OMAHA (DTN) -- A week out from Donald Trump's inauguration, uncertainty looms over trade with Canada and Mexico as Trump and leaders from all three countries are warning about what's to come.

Trump has repeatedly said he would place tariffs as high as 25% on both countries, which would threaten the U.S.-Mexico-Canada Agreement (USMCA) negotiated during Trump's first term.

"I think one thing everyone has learned is to take him seriously, right?" said Joe Glauber, a former USDA chief economist, who is now a fellow with the International Food Policy Research Institute.

Trump also has said he would impose tariffs of 10% on all global imports into the U.S., along with a 60% tariff on Chinese goods.

Just looking at the USMCA, the United States does a combined $1.5 trillion in overall trade with Canada and Mexico.

CORN GROWER: WE DON'T NEED TARIFFS

Illinois farmer Kenneth Hartman Jr., president of the National Corn Growers Association (NCGA), said he's worried about facing another trade war. Looking at 2025, Hartman said corn farmers right now are facing $160 per acre in the red when it comes to planting a 2025 crop with prices where they are now. Hartman said he'd like to see trade agreements without the punitive duties.

"When you look at these corn and soybean prices right now, they are way below the cost of production," Hartman said. "So, we need to have markets to get them back up to where they were a few years ago, especially considering the operating costs we have right now."

He added, "We have a lot of concerns with economics and the last thing we need is to have a tariff where these countries start buying from Brazil and Argentina. I guess that's the big concern."

Hartman noted Mexico is the top market for U.S. corn. And Canada is the top market for U.S. ethanol.

"USMCA is a good agreement. We're hoping we can keep them as customers, especially in these times," he said.

When the USMCA was signed in 2020, "certainty" for agriculture was a repeated theme by backers. U.S. agricultural exports to Canada have since increased $7.5 billion, nearly 36%, from 2019 and sales to Mexico are up $9.1 billion, more than 47%.

A CoBank outlook for 2025 released in December highlighted the potential tariff challenges. Looking back at the 2018-19 trade war, CoBank noted, "U.S. exporters have looked south of the border to fill in lost sales to China, and Mexico has become our largest export market in 2024."

The report added, "A full-blown global trade war would have devastating impacts on U.S. agriculture. Brazil, Russia, Australia, Argentina and others are gearing up to supply our global agricultural customer base -- and this is no exaggeration."

TRADING BARBS OVER TRADE

Trump first announced in late November that he would impose a 25% tariff on all products imported into the U.S. from Canada and Mexico as one of his first executive orders after inauguration on Jan. 20.

In a press conference last week, Trump said he wants to place "substantial tariffs" on both countries. He complained about the trade deficit with Canada, and auto manufacturing there.

"We are not treated well, as you know, by Canada," he said. "Canada is subsidized to the tune of about $200 billion a year, plus other things."

Trump has said he wants to rework the USMCA. During a speech in October to the Detroit Economic Club, Trump said he would formally notify Canada and Mexico about invoking a six-year renegotiation provision in the USMCA once he takes office. He indicated later that week in an interview on FOX that he wanted a better deal for the U.S. auto industry. Also, Trump has said he wants more restrictions against Chinese companies operating in North America as well.

Then Trump began trolling Canada about becoming the 51st state.

Canadian officials cited last week that they have a list of hundreds of U.S. products that would immediately face retaliatory tariffs. While the list was not released, CBC in Canada reported the tariffs would be on steel and aluminum products coming from states such as Michigan and Pennsylvania. Another product on the list was Florida orange juice.

Outgoing Canadian Prime Minister Justin Trudeau, in interviews on CNN and MSNBC, said the talk from Trump about Canada becoming a state is a distraction from consumers looking at the costs of 25% tariffs on oil, gas, electricity, steel and aluminum, as well as lumber and concrete.

"Everything the American consumers buy from Canada is suddenly going to get a lot more expensive if he moves forward with these tariffs," Trudeau said.

While Trudeau has lost popularity in Canada, other politicians are reiterating his stance. Pierre Poilievre, leader of Canada's Conservative Party, also warned the U.S. relies on Canada for 60% of U.S. oil imports and nearly all U.S. liquid natural gas imports.

"Canada is selling oil and gas at a massive price discount to American refineries and LNG plants that are able to massively profit at our expense. It is a rip off. We're ripping ourselves off with this approach," Poilievre said.

If tariffs are imposed, Poilievre suggested Canada would need to start building out pipelines and refineries to export elsewhere. Or cooler heads could prevail.

"Why would we not want to have a North American energy market that enriches us both?" he said.

