Category: Trade

A substantial share of U.S. agricultural production is sold overseas (Figure 1). Exchange rates, therefore, play a central role in export competitiveness and, indirectly, in domestic price prospects. For crops with heavy export exposure, the value of the dollar is not just a macroeconomic headline; it is part of the demand curve faced by Southern producers.

The economic intuition is straightforward. Most globally traded agricultural commodities are priced in U.S. dollars. When the dollar strengthens, foreign buyers must use more local currency to purchase the same dollar-priced commodity, which tends to soften demand at the margin and place downward pressure on prices. When the dollar weakens, U.S. supplies become cheaper in foreign-currency terms, export bids often improve, and U.S. crops become easier to place in global markets. This helps explain why the dollar and broad commodity prices frequently move in opposite directions, even though exchange-rate effects can be offset by other market forces.

In 2025, the exchange-rate environment turned more supportive for U.S. agriculture. After rising 7.1 percent in 2024, the nominal broad dollar index declined 7.2 percent over 2025 (Figure 2). Over the same period, major U.S. agricultural customers experienced notable currency appreciation against the dollar: the euro strengthened 12.6 percent, and the Mexican peso appreciated 12.7 percent (Figure 3). These movements improved foreign purchasing power for U.S. shipments and helped support U.S. crop exports. At the same time, Brazil’s real appreciated by roughly 11 percent, which can tighten Brazilian exporters’ local-currency margins and reduce their ability to price aggressively, all else equal.

Empirical research supports this channel. Shane et al. (2008) find that a 1 percent decline in the trade-weighted dollar is associated with roughly a 0.5 percent increase in the value of U.S. agricultural exports. Exchange rates, however, rarely operate in isolation. Weather outcomes, yields, freight costs, geopolitics, and policy shocks can dominate price formation in the short run (an important lesson from the post-2022 period).

For Southern producers, the dollar’s decline in 2025 is a constructive signal for export-oriented crops because it supports international competitiveness without requiring lower farm-gate prices. The main limitation is timing: exchange-rate effects pass through bids, basis, and contracting practices unevenly, so benefits can vary across regions and marketing windows. Even so, the directional effect is favorable. 

If global conditions remain orderly and U.S. interest rates drift lower, the dollar may stay softer and continue to support the export channel; renewed risk aversion, however, could reverse this trend and reintroduce headwinds. For export-dependent Southern crops, monitoring exchange-rate conditions alongside basis and contract timing remains an essential part of marketing discipline.

Figure 1 – Exports account for a large share of output in several U.S. crops

Figure 2 – The U.S. dollar declined in 2025

Figure 3 – U.S. dollar weakened against key agricultural trading partners in 2025

References

Federal Reserve Bank of St. Louis. (2026). Federal Reserve Economic Data. FRED. https://fred.stlouisfed.org/. Accessed January 23, 2026

Shane, M., Roe, T. L., & Somwaru, A. (2008). Exchange rates, foreign income, and U.S. agricultural exports. Agricultural and Resource Economics Review, 37(2). https://ageconsearch.umn.edu/record/45666/files/shane%20-%20current.pdf

U.S. Department of Agriculture, Office of the Chief Economist. (2025, January). World Agricultural Supply and Demand Estimates (WASDE). https://www.usda.gov/oce/commodity/wasde. Accessed January 23, 2026.

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Clemets Daglia Calil, Yuri. “A Weaker Dollar Can be Good News for U.S. Crop Exports.” Southern Ag Today 6(5.4). January 29, 2026. Permalink

Authors: ^[1]Luis Ribera, Texas A&M AgriLife Extension Service

Aleks Schaefer, Oklahoma State University

To say that it has been a very busy year for U.S. agricultural trade is an understatement. Since “Liberation Day” back on April 1, 2025, and even before that, trade has been a major news topic.  The current administration’s strategy of leveraging tariffs (combined with the sheer size of the U.S. market) to change trade relationships with the rest of the world has generated much uncertainty in nearly all markets.  Both agricultural and non-agricultural industries have reacted to the almost daily trade talk news.

