TRADE UPDATE

Food & Agriculture
September 2, 2025

By Kristy Goodfellow, Vice President of Trade and Industry Affairs, and Ameya Khanapurkar, Project and Policy Coordinator

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HIGHLIGHTS

  • Tariffs and Bilateral Negotiations:
    • On Aug. 29, a U.S. federal appeals court issued a decision in which it affirmed the Court of International Trade’s decision that trafficking and reciprocal tariffs imposed by the Trump Administration exceeded the authority delegated to the President in the International Emergency Economic Powers Act (IEEPA).
    • The European Commission published a proposed list of tariff concessions committed to in the Aug. 2025 U.S.-EU trade agreement. The proposal will go to the European Parliament and Council for approval.
    • The additional 25% tariff that the Trump administration threatened on imports from India officially took effect on Aug. 27.
    • The Trump administration ended the de minimis exemption, which allowed duty-free imports of packages worth less than $800.
  • Trade Data:
    • The USDA Outlook for U.S. Agricultural Trade showed a record $47.0 billion trade deficit for fiscal year (FY) 2025 and projected a $41.5 billion deficit in FY2026. ERS stopped the long-standing practice of providing a narrative contextualizing the data.
  • Multilateral:
    • President Trump has informed Congress of a “pocket rescission” plan that will reduce funding for foreign aid and international organizations, including a $29 million cut to World Trade Organization funding.
  • U.S. – Mexico:
    • The U.S. Trade Representative has invoked the Rapid Response Labor Mechanism (RRM) under the USMCA, alleging a pork producer in Sonora, Mexico is denying freedom of association and collective bargaining rights for its workers.

“Today a Highly Partisan Appeals Court incorrectly said that our Tariffs should be removed, but they know the United States of America will win in the end. If these Tariffs ever went away, it would be a total disaster for the Country. It would make us financially weak and we have to be strong.”

—President Trump on Truth Social, responding to federal appeals court decision on tariffs

Tariffs and Bilateral Negotiations

FEDERAL APPEALS COURT IEEPA RULING

  • On Aug. 29, a U.S. Federal Appeals Court issued a decision in which it affirmed the Court of International Trade’s decision that trafficking and reciprocal tariffs imposed by the Trump Administration exceeded the authority delegated to the President by the International Emergency Economics Powers Act (IEEPA).
  • The decision is expected to be appealed to the U.S. Supreme Court.
  • The decision allows for tariffs to remain in place through October 14 to allow time for an appeal.

EU TARIFF DETAILS

Maroš Šefčovič, Commissioner for Trade and Economic Security; Interinstitutional Relations and Transparency
  • The European Commission submitted proposals to implement the EU-U.S. joint statement from Aug. 21.
  • The proposals included details that had not been specified in the Joint Statement, including a list of products subject to tariff elimination and tariff-rate quotas (TRQs).
  • The proposals will now go to the European Parliament and Council for approval under ordinary legislative procedures.
  • In a public comment, EU Commissioner for Trade and Economic Security, Maroš Šefčovič, said, “The EU-US deal goes beyond a step toward stability. It lays the groundwork for closer cooperation on shared challenges, turning common goals – such as those related to steel – into real results. It is in our mutual interest that both sides honour their commitments and ensure full implementation of the agreement. I particularly welcome the reduction of tariffs on cars and car parts to 15%, effective August 1, which will help our automotive industry stay competitive on the global stage.”

INDIA TARIFFS TAKE EFFECT

  • The additional 25% tariff the Trump administration threatened on imports from India due to the country’s purchases of Russian oil officially took effect on Aug. 27.
  • U.S. annual imports of agricultural and related products from India have increased from approximately $5.3 billion in 2020 to $6.2 billion in 2024.
  • In recent years, the United States imported $2.6-3.3 billion in seafood products and about $400 million in spices from India. 

DE MINIMIS EXEMPTION ENDED

  • On Aug. 29, the Trump administration ended the de minimis exemption, which allowed duty-free imports of packages worth less than $800.
  • The administration linked the fentanyl public health crisis to smugglers exploiting the de minimis loophole for shipping narcotics and precursors.
  • Shipment tariffs will either be based on the value of the package (ad valorem) or will be $80 to $200 (specific to the country of origin).

Trade Data

USDA RELEASES QUARTERLY TRADE OUTLOOK

  • The USDA Economic Research Service (ERS) published its quarterly Outlook for U.S. Agricultural Trade, which showed a record trade deficit for fiscal year (FY) 2025. The FY2025 deficit forecast was reduced from earlier estimates made in May.
  • The report projected a $41.5 billion deficit in FY2026, which is smaller than the $47.0 billion deficit currently projected for FY2025.
  • Exports for 2026 are projected to decrease by $4 billion, while imports are projected to decrease by $9.5 billion.
  • USDA maintained or reduced its FY2026 imports projections from FY2025 levels for all product categories, except for cocoa, cocoa products, coffee, and coffee products.
  • For the second time, ERS did not provide a narrative contextualizing the data in the Outlook as had previously been done, so the basis for the projections and modifications can only be inferred by assessing estimates by product and country.

Multilateral

TRUMP CUTS FUNDING THROUGH POCKET RESCISSION PACKAGE

  • President Trump has informed Congress of its plan further reduce funding for foreign aid and international organizations using the Impoundment Control Act (ICA).
  • This “pocket rescission package” includes a reduction of $29 million to the World Trade Organization, $45 million to the Pan American Health Organization (PAHO), and U.S. contributions to the Organization for Economic Cooperation and Development (OECD), among other cuts.
  • Some U.S. legislators are speaking out against the maneuver, asserting that this is beyond the authority provided in the ICA.

U.S. – Mexico

USTR RAPID RESPONSE MECHANISM AGAINST MEXICAN PORK PRODUCER

  • The U.S. Trade Representative has invoked the Rapid Response Labor Mechanism (RRM) under the USMCA to request Mexico review whether workers at Alimentos Grole, S.A. de C.V. – a pork producer in Sonora, Mexico – are being denied freedom of association and collective bargaining rights.
  • The petition, submitted by current and former workers with the SITIES union, alleges worker intimidation, dismissals, and the creation of a company-aligned internal union to discourage union activity.
  • Mexico has 10 days to agree to conduct an internal review and, if so, 45 days to remediate. The United States has suspended liquidation of unliquidated goods from the facility.