CPKC: TRUMP YEARS WERE GOOD

The CPKC railroad, announced in 2021 by Canadian Pacific and Kansas City Southern railroads, was set up to be a single North American rail line from Canada down to Mexico. Terry Cunha, a CPKC spokesman, said the two railroads "experienced great success during the first Trump administration" despite tariff disputes. From 2016-2019, CP carloads moving between the U.S. and Canada increased 21%. KCS carloads moving between Mexico and the U.S. increased 38%. Cunha did not say whether tariffs would complicate the rail line's movement, but pointed to the growth after USMCA was created.

"While there was rhetoric and headlines, ultimately free trade in North America increased significantly during the first Trump term and a new free trade agreement was established," Cunha said.

Since the pandemic, investment in nearshoring in Mexico has accelerated, as has trade between the United States, Mexico and Canada, Cunha added. Mexico is now the U.S.'s largest trading partner with Canada right behind.

"The countries are more closely linked than ever and those strong trade ties will remain. KCS and CP were both involved in initial USMCA discussions and the companies grew," Cunha added. "Today, as CPKC, the company that connects all three countries, we will be actively engaged on these issues again."

CANADA AND AG TRADE

The U.S. exported $28.4 billion in agricultural products to Canada in 2023. Through November 2024, U.S. agricultural exports were $26.2 billion, staying on pace with a year earlier.

In 2023, the U.S. imported $40.4 billion in agricultural commodities from Canada. Through November 2024, that number stood at $37.7 billion, up 1% from a year earlier.

U.S. baked goods, fresh vegetables, fruit, ethanol, processed food, dairy products and pet food are all billion-dollar export products to Canada, USDA data highlights.

Canada is the largest export market for U.S. baked goods at $2.8 billion in sales in 2023. Canada was the top market for U.S. vegetables at $1.97 billion.

At $1.74 billion, Canada is the largest buyer of U.S. ethanol, topping all other markets four-fold.

U.S. buyers have brought in 730,409 head of cattle from Canada through the first 11 months of 2024. Most of those cattle go directly to slaughter.

In turn, Canada is the No. 5 market for U.S. beef exports. Through November 2024, the U.S. has exported $824 million in beef to Canada, up 2% from a year ago, according to the U.S. Meat Export Federation.

Canada has sent 3.4 million pigs to U.S. farmers through November 2024, primarily to producers in Iowa and Minnesota.

Turning pigs into pork, Canada is the No. 5 market for U.S. pork through November at $782 million, down 2% from 2023, according to USMEF.

Canada is the No. 3 market for poultry exports at nearly $504 million in 2023, according to USDA.

One key product U.S. agriculture imports from Canada is potash. The U.S. imports more than 90% of potash fertilizer, and 87% of those imports come from Canada. That equates to about 11 million metric tons (mmt) to 12 mmt a year.

MEXICO AND AG TRADE

The U.S. exported $28.3 billion in agricultural products to Mexico in 2023. Through November, ag exports to Mexico for 2024 were $27.7 billion, up 7% from a year ago.

Mexico's agricultural exports to the U.S. topped $45.5 billion in 2023. Through November, Mexico's ag exports to the U.S. for 2024 were $45 billion, up 7% from a year ago.

Mexico is the top market for U.S. corn, pork, poultry, dairy products and wheat.

Corn exports to Mexico are king, valued at just under $5.4 billion in 2023.

For the corn marketing year, which started in September, USDA shows corn sales to Mexico at 7.1 mmt, which makes up nearly 43% of all corn exports. Sales to Mexico were up 13% compared to a year ago.

Pork exports to Mexico are valued at $2.3 billion through November, up 10% from a year ago, according to USMEF reports.

Before the import ban in November, the U.S. had imported more than 1.2 million cattle from Mexico in 2024, according to USDA.

Mexico is the No. 4 market for beef exports. Through November 2024, the U.S. has exported $1.2 billion in beef to Mexico, up 14% from last year.

Mexico was the top market for poultry exports in 2023 at $1.26 billion, according to USDA.

COSTS TO CONSUMERS, FARMERS

With Mexico as the top supplier of fruits and vegetables to the U.S., consumers would see higher prices at grocery stores if tariffs were placed on food.

"A 25% tariff on Canada and Mexico, that would hurt our consumers a lot," Glauber said.

The long-term implications for American farmers likely would be more planted soybean acres in Brazil and more second-crop corn there as well, Glauber said.

"It's almost unthinkable to think what would happen if you were to put a 25% tariff on Mexico at the same time you were putting a 60% tariff on China. You are talking about a really big portion of our grain and oilseed trade that goes to those two countries."

Also see, "RaboResearch: Soybean Prices, Acreage Take a Hit under 'Trump Trade War 2.0,'" https://www.dtnpf.com/…

Chris Clayton can be reached at Chris.Clayton@dtn.com

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