U.S. Heading to Record Ag Trade Deficit | Market Intel – American Farm Bureau Federation

Report on U.S. Agricultural Trade and Sustainable Development Goals (SDGs) – May 2025

Overview of U.S. Agricultural Trade Deficit

Trade policy decisions made in Washington, D.C., significantly impact farmers and ranchers nationwide. The U.S. agricultural trade deficit is projected to widen in 2025 due to shifting global trade dynamics and rising import demand. According to the USDA’s Outlook for U.S. Agricultural Trade: May 2025 report, from January through April 2025, the United States imported $78.2 billion in agricultural products while exporting $58.5 billion, resulting in a $19.7 billion deficit—the largest ever recorded for the first four months of a year. This trend signals that the 2025 deficit may surpass previous records.

Historical Context and Forecast

• After decades of consistent trade surpluses, the U.S. agricultural sector has experienced a trade deficit since 2022.
• In fiscal year (FY) 2023, the trade gap reached $16.7 billion.
• In FY 2024, the deficit nearly doubled to $31.8 billion.
• USDA forecasts the FY 2025 deficit will rise to approximately $49.5 billion, marking the largest agricultural trade imbalance on record.

Understanding the Trade Mix and Its Implications for SDGs

Several factors drive the trade deficit, including changing consumer demand, currency strength, and new market opportunities such as the U.S.–U.K. trade agreement. Understanding these drivers is essential to support U.S. farmers, ensure a strong agricultural economy, and protect U.S. food security, aligning with SDG 2 (Zero Hunger) and SDG 8 (Decent Work and Economic Growth).

1. Imports to Ensure Year-Round Availability:
   • The U.S. imports products like coffee, which is almost entirely imported due to limited domestic production.
   • Imports complement domestic production, such as oranges, which are consumed year-round through a combination of U.S.-grown and imported fruit.
2. Consumer Preferences and Trade:
   • Horticultural products—including fruits, vegetables, nuts, wine, and other alcohols—are projected to account for approximately 49% of total agricultural imports by value in FY 2025.
   • This reflects consumer demand for variety and year-round availability, supporting SDG 12 (Responsible Consumption and Production).

Challenges Affecting U.S. Agricultural Exports

Despite record export values in 2022, U.S. agricultural exports have declined due to several factors:

• A strong U.S. dollar and high labor costs have made American goods more expensive for foreign buyers, weakening global competitiveness.
• Trade barriers, retaliatory tariffs, and ongoing disputes have limited access to key markets such as China and the European Union.
• Foreign buyers increasingly turn to lower-cost suppliers like Brazil and Argentina.

These challenges emphasize the need for the United States to pursue new trade agreements and strengthen existing ones, supporting SDG 17 (Partnerships for the Goals) by fostering international cooperation and trade partnerships.

U.S.–United Kingdom Trade Agreement

In May 2025, the United States and the United Kingdom announced a new trade agreement aimed at expanding agricultural market access. Key points include:

• The UK is a high-value export destination for U.S. agriculture, with exports totaling approximately $2.18 billion in 2024.
• Leading exports to the UK include horticultural products such as wine and tree nuts, along with ethanol fuel.
• The agreement removes key UK tariffs, including a 20% duty on U.S. beef and tariffs on American ethanol, creating new export opportunities.
• U.S. products must comply with UK standards, which prohibit hormone-treated beef and chlorine-washed poultry.
• The deal grants British exporters a limited quota to send beef to the U.S. tariff-free.
• While not a full free trade agreement, it is a meaningful first step toward broader negotiations.

This agreement supports SDG 8 (Decent Work and Economic Growth) and SDG 17 by enhancing trade relations and market access.

Conclusion and Recommendations

The USDA’s May 2025 forecast highlights the largest agricultural trade deficit in U.S. history. This growing gap underscores the importance of:

• Resolving current trade disputes.
• Expanding export markets.
• Protecting fair trading conditions for American farmers and ranchers.
• Diversifying export destinations through agreements like the U.S.–U.K. deal to reduce exposure to market disruptions.
• Building reliable, science-based access to global markets for the long term.

Strong trade policy is essential for farm profitability and aligns with multiple Sustainable Development Goals, including SDG 2 (Zero Hunger), SDG 8 (Decent Work and Economic Growth), SDG 12 (Responsible Consumption and Production), and SDG 17 (Partnerships for the Goals).

1. Sustainable Development Goals (SDGs) Addressed or Connected

1. SDG 2: Zero Hunger
   • The article discusses agricultural trade, food supply stability, and food security, which are directly related to ending hunger and ensuring access to sufficient and nutritious food.
2. SDG 8: Decent Work and Economic Growth
   • Trade policies impacting farmers and ranchers, labor costs, and economic competitiveness relate to promoting sustained economic growth and decent work.
3. SDG 12: Responsible Consumption and Production
   • The article highlights consumer demand for year-round availability and the role of imports complementing domestic production, implicating sustainable consumption and production patterns.
4. SDG 17: Partnerships for the Goals
   • The discussion on trade agreements, such as the U.S.–U.K. trade deal, reflects the importance of global partnerships to achieve sustainable development.

2. Specific Targets Under the Identified SDGs

1. SDG 2: Zero Hunger
   • Target 2.3: By 2030, double the agricultural productivity and incomes of small-scale food producers.
   • Target 2.4: Ensure sustainable food production systems and implement resilient agricultural practices.
   • Target 2.a: Increase investment in rural infrastructure, agricultural research, and trade policies that support food security.
2. SDG 8: Decent Work and Economic Growth
   • Target 8.2: Achieve higher levels of economic productivity through diversification, technological upgrading, and innovation.
   • Target 8.3: Promote development-oriented policies that support productive activities and decent job creation.
3. SDG 12: Responsible Consumption and Production
   • Target 12.2: Achieve sustainable management and efficient use of natural resources.
   • Target 12.3: Halve per capita global food waste at the retail and consumer levels.
4. SDG 17: Partnerships for the Goals
   • Target 17.10: Promote a universal, rules-based, open, non-discriminatory, and equitable multilateral trading system.
   • Target 17.11: Increase exports of developing countries, including agricultural products.
   • Target 17.16: Enhance global partnerships for sustainable development.

3. Indicators Mentioned or Implied to Measure Progress

1. Trade Deficit and Export/Import Values
   • The article provides data on U.S. agricultural imports and exports values (e.g., $78.2 billion imports vs. $58.5 billion exports Jan-Apr 2025), which can be used as indicators to measure trade balance and economic performance (related to SDG 8 and SDG 17 targets).
2. Market Access and Tariff Rates
   • References to tariff removals in the U.S.–U.K. trade deal (e.g., 20% duty on U.S. beef removed) imply indicators related to tariff rates and trade barriers affecting market access (SDG 17 indicators).
3. Product Mix and Consumer Demand
   • Proportion of horticultural products in imports (49% in FY 2025) reflects consumer preferences and food supply stability, which can be linked to indicators measuring sustainable consumption and production (SDG 12).
4. Labor Costs and Competitiveness
   • High labor costs affecting export competitiveness suggest the use of labor cost indices and export volume/value indicators to assess economic growth and productivity (SDG 8).
5. Food Security and Availability
   • Implied indicators include availability of fresh produce year-round and diversity of food products, relevant to food security monitoring (SDG 2).

4. Table: SDGs, Targets and Indicators

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