Source: Ukragroconsult (Ukraine)
The European Commission has declared its intention to enforce retaliatory tariffs on imports of corn and soybeans from the United States, in reaction to the steel and aluminum tariffs imposed by U.S. President Donald Trump.
European Commission President Ursula von der Leyen stated, “Our countermeasures will be rolled out in two phases: the first phase starting on April 1, with full implementation by April 13.”
During the initial phase, the EU will reinstate import tariffs that were put on hold in 2018 and 2020, which includes a 25% duty on U.S. corn imports. The subsequent phase will introduce a new set of measures targeting products originating from the U.S., including soybeans, details of which will be revealed following discussions among member states.
Market analysts indicate that this development poses challenges for U.S. farmers, as approximately 3-4 million tons of corn are exported to the EU from the U.S. each year.
According to a Black Sea market analyst, “The U.S. generally exports around 3-4 million tons of corn to the EU, representing about 4% of total U.S. corn exports, which is 60 million tons per year.”
One analyst pointed out that the tariffs on U.S. soybeans could have an even more significant effect on American farmers, highlighting that around 5-7 million tons of soybeans are sent to the EU annually, making up over 10% of total U.S. soybean exports.
Another trade source remarked, “It will be challenging for U.S. farmers to market crops like corn and soybeans.”
Market participants have differing opinions regarding how the U.S. import duty on corn will impact the EU livestock industry.
Grain analysts suggest that the EU livestock sector may be most severely affected, as farmers predominantly rely on U.S. corn as animal feed. An EU market analyst noted that a tariff on U.S. corn could greatly weaken the livestock sector, which is dependent on imported corn.
“The increased costs from tariffs could diminish the competitiveness of EU livestock products, especially for Spain, one of the largest purchasers of U.S. corn,” the analyst added.
The European Feed Producers Federation also cautioned that the new tariffs are likely to raise the costs of animal feed, negatively impacting local meat and dairy producers.
Analysts believe this situation could force a greater dependence on alternative feed sources or suppliers, potentially raising overall production costs and influencing meat prices.
Despite these concerns, traders remain optimistic, suggesting the impact on corn prices and EU imports will be limited. Many had foreseen the tariffs and had already shifted their supplies to Ukraine, despite the U.S. being the most economical option.
A corn buyer from the Netherlands remarked, “This was already in the pipeline, so it doesn’t alter anything for now.”
Spanish traders expressed that they did not foresee the tariff having a significant impact on corn availability in the market, although it would necessitate sourcing corn from pricier suppliers.
According to a source in the Spanish market, “Currently, the price difference between CIF US and Ukrainian corn in the Spanish Mediterranean is at least $10 per tonne.”
In recent years, the proportion of US corn in the Spanish market has been low as Ukrainian corn has taken a dominant position. Nevertheless, traders indicated that this season has seen a more varied supply, with an increased volume of corn from the U.S. entering Spain.
Market players are anticipating the actual enforcement of the tariff in April to evaluate its ultimate effect on the marketplace. A broker based in Spain commented, “It is meant to be implemented in April, but the EU might delay its introduction once more.”
In Italy, the anticipated impact appears to be minimal since the nation faces restrictions on corn imports from the US due to concerns over genetically modified organisms. However, buyers in Italy are alarmed by the rising premiums associated with South American corn. A buyer from a feed mill stated, “The only issue we have encountered so far is the increase in Brazil’s premium.”
The European Union’s tariffs on corn and soybeans imported from the United States are expected to promote a broader variety of grain sources for the EU, with Brazil and Argentina enhancing their roles as alternative suppliers.
“A notable increase in corn exports from Brazil is occurring, driven by attractive pricing and consistent production levels,” stated a market analyst.
“Brazil, Argentina, and Ukraine are strategically positioned to take the place of U.S. corn in the EU marketplace,” added another industry source.
Nonetheless, experts in the sector caution that despite the competitiveness of these alternatives, logistical hurdles and possible quality variances may hinder their capacity to completely substitute U.S. corn.
An expert in EU grain forecasts that this transition could lead to a search for more sustainable or locally sourced feed options, though achieving this will require time and financial investment.