Arun K Nag, Author at US Tariff News

Brazil Braces For Boost in Exports As China’s Retaliatory Tariffs Hit US Soybeans

China’s latest retaliatory move in the deepening trade conflict with the United States has dealt a major blow to American farmers, with soybean exports at the epicenter. The new tariffs, unveiled Friday, include sweeping 34% duties on all U.S. imports, effectively pricing out a large swath of American agricultural products from the Chinese market.

Brazil, already the largest exporter of soybeans to China, is emerging as the biggest beneficiary. A strong harvest and competitive pricing have positioned Brazilian producers to take advantage of the void left by U.S. exporters.

Soybeans bore the brunt of the initial market reaction. Futures on the Chicago Board of Trade fell over 3% to $9.77 per bushel — the lowest level recorded this year. A Singapore-based grain trader said the scale of the new duties effectively blocks most U.S. agricultural exports to China. “At 34%, nothing is viable,” the trader said.

European traders echoed the concerns, with expectations that the European Union may also impose restrictions on U.S. soybean imports in retaliation for the broad tariffs Washington announced earlier in the week.

The developments come just weeks after earlier Chinese tariffs targeted $21 billion worth of U.S. farm products. Friday’s response adds further pressure on an already strained trade relationship, with analysts warning of long-term shifts in global supply chains.

“This is going to hurt U.S. exporters badly,” said Jack Scoville, vice president at Price Futures Group in Chicago. “We’ve antagonized nearly every major trading partner. Where do we expect our goods to go now?”

“Brazil is set to see record shipments in Q2,” said Carlos Mera, head of agricultural research at Rabobank. “They’re not the only ones — Argentina, Paraguay, and even Australia stand to benefit depending on the crop.”

Local soybean prices in Brazil and surrounding countries have already begun climbing. On Thursday, a day after U.S. tariff hikes were announced, Brazilian port premiums surged to over $1 per bushel above the Chicago benchmark.

“Despite strong harvests, we expect regional prices to stay elevated,” said Sol Arcidiacono, head of Latin American grain sales at HedgePoint Global Markets. “This trade war will likely push more South American farmers to increase production, especially in Brazil, where growth had started to plateau.”

China, long the top destination for American agricultural exports, has been scaling back purchases. U.S. farm exports to China fell to $29.25 billion in 2024, down from $42.8 billion in 2022 — a trend that analysts say could accelerate further under the current tariff regime.

In a further blow to U.S. agribusiness, Chinese authorities also cancelled documentation for certain imports from American suppliers on Friday, including sorghum from C&D (USA) Inc. and poultry products from Mountaire Farms and other U.S.-based firms, citing food safety issues.

Tariffs Shake Up U.S. and Canadian Farm Equipment Industry

A recent farm show in Regina, Canada witnessed many farmers hesitant to buy new equipment like tractors and harvesters, leave alone new-tech machinery. Apparent are worries about tariffs making already expensive machines even more costly, following US-China retaliatory measures.

Some of these machines, like combines, cost more than $800,000. If tariffs suddenly raise prices, farmers say it could hurt their budgets badly, reports Reuters after interviewing several farmers [resent at the farm show. Although Canada avoided some broad U.S. tariffs, it still faces extra charges on things like steel, aluminum, and cars that don’t meet trade rules under the U.S.-Mexico-Canada Agreement. Farmers aren’t sure if the new tariffs apply to farm equipment, and sorting it all out could take weeks.

In the meantime, farmers are holding off on purchases. Some equipment companies, like Case IH, have already laid off workers in the U.S. due to falling demand. Canadian farmers and equipment sellers say the uncertainty is making it risky to buy or sell anything right now.

Bill Prybylski, who leads a Saskatchewan farmers’ group, said many farmers are nervous about spending, even as they admire new equipment at shows.

Derek Molnar from rockpicker-maker Degelman Industries said manufacturers don’t know how the tariffs will affect them either. Since machines are often ordered months in advance, unexpected tariffs could mean big losses.

Manitoba farmer Gunter Jochum said he’s waiting to buy new equipment. Like many farmers, he buys machines from various countries, including the U.S., Germany, and Canada.

Kip Eideberg from the Association of Equipment Manufacturers said about 30% of U.S. farm equipment is sold abroad, with Canada as the top buyer. He warned that tariffs could raise prices, hurt jobs, and mess up the supply chain.

