Distilled spirits fall into six main categories: whiskey (which includes bourbon), vodka, rum, gin, tequila, and brandy. Each is defined by its key ingredient, for example, rum is produced from sugarcane, brandy from grapes, and whiskey from corn and other grains. Production methods, geography, and legal requirements also help in defining these categories. Tennessee Whiskey and Kentucky Bourbon are iconic American spirits, elevating these states to leading exporter status.
American distilled spirits enjoy global popularity and are among the nation’s top agricultural exports. Despite disruptions from the 2018 trade war and the COVID-19 pandemic, exports have shown a steady upward trend reaching almost $3.0 billion in 2024 (Figure 1). Tennessee and Kentucky lead the nation in distilled spirits exports, consistently ranking first and second among exporting states, respectively. While distilled spirits make up approximately 2% of total agricultural exports nationwide, they dominate sales in both states, accounting for 36% of Tennessee’s and 48% of Kentucky’s agricultural exports in 2024. That year, Tennessee exported over $900 million worth of distilled spirits, while Kentucky shipped around $750 million, together comprising more than half of the country’s total distilled spirits export revenue. For comparison, Texas, the third-largest exporting state, had around $350 million in distilled spirits exports in 2024.
Both Canada and the EU have been embroiled in the recent trade actions by the Trump Administration. In response, both countries have either implemented or proposed retaliatory tariffs on U.S. good including distilled spirits. What is at stake if Canada and the EU impose retaliatory tariffs on American distilled spirits?
Because retaliatory tariffs could seriously impact distilled spirits, disrupting export sales, economic activity, and job stability, it is essential to evaluate what is at risk. Our research shows that although export sales to the EU and Canada for the two states combined average around $760 million annually from 2022-2024, the totaled economic impact was over $1.2 billion and nearly 3,000 jobs. These findings highlight how distilled spirits exports create a ripple effect, influencing employment, tax revenue, and business activity across multiple sectors in Tennessee and Kentucky. If Canada or the EU were to impose tariffs on U.S. distilled spirits, it could lead to reduced exports, affecting the economic stability of distilleries and related industries. This could result in job losses, decreased income for workers, and lower tax revenues, ultimately harming the regional economy.
Figure 1. U.S. Distilled Spirits Exports (Tennessee, Kentucky, and Other States): 2010 – 2024
Source: Reprinted from forthcoming article in Choices. See the reference list.
For More Information
Muhammad, A., R.J. Menard, S.A. Smith (2025) “Tennessee and Kentucky distilled spirits: What’s at stake from a new trade war?” Choices (In Press).
The global rice market in the last two years has been a rollercoaster driven mostly by India’s export restrictions and, since October of last year, by its massive rice crop. India’s production performance has been remarkable, breaking a new production record every year for the last ten years. USDA (2025a) estimates that production in marketing year 2024 (still in progress in India with the smaller rabi crop) will reach 147 million metric tons (MMT), milled basis, and exports could go as high as 24.5 MMT, significantly above the record 22 MMT exported in 2021.
Indonesia is also contributing to the bearish tone of the global rice market. While total rice consumption and production have followed a downward trend in the last decade, consumption rebounded in 2023 and 2024 while production kept falling, which created a surge in imports. Indonesia was the second-largest rice importer in 2023 and the largest in 2024, when imports reached 4.7 MMT. Weather is supporting the growth of production in 2025, which, together with ample stocks bought at competitive prices, suggests that Indonesia will need less than 1 MMT of imports this year (USDA, 2025a).
