TRADE UPDATE

Food & Agriculture
Feb. 4, 2025

By Kristy Goodfellow, Vice President of Trade and Industry Affairs, Sophia Vaccaro, CRA Trade Intern, and Charlotte McCourt, CRA Communications Intern

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HIGHLIGHTS

  • Tariffs: President Donald Trump followed through on a campaign promise Saturday when he announced broad tariffs on exports from Canada, Mexico, and China. Duties were set to begin Feb. 4, but Trump announced 30-day delays on the tariffs planned for Canada and Mexico after receiving commitments from Mexican President Claudia Sheinbaum and Canadian Prime Minister Justin Trudeau.
  • Trump Administration:
    • Howard Lutnick, Trump’s nominee for Secretary of Commerce, indicated support for across-the-board tariffs by country during his Jan. 29 Senate confirmation hearing. Lutnick argued that it is “nonsense” that tariffs cause broad inflation.
    • The Senate Finance Committee has scheduled a hearing to consider the nomination of Jamieson Greer to serve as the next U.S. Trade Representative for Thursday, Feb. 6.
  • Congress:
    • Rep. Riley Moore (R-WV), with eight other House Republicans, introduced the Reciprocal Trade Act, which would allow the President to unilaterally impose reciprocal tariffs on a product-by-product basis.
    • Sens. Ron Wyden (D-OR), Jeanne Shaheen (D-NH), and Tim Kaine (D-VA) introduced the Protecting Americans from Tax Hikes on Imported Goods Act, which would limit the President’s ability to use the International Emergency Economic Powers Act (IEEPA).
  • Panama: Both Congress and the Trump Administration are following up on Trump’s comments during his inaugural address to “take back” the Panama Canal.
    • Sen. Ted Cruz (R-TX) convened a Senate Commerce Committee hearing to examine the Panama Canal and its impact on U.S. trade and national security.
    • During a meeting between Secretary of State Marco Rubio and Panamanian President José Raúl Mulino, Rubio said the “status quo is unacceptable” and threatened to take measures necessary to protect the United States’ rights under the Treaty Concerning the Permanent Neutrality and Operation of the Panama Canal.
  • US-Dominican Republic: On Dec. 17, 2024, the Dominican Republic instituted a decree limiting imports of U.S. rice, despite the terms under The Dominican Republic-Central American Free Trade Agreement (CAFTA-DR), which allows for unlimited duty-free access starting on Jan. 1, 2025..

“These tariffs will only make it harder for American families to put food on the table and for American farmers and ranchers to sell their products. They will also raise gas prices by as much as 50 cents per gallon, car prices by up to $3,000, and key inputs like potash fertilizer by up to $25 a ton. Farmers and ranchers want an even playing field, not handouts necessitated by another Trump trade war.”

—— Senate Ag Committee Ranking Member Amy Klobuchar (D-MN) Feb. 2 Statement on Tariffs on Canada, Mexico, and China

Tariffs

US TARIFFS ON CANADA, MEXICO, AND CHINA

  • President Donald Trump followed through on a campaign promise Saturday, declaring broad tariffs on three countries:
    • 25% ad valorem tariffs on Canada (except energy and energy resources, which will have 10% tariffs)
    • 25% ad valorem tariffs on Mexico
    • 10% ad valorem tariffs on China
  • The tariffs are set to go into effect Tuesday, but Trump on Monday announced 30-day delays for the duties slated for both Canada and Mexico. Trump, Canadian Prime Minister Justin Trudeau, and Mexican President Claudia Sheinbaum all separately released statements Monday confirming the delays.
  • Prior to the announcement of a delay, Canada planned to apply 25% retaliatory tariffs on $155 billion (U.S.$107 billion) in U.S. imports, of which C$30 billion were to be applied starting Tuesday, Feb. 4, and the remaining C$125 billion were scheduled to be applied 21 days after the Feb. 1 announcement.
  • China has not yet responded with retaliatory tariffs but has indicated that it would take countermeasures and pursue a World Trade Organization (WTO) challenge.
  • While debates ensue about how long the tariffs will remain in place, the announcements anticipate continued escalation by including a clause that states the “president may increase or expand” tariffs in the case of retaliation.
  • Trump is invoking theInternational Emergency Economic Powers Act (IEEPA) of 1977 due to threats of illegal immigration and fentanyl. This authority has not previously been used to add tariffs on imported goods and may face legal challenges domestically.
Photo: X

Trump Administration

LUTNICK ADDRESSES TRADE AT CONFIRMATION HEARING

  • Businessman Howard Lutnick, Trump’s nominee for Secretary of Commerce, discussed tariffs on Mexico and Canada at his Jan. 29 Senate confirmation hearing.
  • He referred to the tariffs as being “separate to create action from Mexico and action from Canada” on immigration across U.S. borders and fentanyl entering the country. He went on to say “if they execute it, there will be no tariff. And if they don’t, then there will be.”
  • Lutnick also mentioned that the United States is treated “horribly” by the global trading environment, affirming his support for across-the-board tariffs country-by-country, which he advised Trump to pursue.
  • While conceding that the price of particular products may rise, Lutnick argued that it is “nonsense” that tariffs cause broad inflation.