U.S. agricultural exports wrapped up 2024 at $174.1 billion.  USDA Outlook for U.S. Agricultural Trade December 2025 report forecast that exports will close 2025 slightly higher than the previous year at $175.6 billion.  However, the forecast for 2026 exports is $173 billion, the lowest since 2021.  The reason for this slight decrease is both volume and value, as they are expected to decrease by 1.1% and 1.5%, respectively. A continuous decrease in soybean and sorghum exports to China are the main driver of the decrease in value of U.S. ag exports in 2025, as well as expectations for 2026.  China increased their imports of these two products from Brazil and Argentina due to the increased of U.S. tariffs on their exports.  There has been an increase in exports to other countries such as the EU, Mexico, Indonesia, and Vietnam, but not enough to offset the decrease in exports to China.

On the other hand, U.S. agricultural imports are expected to reach an all-time high in 2025 at $219.4 billion and are expected to decrease in 2026 to $210 billion.  The main reasons for this expected decrease are lower imports of horticultural products and vegetable oils.  Cocoa and products, as well as coffee and products, have increased the value of imports but reduced the volume, showing that prices of those products are expected to go up.  Hopefully, the recent announcement of tariff exceptions on some agricultural products, including beef, tea and coffee, fruit juice, cocoa, spices, bananas, oranges, tomatoes, and certain fertilizers, will help reduce their prices paid by U.S. consumers.

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^[1] Ribera is Professor, Department of Agricultural Economics, Texas A&M AgriLife Extension. Schaefer is Associate Professor, Department of Agricultural Economics, Oklahoma State University.

In 2025, U.S. spirit exports to Canada collapsed as a direct consequence of escalating trade tensions, marking one of the sharpest declines in cross-border alcohol trade in recent history. Prior to 2025, Canada accounted for about 11% of U.S. distilled spirit exports. Between 2022 and 2024, Canadian imports exceeded $250 million annually, making Canada the second-largest market for American whiskey, bourbon, rum, and other distilled spirits (USDA, 2025). In March 2025, Canada effectively halted imports and sales of U.S. wine and spirits in retaliation for tariffs imposed by President Trump on Canadian goods. Provincial liquor boards removed American products from shelves, triggering a dramatic plunge in U.S. spirit exports (DISCUS, 2025). Canada also imposed a 25% retaliatory tariff on U.S. distilled spirits and other products in March 2025, which was lifted in September (Government of Canada, 2025). However, the impact far exceeded what would be expected from a 25% tariff alone, underscoring the severity of the trade dispute.

Figure 1 shows monthly U.S. spirit exports to Canada (in million proof liters), comparing the 2022–2024 three-year average with 2025. The data show a sharp and sustained decline in 2025 relative to historical levels. From 2022 to 2024, monthly exports typically ranged between 1.2 and 2.3 million proof liters, peaking during summer months. In stark contrast, exports in 2025 fell dramatically after February, dropping from 1.4 million proof liters in February to just 0.2 million in April, and averaging less than 0.4 million proof liters per month for the remainder of the year. Overall, 2025 marks an unprecedented contraction in Canadian spirit imports from the United States. In terms of value, U.S. spirit exports to Canada averaged over $160 million between March and September in years prior. However, exports in 2025 during the same period were only $35 million (USDA, 2025). Comparing March through September, American distilled spirit sales to Canada were down approximately almost 80% compared to the prior three-year average, underscoring the severe impact of trade restrictions.

Such a steep decline signals fundamental shifts in cross-border alcohol trade that may not be reversed by tariff removal alone. The restrictions on U.S. spirits were not merely retaliatory; they appear to have stimulated domestic production and potentially redirected Canadian consumers toward local and alternative sources. The long-term effects remain uncertain. However, it is noteworthy that imports of oak casks and barrels—essential for aging spirits—rose by 6% during this period (USDA, 2025), suggesting increased investment in Canadian distilling capacity.