From the above, we can infer why long-grain rice prices have been under pressure since last October (Figure 1). Export prices out of Thailand and Vietnam have decreased by over $160/MT or 29% in the last six months, although they seem to have found a floor at around $400/MT in the last few weeks. Export prices out of Mercosur (Argentina, Brazil, Paraguay, and Uruguay) have also decreased sharply; for example, the export price of Uruguayan 5% long-grain rice averaged $582/MT in March relative to $800/MT in October, according to FAO (2025). The export price of U.S. long-grain #2/4% decreased but to a smaller extent (12%) over the last six months and seems to have found a floor at around $650/MT. Interestingly, amid decreasing long-grain prices across the board, U.S. export prices remain more resilient, even when the low milling quality of the U.S. crop has been a significant concern. Of particular concern for the milling industry is the fact that U.S farm prices have remained mostly unchanged: USDA average farm price decreased only 3% from $14.5/cwt in August to $4.2/cwt in April (USDA, 2025b). Lower export prices and steady domestic paddy prices put the squeeze on milling margins.
Nine months into the 2024/25 marketing year, the U.S. has exported 2.29 MMT (paddy basis) of long-grain rice, a 21% smaller amount relative to last year, driven by a decrease in paddy exports to all major markets (Mexico, Central America, and Colombia). Paddy rice from Mercosur continues to gain market share in core U.S. paddy markets. Exports of long-grain milled rice are at par with the previous year’s performance, thanks to the growth of exports to Iraq, which helps offset a sizable market loss in Haiti. U.S. exports will face higher competition from Mercosur in 2025, driven by a significant increase in production in Brazil and, to a lesser extent, Argentina, Paraguay, and Uruguay, which will result in more rice available for export.
Given the global and regional situation described above, what can we expect for the upcoming marketing year? USDA’s March 2025 prospective plantings (USDA, 2025c) suggest a similar crop than last year (2.24 million acres in 2025 relative to 2.28 million in 2024). Excessive rains in Arkansas early April have complicated crop establishment and caused significant infrastructure damage. Despite that, as of May 4th planting progress was almost 80%, but with a mix of situations depending on location (UADA, 2025a). The USDA projects the 2025 long-grain rice production at 167.2 million cwt, around 3% below the 2024 crop, and exports at 68 million cwt, slightly higher than in 2024. As discussed earlier, lower export prices have not caught up with farm prices so far, but a bearish global market will indicate that farm prices will adjust downward. For example, FAPRI (2025) projects that long-grain farm prices will drop below the reference price in 2025/26 to $13.28/cwt, while USDA’s WASDE report (USDA, 2025b) estimates an average farm price of $12/cwt for long grain rice. Looking at the University of Arkansas Rice Enterprise Budgets (UADA, 2025b) with those farm prices, the picture that emerges is worrisome, as all budgets yield negative returns above operating costs.
Figure 1. Monthly average export price of long-grain rice from selected exporters.
The Tomato Suspension Agreement (TSA) between the U.S. and Mexico, first established in 1996, was designed to regulate the importation of Mexican tomatoes. This agreement emerged from an antidumping investigation aimed at determining whether imports of fresh tomatoes from Mexico were being sold at less than fair market value. Under the TSA, Mexican tomato producers agreed to sell fresh tomatoes in the U.S. market at set reference prices, and in return, the U.S. suspended the antidumping duty investigation. The first suspension agreement became effective in November 1996. Over the years, the U.S. Department of Commerce and Mexican signatories have entered into revised suspension agreements in 2002, 2008, and 2013, with the most recent becoming effective in September 2019 (Federal Register, 2019).
On April 14, 2025, the U.S. Department of Commerce announced its intent to withdraw from the 2019 Agreement, citing its failure to protect U.S. producers from “unfairly” priced Mexican tomatoes. Upon termination—effective in 90 days—antidumping duties of around 21% will be imposed on most Mexican tomatoes (Spiegelman, 2025). This decision could have a significant impact on imports, benefiting domestic producers. However, these duties (i.e., tariffs) could also reduce the economic activity associated with tomato supply chains and increase consumer prices.
The basic premise of an antidumping investigation is to determine whether imported goods are being sold in the U.S. market at less than fair value, often referred to as “dumping.” This practice can harm domestic producers by depressing local prices and causing financial distress. Concerns about imports of Mexican tomatoes have been driven by a significant surge in imports over the last two decades. Since 1995, imports from Mexico have grown by nearly 700% in value, from $406 million in 1995 to $3.1 billion in 2024. In terms of quantity, imports from Mexico have increased by around 220% (USDA-FAS, 2025).