In Saskatchewan, Honey Bee’s general manager Jamie Pegg said they may cut back on production to avoid having too much unsold equipment.

Nancy Malone, who works with Canadian machinery dealers, said the confusion is hurting business. She’s asking the Canadian government not to add more tariffs on U.S. farm machinery, hoping to protect local dealers and farmers.

French Cognac Producers Grapple with Crisis as US Tariffs And Global Slowdown Take Toll

Cognac producers in southwestern France are facing mounting economic pressure as a wave of new U.S. tariffs deepens the challenges already posed by declining global demand and earlier Chinese trade retaliation.

The latest blow came with U.S. President Donald Trump’s decision to impose a 20% tariff on all European goods, including French cognac, a move that threatens the backbone of France’s nearly $3 billion spirits export industry. The United States remains the largest market for cognac, accounting for roughly half of global sales.

Producers like Christophe Fillioux, whose family-owned estate has operated for five generations, are now making difficult decisions. He recently uprooted sections of his vineyard and plans to remove more next year as part of a broader industry-wide response aimed at adjusting to the downturn. “The future is very uncertain. It’s hard to plan anything right now,” said Fillioux, standing in a vineyard planted by his father in 1980.

This comes as the region’s growers were already reeling from Chinese tariffs imposed in retaliation for EU duties on electric vehicles. Shipments to China, the second-largest cognac market by volume, have dropped by over 50% since last October.

The situation may worsen: Trump has floated the possibility of further tariffs of up to 200% on European wine and spirits, escalating tensions amid the ongoing trade disputes.

Global Slump and Overcapacity

The current crisis is exacerbated by an earlier expansion in production during the post-pandemic boom, when global demand for luxury goods spiked. Many growers invested heavily, often through loans, to meet the anticipated surge. Today, many of those same producers are struggling under debt as sales decline.

Industry body BNIC (Bureau National Interprofessionnel du Cognac) has responded by cutting production limits for the third consecutive year — now just half of 2022 levels — citing a “dramatically weakened” global economic climate. “We’re doing our best to manage the fallout with banks and local governments,” said BNIC President Florent Morillon, acknowledging that external factors beyond the control of producers have triggered the crisis.

In the Cognac region, the industry — from vineyard workers to barrel-makers — supports around 70,000 jobs, many of which are now at risk. Layoffs have begun, and local leaders warn of rising unemployment.

Changing Tastes, Rising Costs

Even before the latest tariffs, cognac’s popularity in the U.S. was beginning to wane due to price hikes and changing consumer preferences. While the U.S. remains a key market, especially for mid-range bottles priced between $36–$60, analysts note that American drinkers are increasingly shifting toward alternatives like tequila and whiskey. “Cognac hasn’t expanded beyond niche demographics in the U.S.,” said Thomas Mesmin, a Paris-based luxury industry consultant. “The big brands still rely on a few core cities and loyal customer bases.”

Still, the cultural connection between cognac and the U.S. — particularly its historic popularity among Black American communities and high-profile partnerships in entertainment and sports — has helped maintain visibility in the market. But experts warn that brands may struggle to absorb the tariff cost without losing customers. “Even a $1 or $2 price increase could cause disruption in today’s environment,” Morillon said.

Fourth-generation grower Pascale Dupuy, 67, said he expects his income to fall by 40% this year after major buyers like Remy Martin slashed contracts. His daughter has shown little interest in continuing the family business, raising concerns about the long-term future of small, independent cognac estates. “It’s just one more problem in a growing list,” he said. “I don’t know if it’s worth continuing anymore.”

As producers explore new markets in Asia and Africa to offset losses, many remain uncertain about how long the downturn will last or whether the industry can recover from the combined shocks of tariffs, shifting demand, and overproduction.

Trump’s 10% Tariff On All Imports Sparks Global Market Rout, Consumer Panic

President Donald Trump’s sweeping 10% tariff on all imports has sent shockwaves through the global economy, rattling financial markets, disrupting trade norms, and sparking consumer panic across the United States.

The tariff—applied unilaterally at U.S. seaports, airports, and customs facilities—marks a dramatic departure from the decades-old framework of negotiated trade agreements. Kelly Ann Shaw, a trade attorney at Hogan Lovells and former White House trade adviser, called it “the single biggest trade action of our lifetime.”

The announcement has wreaked havoc on global financial markets. In just two days, more than $5 trillion in value was wiped off the S&P 500, which plunged 10%, marking its steepest two-day drop since the COVID-19 crash in March 2020. The Dow Jones Industrial Average sank over 2,000 points, while the Nasdaq slipped into bear market territory.

