariffs make U.S. agricultural products more expensive on the global market. That combination is not only dangerous to the competitive position of American farmers in the short term, but could also cause long-term damage as the U.S. loses market share." AFBA supports Trump's goal of a level playing field but is concerned about the economic uncertainty that tariffs create.

The National Farmers Union (NFU) is sounding a similar note. According to its chairman Rob Larew one thing is for sure; 'The family farmers en Stake will be the ones who pay the price for this global trade war. “Without meaningful support and a commitment to fair trade policies, we will lose more family businesses, weaken the rural economy, and ultimately drive up costs and limit consumer choices at the grocery store.”

The International Fresh Produce Association (IFPA), the association of producers of fresh produce and flowers, is particularly relieved that specialty crops under which fruits and vegetables appear to remain largely unaffected for the time being because they fall under the USMCA. As a result, trade with Canada and Mexico remains possible without additional duties. However, the IFPA is concerned about the impact of Trump's trade policy on economic stability and the possible disruption of trade and supply chains. "Targeted use of tariffs can be a tool to address inequalities between trading partners, but broad application of this blunt instrument often distorts markets, increases costs for consumers and places unnecessary burdens on growers and producers throughout the supply chain", Cathy Burns in a statement from the IFPA.