What is even more concerning is that this growth occurred even as U.S. production declined, and per capita availability increased. In 1995, the year prior to the agreement, domestic tomatoes accounted for over 70% of the total U.S. supply. This situation has now completely reversed, with imported tomatoes accounting for 70% of the total U.S. supply in 2025 (USDA-ERS, 2025a). Almost all imports come from Mexico, which accounted for around 90% of U.S. tomato imports in 2024 (USDA-FAS, 2025). Despite the surge in imports, is there evidence to suggest that domestic prices have been depressed, impacting U.S. tomato growers?
From 1995 to 2024, the U.S. saw a significant rise in the importation of Mexican tomatoes (Figure 1). The quantity of tomatoes imported from Mexico surged from approximately 1.3 billion pounds in 1995 to over 4.4 billion pounds in 2024. Alongside this rise in quantity, import prices also increased, starting at about 31 cents per pound in 1995 and reaching nearly 74 cents per pound in 2024. This upward trend in prices could be the result of the suspension agreements where Mexican signatories agreed to sell at increasingly higher prices. However, various factors, such as increased demand, changes in production costs, and market dynamics, likely contributed to this high correlation. Comparing Mexican tomato import prices to U.S. tomato farm prices and the U.S. Producer Price Index for all fresh vegetables shows little evidence of domestic price depression from imports (Figure 2). There is a positive correlation between import prices and U.S. farm prices, with a consistent upward trend. While it could be argued that prices would have grown at a faster rate without the surge in imports, overall vegetable prices suggest that this is not the case. In fact, import prices often exceeded both U.S. farm prices and overall vegetables prices.
In closing, while increased barriers on Mexican tomatoes might benefit U.S. tomato producers, there are other factors to consider. In 2024, the U.S. imported almost 2.0 million metric tons (over 4.0 billion pounds) of fresh tomatoes from Mexico, valued at more than $3.0 billion. According to a recent study by Texas A&M University, these imports generated an estimated $8.3 billion in total economic impact, including $3.6 billion in direct effects and $4.7 billion in indirect and induced effects, supporting approximately 47,000 U.S. jobs (Ribera et al., 2025). This suggest that there is more at stake if the U.S. eliminates the suspension agreement.
Figure 1. Import price and quantity of Mexican tomatoes: 1995–2024
Source: USDA-FAS (2025)
Figure 2. Comparison of import and domestic prices: 1995–2024
Source(s): The U.S. farm prices was obtained from USDA-ERS (2025b); import prices from USDA-FAS (2025); and the producer price index from BLS (2025), which was adjusted to for comparison purposes.
References
Bureau of Labor Statistics (BLS) (2025). Inflation and Prices, Prices – Producer, Commodity Data. https://www.bls.gov/data/
After numerous rounds of reciprocal tariff hikes, the tariffs between the U.S. and China have escalated to 145% and 125%, respectively. This raises a critical question: Can U.S. agricultural exports to China withstand such steep retaliatory tariffs? To delve deeper into this issue, let’s examine the impact of prohibitively high tariffs on U.S. beef exports, a significant component of U.S. agricultural trade with China.
As noted in a previous article, China has emerged as a major player in global beef trade. Although once a minor importer, China is now the largest beef importing country in the world. In 2010, Chinese beef imports were only $84 million, but by 2022, they increased by 21,000% to nearly $18 billion (See SAT: https://southernagtoday.org/2022/12/01/china-emerges-as-a-leading-destination-for-u-s-beef-exports/). This remarkable rise can be attributed to several factors, including economic growth, urbanization, and changing preferences for quality protein sources. The increase in imports was further accelerated by the outbreak of African Swine Fever in 2018, which decimated pork supplies and led to a significant shift towards beef. Due to rising demand and imports, coupled with lifting the import restriction on U.S. beef in 2017, China is now the third largest foreign market for U.S. beef behind South Korea and Japan (USDA, 2025).
