An already record agricultural trade deficit in the United States is expected to get even bigger, the Agriculture Department said Tuesday.
The U.S. farm trade deficit in fiscal year 2025 is on track to reach $45.5 billion, according to an updated USDA outlook. Government analysts were previously forecasting a $42.5 billion deficit in August.
U.S. agricultural exports have declined since peaking in 2022 as ample supply and slowing demand depress global prices. The trade headwinds have eaten into farmers’ income and are a key driver of expected pressure in the agricultural economy.
Exports are projected to reach $170 billion in fiscal year 2025, up $500 million from the August forecast but still more than 13% below the peak seen in 2022. Meanwhile, imports are expected to reach a record $215.5 billion, $3.5 billion more than the August forecast as the U.S. accelerates purchases of tropical fruits and sugar.
While U.S. producers have been able to modestly increase exports of livestock, dairy, corn and sorghum since the USDA’s August forecast, trade of other major commodities — namely cotton and soybeans — has declined. Crop farmers have been hit the hardest by a decline in global prices and are expected to bear the brunt of the widening trade deficit.
“As so goes the price of some of our key agricultural exports, so goes our total export value, and that also is a big contributor to farm income,” USDA Chief Economist Seth Meyer told the department’s radio news service.
Trade with two of the U.S.’ biggest markets faces additional risks next year as President-elect Donald Trump threatens 25% tariffs on Canada and Mexico. Trade with both countries has soared in recent years, with Mexico replacing China as the top U.S. agricultural market.
The U.S. is expected to export $29.9 billion to Mexico in fiscal year 2025, and a record $29.2 billion to Canada.