NOMINATIONS AND HEARINGS

  • The Senate Finance Committee has scheduled a hearing to consider the nomination of Jamieson Greer to serve as the next U.S. Trade Representative for Thursday, Feb. 6.
  • The Senate Agriculture Committee on Agriculture, Nutrition, & Forestry advanced the nomination of Brooke Rollins to be the next Secretary of Agriculture with a 23-0 vote Monday evening. Her nomination now goes to the Senate floor for consideration.

Congress

HOUSE REPUBLICANS INTRODUCE ‘RECIPROCAL TRADE ACT’

  • Rep. Riley Moore (R-WV) and eight other House Republicans introduced the Reciprocal Trade Act, which would allow the President to unilaterally impose reciprocal tariffs on a product-by-product basis.
  • The Act, which is similar to a 2019 bill, would permit tariffs to be equal to the duty imposed by a foreign country or equal to the effective rate of the duty of the nontariff barriers applied by the foreign country.
  • The Act also authorizes the president to negotiate with foreign nations to lower tariff rates on American goods.
  • The 2019 bill was introduced by then-Rep. Sean Duffy, the Pennsylvania Republican who now serves as the Trump Administration’s Transportation Secretary.

SENATE DEMOCRATS INTRODUCE LEGISLATION RESTRICTING TARIFF USE

  • Sens. Ron Wyden (D-OR), Jeanne Shaheen (D-NH), and Tim Kaine (D-VA) introduced the Protecting Americans from Tax Hikes on Imported Goods Act, which would limit the President’s ability to use the International Emergency Economic Powers Act (IEEPA).
  • IEEPA allows the President to immediately place unlimited tariffs after declaring a national emergency; Trump used that authority to announce the tariffs on Canada, Mexico, and China over the weekend.
  • According to Yale’s Budget Lab analysis, broad increases in import tariffs could cost the typical American family $3,900 annually.

Panama

PANAMA CANAL AND CHINA

  • Both Congress and the Trump Administration are following up on Trump’s comments during his inaugural address to “take back” the Panama Canal.
    • On Jan. 28, Sen. Ted Cruz (R-TX) convened a Senate Commerce Committee hearing to examine the Panama Canal and its impact on U.S. trade and national security.
    • Testimony included growing concern over Chinese influence in the Panama Canal, a waterway where 75% of cargo traffic originates in – or is bound for – the United States.
    • Speakers also noted frequent droughts have brought longer transit times with toll hikes and consequently a 10% reduction in imports.
    • Speakers explained how shipping companies may pay to jump the line at the canal, causing longer transit times for those who do not pay more.
    • China’s construction of a bridge across the canal was also a topic of conversation, with Cruz claiming that the partially completed bridge “gives China the ability to block the canal (and the ports) without warning.”
  • Secretary of State Rubio met with Panamanian President José Raúl Mulino on Feb. 2.
    • According to Rubio’s meeting readout, he informed Panama that the “current position of influence and control of the Chinese Communist Party over the Panama Canal area is a threat to the canal and represents a violation of the Treaty Concerning the Permanent Neutrality and Operation of the Panama Canal.” 
    • Rubio said the “status quo is unacceptable” and threatened to take measures necessary to protect American rights under the Treaty.

US-Dominican Republic

DOMINICAN REPUBLIC TO RESTRICT U.S. RICE EXPORTS

  • On Dec. 17, 2024, the Dominican Republic instituted Decree 693-24, which limits imports of U.S. rice despite the terms under The Dominican Republic-Central American Free Trade Agreement (CAFTA-DR), which would allow for unlimited duty-free access starting on Jan. 1, 2025.
  • According to USDA, the decree established a quota of 23,300 metric tons subject to a 0% ad valorem tariff, with additional WTO quota access for 17,810 metric tons at a 20% ad valorem tariff. All rice imported beyond these two quotas will be subject to a 99% tariff.
  • In 2023, the United States exported $2.15 billion in agricultural and related products to the Dominican Republic, including $32 million worth of rice.
  • The decree is based on legal precedent, which allows the Dominican Republic to regulate imports of “sensitive products” for the sake of national security.