Figure 1. U.S. spirit exports to Canada: 2022-2024 and 2025

References

Distilled Spirits Council of the United States (DISCUS) (2025). Removal of U.S. Spirits from Canadian Stores in Retaliation to U.S. Trade Dispute Resulted in Sharp Sales Decline of U.S. Products, Canadian Products and Total Spirits Sales. https://distilledspirits.org/news/spirits-canada-analysis-removal-of-u-s-spirits-from-canadian-stores-in-retaliation-to-u-s-trade-dispute-resulted-in-sharp-sales-decline-of-u-s-products-and-total-spirits-sales/

Government of Canada (2025). https://www.canada.ca/en/department-finance/programs/international-trade-finance-policy/canadas-response-us-tariffs.html

U.S. Department of Agriculture (2025). Global Agricultural Trade System. https://apps.fas.usda.gov/gats/default.aspx

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Muhammad, Andrew. “Trade War Fallout: The Collapse of U.S. Spirit Exports to Canada in 2025.” Southern Ag Today 5(51.4). December 18, 2025. Permalink

Recently, the Trump administration announced tariff exceptions on some agricultural products, including beef, tea and coffee, fruit juice, cocoa, spices, bananas, oranges, tomatoes, and certain fertilizers. Imports account for over ninety percent of consumption for four of these products: bananas, tea, coffee, and cocoa. Spices, tomatoes, and fruit juice also have import shares surpassing 60 percent. Meanwhile, consumption of beef and oranges have not been as reliant on imports, with a dependency totaling less than 20 percent of U.S. consumption. In 2024, the beef industry produced 12.4 million metric tons (MMT) of carcass weight equivalent beef, and the citrus industry grew 3.33 MMT of oranges. Of the 1.52 MMT of beef imports in 2024, ground beef made up nearly two-thirds at 981 thousand metric tons (TMT).

Figure 1: U.S. Import Share of Agricultural Products Relieved of Reciprocal Tariffs, MT, Five-Year Average 2020-2024

	Import Share	Production	Imports
Beef*	12.68%	12,472,000	1,810,400
Oranges	17.11%	3,332,304	687,805
Fertilizer	23.84%	39,150	12,257
Spices	60.00%	427,003	640,505
Tomatoes	69.93%	864,162	1,981,046
Fruit Juice**	69.77%	2,097415	4,840,255
Cocoa	99.00%	14,240	1,409,748
Coffee	99.82%	2,736	1,502,760
Tea	99.99%	29	205,456
Bananas	100.00%	–	5,121,292

Canada is the largest source of imported cocoa products and fertilizer for the United States, amounting to $2.77 billion and $4.73 billion, respectively, in 2024. Brazil is the leader in fruit juice exports to the United States at $1.14 billion. Mexico is the source of 85 percent of imported tomatoes, worth $3.12 billion, in the United States. Vietnam and India rank as the two leading sources of U.S. spice imports, $472 million and $410 million, respectively. As for tea, China ($118 million), Japan ($115 million), Canada ($107 million), and India ($92 million) each account for around 10 percent of U.S. imports. Brazilian coffee exports totaled $2.13 billion, and 21.6 percent of U.S. imports.

Additionally, the Trump administration has announced framework agreements with Ecuador, Guatemala, El Salvador, and Argentina, focusing on reciprocal trade and investment to boost market access and address non-tariff barriers. These agreements would remove the reciprocal tariff rate of 10 percent, 15 percent in the case of Ecuador, on the bulk of exported products to the United States from the respective country. In 2024, U.S. imports of agricultural products totaled $7.45 billion from the four countries. In 2024, imports from Ecuador totaled $3.78 billion with shellfish accounting for 35 percent of this total, with cut flowers, bananas, and cocoa each worth more than ten percent of the import value. Two products, bananas and coffee, made up more than half of the $2.9 billion imported from Guatemala. The $2.40 billion of imports from Argentina were mixed between a large group of items, with shellfish, beef, wine, and sugar making up 41 percent of the total. Finally, sugar and coffee were the leading products imported from El Salvador, together totaling $207 million of the $415 million in 2024.

