Rabobank has detailed how the agriculture sector has so far been able to avoid tariff pitfalls on exported produce, thanks in large part to the United States’ trade surplus with Australia.
In the report, titled The impact of US tariffs on global food and agribusiness, Rabobank researchers concluded Australia’s position as a key trading partner leans more in favour of the Unites States.
The report takes a deep dive into the string of new trade tariffs announced
by President Trump during his first weeks in office, and the potential
impact on global food trade.
The report identified nine waves of ‘economical and geopolitical measures’ that have been imposed or are in the process of being implemented:
Colombia – significant impacts for US imports of cut flowers and coffee.
Mexico and Canada – 25 per cent tariffs on most goods, along with a 10 per cent tariff on Canadian energy imports. Could heavily impact energy sector and agricultural supply in North America, increasing costs
China – a 10 per cent tariff imposed on Chinese goods. Retaliatory measures from China have been put in place, but do not yet affect major US agricultural exports like soybeans.
Ukraine – to ensure continued financial and military support, a US-Ukraine deal that would give the US access to Ukraine’s vast supplies of rare earths including lithium is in the final stages.
Panama Canal – President Trump has expressed a desire to take back control of the canal, a crucial shipping route for US trade. This could have significant implications for global maritime agricultural trade
Europe – the EU may face US tariffs on products, including machinery and pharmaceuticals as well as spirits, wine and agricultural goods.
US Agency for Development (USAID) – funding cuts have impacts for agriculture, with the agency, which administers foreign aid and development assistance, having purchased USD $2 billion in US-grown crops in 2024.
Steel and aluminium tariffs – increased US tariffs on steel and aluminium may disrupt supply and increase packaging costs for food and beverage manufacturers.
“President Trump has stated many times that he is especially targeting countries with whom the US holds a heavy trade deficit,” said Vogel.
“China and Mexico are top on that list, but Canada also makes the list of the top 10 countries with whom the US has a trade deficit.
“EU countries also make up a large share as do various Asian economies.”
Australia holds a more favourable trade balance with the United States regarding potential tariff risks
However, the US remains a key market for Australian agricultural exports, including beef, lamb, and wine, the report states.
“Australia’s beef sector has seen the US emerge as its largest buyer in recent months,” said Vogel.
“US tariffs would hurt this trade flow, which accounted for approximately 30 per cent of all Australian beef exports in 2024, the equivalent of 23 per cent of Australia’s beef production, while 23 per cent of US beef imports were supplied
by Australia.
“This made Australia, together with Canada the largest beef exporters to the US, well ahead of Mexico, Brazil, and New Zealand.”
As well as the level of beef export, almost a quarter of all sheep meat exports out of Australia were into the US market.
According to data from Rural Bank, in 2023-24, Australia’s agricultural exports to the United States were valued at $6.8 billion, which was a notable increase from the previous year (+21.2 per cent).
This was largely backed by a rise in beef, lamb, dairy, and wine exports.
Meanwhile, Australia’s next 11 largest export markets all recorded year-on-year declines in value.
However, China remained Australia’s largest export market in 2023-24, building on the record set the
previous year.
Exports to China rose by $331 million (2.0%) to $16.9 billion, following a $3 billion (22.4 per cent) increase in 2022-23.
China accounted for 23.3 per cent of Australia’s total agricultural export value, the highest share since 2019-20.
The increase was primarily driven by the return of barley exports, which surged from zero in 2022-23 to $2.3 billion, making up 69.8 per cent of Australia’s total barley exports.
Cotton and wine exports to China also saw significant gains, increasing by $920.9 million and $376.5 million, respectively.
However, most other major commodities experienced declines in export value to China, with cattle, dairy, and sheep meat seeing the biggest drops.
It’s hoped the agriculture sector will continue to avoid the pitfalls of the current United States tariffs throughout 2025.