Since 2017, the U.S. has significantly increased its beef exports to China. In 2018, U.S. beef exports were valued at around $64 million, but by 2024, increased to approximately $1.5 billion (See Figure 1). As the figure shows, Brazil is the leading exporter of beef to China, reaching approximately $6.2 billion in 2024 (45% of total Chinese imports). Other noted suppliers include
Argentina, Australia, New Zealand, and Uruguay.
The figure underscores the competitive landscape of imported beef in China, with the U.S. emerging as a key player alongside Argentina, Australia, Brazil, New Zealand, and Uruguay. We can assess the impact of tariffs on these countries using price elasticity estimates from previous research (Hossen and Muhammad, 2025). The price elasticity refers to how the quantity imported responds to changes in import prices (own or competitor’s). Based on estimates from previous research, U.S. beef exports to China could decline by more than 77% in the short run, amounting to more than $1.0 billion in lost export sales. In the long run, U.S. beef exports to China will likely fall to zero if the high tariff persists. Interestingly, competing beef exports from Brazil and other countries could also decline (although by much smaller values) due to complementarities in importing. However, our estimates suggest that Uruguay could possibly benefit, but the benefit would be a fraction of U.S. losses. The U.S. has managed to capture a substantial share of the Chinese beef market (11% in 2024). Challenges posed by recent tariffs and trade barriers could cause the U.S. to lose it all.
Figure 1. Chinese Beef Imports: 2010 – 2024
Source: Trade Data Monitor® (2025)
For more information:
Hossen, M.D. and Muhammad, A. (2025). “Assessing the Impacts of Maritime Freight Rates on Global Beef Trade” Agribusiness. https://doi.org/10.1002/agr.22030
Over the past few decades, international trade has undergone significant transformations as countries strive to lower barriers and create a more interconnected global economy. While reductions in tariff rates have been a welcome advancement, the complex landscape of non-tariff measures (NTMs) has added new layers of challenges to achieving freer trade. Understanding how these policies impact trade dynamics is essential for navigating the ever-changing world of global commerce.
Since 1996, the average most favored nation (MFN) tariff rate for World Trade Organization (WTO) member countries has fallen by nearly half, from 13.2 percent to 7.4 percent in 2021. MFN rates are given to all WTO members unless an agreement allows for a lower rate to be given, this would be the trade-weighted effective rate or preferential rate. When comparing simple average rate to the trade-weighted MFN rate there was a 3.7 percent spread in tariff rate during 2021. The trade-weighted effective rate brings the world average down even further, to 2.5 percent in 2021. While the overall reduction of tariff rates is good news for reducing trade barriers, non-tariff measures (NTMs) play a major role as well.
Applied tariffs are the actual rates charged on products whereas bound tariff rates are the maximum upper bound that can be applied on a product without having to compensate the affected party. All rates discussed throughout this article are applied and include both ad valorem as well as ad valorem equivalents for non-ad valorem tariff rates.
NTMs are policy measures other than tariffs that can affect international trade such as regulations, standards, and procedures, impacting quantity traded, prices, or both. In 1994, a total of 293 NTMs were in place between all WTO countries. These included 264 anti-dumping policy lines and 29 countervailing lines. These have grown drastically over time with the largest increase being the growing number of Sanitary and Phytosanitary (SPS) policies. While SPS measures are tracked through 2021, limited data exist on NTM. In 2021 a total of 20,726 SPS measures were in place for WTO markets, a 134 percent increase from 2010. In addition, in 2018 there were 1,858 dumping reported. This rapid increasing trend of NTMs should be a concern for those of us that support freer trade.
In recent decades, the reduction of tariffs has significantly opened up opportunities for U.S. trade. However, the increasing prevalence of NTMs highlights the need for continuous monitoring and policy adjustments to foster a truly free trade environment.
Source
Snoussi-Mimouni, Monica and Edvinas Drevinskas. “Tariffs applied by WTO members have almost halved since 1996”, World Trade Organization. April 2023.
World Trade Organization. WTO Stats. https://stats.wto.org/. Online public database. Accessed March 2025.