Figure 2: U.S. Imports from Selected Countries, 2024

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Sources:

Buzzanell, Peter J. Rex Dull, & Fred Gray. “The Spice Market in the United States: Recent Developments and Prospects.” July 3, 1995. https://ers.usda.gov/publications/pub-details?pubid=42049.

Economic Research Service (ERS). “Fruit and Tree Nuts Yearbook Tables.” Accessed November 2025. https://www.ers.usda.gov/data-products/fruit-and-tree-nuts- data/fruit-and-tree-nuts-yearbook-tables/. Published February 25, 2025.

Foreign Agricultural Service (FAS). “Global Fertilizer Dashboard.” Online Database. https://www.fas.usda.gov/data/visualization-global-fertilizer-trade-dashboard. Online public database.

Foreign Agricultural Service (FAS). Global Agricultural Trade System (GATS). Online database. https://apps.fas.usda.gov/gats/default.aspx. Online public database accessed November 2025.

Foreign Agricultural Services (FAS). Production Supply and Distribution (PS&D). Online Database. https://apps.fas.usda.gov/psdonline/app/index.html#/app/advQuery. Online public database

The White House. “Fact Sheet: Following Trade Deal Announcements, President Donald J Trump Modifies the Scope of the Reciprocal Tariffs with Respect to Certain Agricultural Products.” November 14, 2025.

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Ribera, Luis, and Landyn K. Young. “Recent Tariff Exceptions and Trade Agreements Aimed to Reduce Food Costs.” Southern Ag Today 5(49.4). December 4, 2025. Permalink

In 2025, grain sorghum production for the United States totaled 10.2 million metric tons (MMT). This was led by Kansas, totaling 5.8 MMT, and Texas, 2.64 MMT. Colorado (497 thousand metric tons), Nebraska (494 TMT), and Oklahoma (479 TMT). Aside from a poor production year in 2022, the United States has averaged 9.35 MMT annually.

The U.S. is by far the largest sorghum exporter, followed by Australia and Argentina. In 2024, the United States exported 5.24 MMT of sorghum worth $1.38 billion, with China being the leading importer. From 2020-2024, China imported more than 83 percent of U.S. exported sorghum with an FOB value ranging from $1.32-2.14 billion each year. In 2024, sorghum exports to China from the United States totaled 4.63 MMT and $1.23 billion. Annually since 2020, less than 16.4 percent of U.S. sorghum exports have gone to the rest of the world. In recent years, Ethiopia, Eritrea, Sudan, and Djibouti follow China in terms of volume imported, but none have imported more than 20 TMT since 2020.

The ongoing tariff war has caused a decrease in Chinese imports of many U.S. products, including sorghum. In the partial year through July, only 82 TMT of sorghum have been exported; in the same time period in 2024, more than 3.24 MMT of sorghum were exported. As of July 2025, exports were down 80% when compared to the previous year, with sales to China down 97%. Some of these imports are primarily being substituted by Australia and Argentina. Similarly, in 2018 and 2019, sorghum trade between China and the United States fell but rebounded with the U.S.-China “Phase One” Deal that occurred in 2020. The recent agreement between the U.S. and China could reopen the Chinese market for U.S. sorghum.

World Sorghum Exports, 2013-2024

World Sorghum Imports, 2013-2024

U.S. Sorghum Exports, 2016- July 2025

Sources

Foreign Agricultural Service (FAS). Global Agricultural Trade System (GATS). Online database. Online public database accessed November 2025.

Nguema, Abigail. “Grain and Feed Update.” Foreign Agricultural Services. September 30, 2025.

United Nations Department of Economic and Social Affairs. Comtrade. Online public database accessed November 2025.

USDA Foreign Agricultural Service (FAS). Production, Supply and Distribution Online (PS&DView). Online public database accessed November 2025.

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