Toplines for Thursday, April 3rd
President Trump's sweeping tariff announcement: Key details and implications...
On Wednesday, April 2, President Donald Trump unveiled an extensive new tariff strategy during a Rose Garden ceremony at the White House. Dubbed "Liberation Day," the announcement marks a significant shift in U.S. trade policy, intensifying global trade tensions and sparking concerns about inflation and economic disruption. They are the realization of a core pillar of Trump’s 2024 campaign. Link to White House fact sheet. Overall, the import tax rate has shot up to 22% in the past couple months, up from just 2.5% in 2024, reaching the highest levels since around 1910. A comprehensive review of yesterday’s tariff announcement can be found in Jim Wiesemeyers's Policy Update.
Early implications of broad-sweeping tariffs…
Markets were risk-off overnight, with nearly every asset except bonds lower. Copper was one of the big losers, despite tariffs not applying to the red metal. The selling in copper can be attributed to the implication of lower global economic growth that traders are anticipating. As it stands, tariffs are expected to reignite inflation in the short term while slowing growth, an occurrence known as ‘stagflation.’ The EU and China have both already announced the plan for countermeasures and many other countries are likely to follow suit. Until those announcements are made, a direct impact to agriculture, specifically agricultural exports, is hard to quantify.
Brazil sugar production to fall…
Brazil’s center-south sugarcane crop in 2025-26 is forecast at 605 to 618 MMT, Jose Nogueira, the chief executive of producers' group Orplana said on Wednesday. That is well below the prior year at 630 to 640 MMT, he said. The sugarcanes crop has been impacted by drought. Brazil crushes most of their sugarcane production, producing ethanol which challenges U.S. corn based ethanol on the world market.
Two tiers of tariffs announced…
President Trump announced two tiers of tariffs. Baseline tariff: A flat 10% tariff on all goods imported into the United States (except Canada and Mexico), effective Saturday, April 5 at 12:01 a.m. ET. The concept of the baseline tariff was to have a level imposed that will keep countries from trying to circumvent the tariffs by trans-shipping goods through other countries to avoid the higher tariffs. Reciprocal tariffs: Higher tariffs targeting nations with significant trade surpluses or restrictive trade practices against U.S. goods. These tariffs will be calculated at approximately half the rate imposed by those countries on American exports and will take effect on Wednesday, April 9, at 12:01 a.m. ET. These tariffs will be additive, meaning they will be imposed on top of existing tariffs already in place.
Export sales and shipments of corn have remained strong despite ongoing and threats of tariffs. Persistent sales and shipments are needed to hit the current USDA export forecast of 2.450 billion bushels, though.
