The USDA quarterly Outlook for U.S. Agriculture Trade projects the trade deficit is to hit a record $45.5 billion in fiscal 2025. Imports are expected to surge by $9.3 billion while exports decline for the third consecutive year. Lower commodity prices factor into the decline.

Imports are forecast to reach $215.5 billion with horticultural products and processed foods leading the increase. Mexico and Canada account for 43% of U.S. food trade. They are the largest partners, while China has fallen to the third-largest buyer of U.S. food exports.

President-elect Donald Trump proposed a 25% tariff on goods from Mexico and Canada. This has sparked warnings from officials about potential economic repercussions. U.S. agricultural trade remains largely tariff-free under the USMCA, but concerns over additional tariffs on Chinese imports persist. Previous Sino-U.S. trade tensions caused a 6% drop in agricultural exports. This was offset by $23 billion in aid to farmers.

The strong dollar is boosting imports while making exports less competitive, with total U.S. agricultural exports forecast at $170 billion. This is down from a 2022 peak of $196.1 billion.

Read more from the USDA quarterly Outlook for U.S. Agriculture Trade here.