USDA Projects Ag Trade Deficit Will Fall to $41.5 Billion in 2026

Agri-Pulse’s Philip Brasher reported that “USDA’s quarterly trade outlook lowered the projected trade deficit for fiscal 2025 to $47 billion from the $49.5 billion estimated in June. The deficit is projected to drop to $41.5 billion for fiscal 2026, which starts Oct. 1, because U.S. ag imports are expected to fall even more than exports. The estimated deficit for FY26 would still be higher than FY24’s $32 billion.”

“USDA raised its estimate for FY25 exports from $170.5 billion to $173 billion, but projected them to decline to $169 billion for FY26. Imports are projected to drop from $220 billion this year to $210.5 billion in FY26,” Brasher reported. “Soybean exports are expected to drop from $21.5 billion in FY25 to $18.3 billion for FY26, down from $24.2 billion in FY24.”

“Soybean growers are being especially hard hit by Trump’s simmering trade war with China; the Chinese have yet to put in an order for this fall’s soybean crop,” Brasher reported. “ERS projects U.S. ag exports to China will drop from $17 billion in FY25 to $9 billion in FY26. As recently as FY24, China imported $25.7 billion worth of U.S. ag commodities.”

“Mexico and Canada will remain the top two U.S. ag export markets in FY26, while China drops behind the European Union, Japan and South Korea, according to the forecast. The $9 billion in exports to China estimated by USDA would be the smallest amount of exports by value to the Asian nation since 2007, said economist John Newton, executive head of Terrain,” Brasher reported. “‘I certainly think this forecast could change if an agreement were to be reached, but know that 80% to 90% of soybean exports to China occur between November and April and with no purchases on the books there would be some catching up to do before exports from Brazil ramp up next spring,’ Newton said.

Ag Trade Deficit Reached Record High in First Half of 2025

Bloomberg’s Gerson Freitas Jr and Ilena Peng reported earlier this month that “the US agricultural trade deficit hit a record high in the first half of 2025, underscoring the continued decline of American farmers’ long-dominant role in global exports amid President Donald Trump’s trade wars. The value of agricultural exports trailed that of imports by $4.1 billion in June — a gap 14% wider than a year earlier — pushing the sector’s deficit to a staggering $28.6 billion for the first six months of the year, according to data released Thursday by the US Department of Agriculture.”

“The widening deficit marks a historic reversal for the US agricultural sector, which for the past five decades had consistently run major trade surpluses — even serving as a key foreign policy tool during the Cold War,” Freitas Jr and Peng reported. “The shift in fortunes began during President Donald Trump’s trade war with China in his first term, with the initial annual deficits recorded in 2019 and 2020. More followed, with negative flows seen over the past three years.”

“Limited capacity to further expand crop and livestock production and Americans’ growing appetite for imported produce have helped erode the balance. In addition, Trump’s trade wars have played a role, pushing China — the world’s largest crop importer — to rely more heavily on Brazil for its supplies,” Freitas Jr and Peng reported.

Is an Ag Trade Deficit Cause for Concern?

AgWeb’s Michelle Rook reported that “the trade deficit is one of the main reasons President Trump has given for why he’s imposing tariffs and working on new trade deals. But former USDA chief economist Joe Glauber, who is now a senior research fellow with the International Food Policy Research Institute, says the trade imbalance is not as alarming as it looks on the surface.”

“He says that’s partly because the U.S. imports many products it can’t grow — like seasonal produce,” Rook reported. “‘We kind of define ‘What are agricultural exports?’ and ‘What are agricultural imports?’ Glauber says. ‘They’re very different in one sense. In fact, we export a lot of bulk commodities like corn, wheat and soybeans and import a lot of fresh fruits and vegetables. And there are obviously some products that compete against each other, but by and large, we’re importing and exporting very different things.'”