The fallout is already global. The initial tariff wave has affected imports from a wide range of nations—including Australia, the UK, Colombia, Argentina, Egypt, and Saudi Arabia—with higher duties on goods from 57 major trading partners set to kick in next week.

“This is effectively a massive tax hike on American consumers and businesses,” said Michael Strain, director of Economic Policy Studies at the American Enterprise Institute. “We estimate it will cost households and businesses between $400–500 billion this year alone.”

Consumer Rush to Beat Rising Prices

The announcement has triggered a surge in consumer spending as Americans rush to buy goods ahead of anticipated price hikes. From avocados to automobiles, electronics to everyday essentials, retailers are reporting stockpiling behavior.

Car dealerships have seen a notable uptick in activity, particularly for foreign-assembled vehicles, while demand for laptops, smartphones, and home appliances has spiked. Retailers are bracing for potential shortages as supply chains adjust to the sudden policy shift.

Adding to the domestic shake-up, the Trump administration has unveiled new immigration policy measures, placing added scrutiny on green card applicants. The centerpiece is an updated Form I-485, which now requires extensive financial disclosures and in-person interviews for marriage-based applications.

The revised form also reintroduces the term “alien” in official usage, drawing criticism from immigration advocates. According to Newsweek, use of the updated form became mandatory as of January 20. Critics say the changes could disproportionately burden low-income applicants and complicate an already lengthy process.

Trump’s tariff marks a sharp reversal from the post-World War II era of multilateral trade pacts. Economists warn the move could fragment the global trade system and set off retaliatory measures, with uncertain long-term consequences for global growth.

As markets tumble, consumers scramble, and policy experts warn of economic strain, the world is watching how the U.S. will navigate the fallout—and how other countries will respond.

“This is a defining moment for global trade,” said Shaw. “The aftershocks of this action will be felt for years.”

Economists Warn of Recession as Trump’s Trade Policies Take Hold

April 5, 2025 — Leading global economists and brokerages are warning that the U.S. economy is on the brink of a recession, triggered by the sweeping reciprocal tariffs announced by former President Donald Trump. As the trade war escalates, the economic outlook for the world’s largest economy has darkened considerably.

In a sobering revision, JPMorgan Chase & Co. now forecasts U.S. real GDP to shrink by 0.3% for the year (measured Q4/Q4), slashing its previous projection of 1.3% growth. Michael Feroli, the bank’s chief U.S. economist, said the contraction is expected to weaken hiring and push the unemployment rate to 5.3%, up from its current 4.2%.

“We now expect real GDP to contract under the weight of the tariffs,” Feroli wrote in a note to clients. “If realised, our stagflationary forecast would present a dilemma to Fed policymakers.” Feroli expects the U.S. Federal Reserve to respond by initiating a series of rate cuts starting in June, continuing through each meeting until January 2026.

Other global banks are also slashing their outlooks. Citigroup has trimmed its growth forecast for the year to 0.1%, while UBS reduced its projection to 0.4%.

Jonathan Pingle, UBS’s Chief U.S. Economist, anticipates a steep drop in imports—over 20%—over the next few quarters. “This will push imports as a share of GDP back to pre-1986 levels,” Pingle noted. “The forcefulness of the trade policy action implies substantial macroeconomic adjustment for a $30 trillion economy.”

Markets have already begun to react sharply. In a brutal two-day selloff, the Dow Jones Industrial Average plunged over 2,000 points, the S&P 500 recorded its worst decline since the pandemic-led crash of March 2020, and the Nasdaq slipped into bear market territory, down more than 20% from its recent highs.

Despite the growing alarm among economists, Federal Reserve Chair Jerome Powell struck a cautious tone Friday, saying “it feels like we don’t need to be in a hurry” regarding rate adjustments. His comments followed March’s jobs report, which showed solid hiring but a slight rise in the unemployment rate to 4.2%.

The Trump administration’s tariff strategy, aimed at mirroring duties imposed by trading partners, is part of a broader effort to reset global trade terms. But critics warn the policy risks backfiring, shrinking U.S. trade volumes and weakening consumer spending just as inflation pressures persist.

With Wall Street reeling, central bankers divided, and recession risks rising, all eyes will now be on the Fed’s June meeting—and how deep the impact of the tariffs will go.