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)

Introduction

Trade policy decisions made in Washington, D.C., significantly impact farmers and ranchers across the United States. This report analyzes the current trends in U.S. agricultural trade, emphasizing the implications for Sustainable Development Goals (SDGs), particularly those related to economic growth, food security, and sustainable agriculture.

Current State of U.S. Agricultural Trade

1. Widening Agricultural Trade Deficit

   In 2025, the U.S. agricultural trade deficit is projected to widen due to shifting global trade dynamics and increased import demand. According to the USDA’s Outlook for U.S. Agricultural Trade: May 2025, from January through April, the U.S. imported $78.2 billion in agricultural products while exporting $58.5 billion, resulting in a $19.7 billion deficit — the largest ever recorded for this period.

2. Historical Context and Forecast

   After decades of trade surpluses, the U.S. has experienced an agricultural trade deficit since 2022. The fiscal year (FY) 2023 deficit reached $16.7 billion and is expected to nearly double to $31.8 billion in FY 2024. USDA forecasts the FY 2025 deficit to rise to approximately $49.5 billion, marking the largest agricultural trade imbalance on record.

Understanding the Trade Mix and Its SDG Implications

Several factors drive the trade deficit, including 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, maintain a strong agricultural economy, and protect food security (SDG 2: Zero Hunger).

• Imports for Year-Round Access: The U.S. imports products like coffee, which is not widely produced domestically, to ensure year-round availability.
• Complementary Imports: Some imports complement domestic production, such as oranges, which are consumed domestically in winter and spring, while imports fill off-season demand.
• Consumer Preferences: High demand for diverse, consumer-ready products drives imports, reflecting SDG 12 (Responsible Consumption and Production).

Horticultural Products and Trade Balance

In FY 2025, horticultural products—including fruits, vegetables, nuts, wine, and other alcohols—are projected to account for approximately 49% of total agricultural imports by value. This trend highlights the role of trade in maintaining a stable food supply and meeting consumer preferences (SDG 2 and SDG 12). Meanwhile, U.S. exports largely consist of lower-value bulk commodities, contributing to the growing trade imbalance.

Challenges Affecting U.S. Agricultural Exports

1. Declining Export Values

   After record highs in 2022, U.S. agricultural export values have declined due to a strong U.S. dollar and high labor costs, which reduce global competitiveness (SDG 8: Decent Work and Economic Growth).

2. Trade Barriers and Market Access

   Trade barriers, retaliatory tariffs, and ongoing disputes have limited access to key markets such as China and the European Union. Some foreign buyers are turning to lower-cost suppliers like Brazil and Argentina, underscoring the need for new and strengthened trade agreements (SDG 17: Partnerships for the Goals).

U.S.–United Kingdom Trade Agreement

In May 2025, the U.S. and the U.K. announced a trade agreement aimed at expanding agricultural market access. The U.K. is a high-value export destination, with $2.18 billion in U.S. agricultural exports in 2024. Key features include:

• Removal of key U.K. tariffs, including a 20% duty on U.S. beef and tariffs on American ethanol, benefiting beef and corn producers.
• Compliance requirements with U.K. standards, such as prohibitions on hormone-treated beef and chlorine-washed poultry.
• A limited quota allowing British exporters to send beef to the U.S. tariff-free.
• The agreement is a foundational step toward broader negotiations, promoting fair trade and economic growth (SDG 8 and SDG 17).

Conclusion and Recommendations

The USDA’s May 2025 forecast indicates the largest agricultural trade deficit in U.S. history, emphasizing the urgency to:

• Resolve existing trade disputes to protect fair trading conditions for American farmers and ranchers (SDG 16: Peace, Justice, and Strong Institutions).
• Expand export markets and diversify trade partnerships to reduce vulnerability to market disruptions (SDG 17).
• Support sustainable agricultural practices and food security by balancing imports and exports in line with consumer needs and environmental considerations (SDG 2 and SDG 12).
• Leverage trade agreements like the U.S.–U.K. deal to enhance market access and competitiveness.

Strong, science-based trade policies will be critical to closing the trade gap and ensuring long-term farm profitability, contributing to the achievement of multiple Sustainable Development Goals.

1. Sustainable Development Goals (SDGs) Addressed or Connected

• SDG 2: Zero Hunger – The article discusses agricultural trade, food supply stability, and food security, which are central to ending hunger and promoting sustainable agriculture.
• SDG 8: Decent Work and Economic Growth – Issues related to trade policy, labor costs, and market competitiveness affect economic growth and employment in agriculture.
• SDG 12: Responsible Consumption and Production – The article highlights consumer demand for year-round availability and the balance between imports and domestic production, relevant to sustainable consumption.
• SDG 17: Partnerships for the Goals – The U.S.–U.K. trade agreement and the emphasis on expanding trade partnerships align with strengthening global partnerships for sustainable development.

2. Specific Targets Under Those SDGs Identified

1. SDG 2 – Target 2.3: By 2030, double the agricultural productivity and incomes of small-scale food producers, including through secure and equal access to markets.
   • Implied through the focus on supporting U.S. farmers and ranchers by improving trade conditions and market access.
2. SDG 2 – Target 2.4: Ensure sustainable food production systems and implement resilient agricultural practices.
   • Related to maintaining a stable food supply through trade and imports of horticultural products.
3. SDG 8 – Target 8.2: Achieve higher levels of economic productivity through diversification, technological upgrading, and innovation.
   • Relevant to addressing labor costs and competitiveness challenges in U.S. agriculture exports.
4. SDG 12 – Target 12.2: Achieve sustainable management and efficient use of natural resources.
   • Implied in balancing imports with domestic production to meet consumer demand sustainably.
5. SDG 17 – Target 17.10: Promote a universal, rules-based, open, non-discriminatory, and equitable multilateral trading system under the World Trade Organization.
   • Reflected in the discussion of trade agreements and resolving trade disputes.
6. SDG 17 – Target 17.11: Significantly increase exports of developing countries, in particular with a view to doubling the least developed countries’ share of global exports.
   • Relevant to expanding U.S. export markets and diversifying trade partners.

3. Indicators Mentioned or Implied to Measure Progress

• Trade Deficit Value (USD) – The article provides specific figures on the agricultural trade deficit ($19.7 billion Jan-Apr 2025, projected $49.5 billion FY 2025), which can be used as an indicator of trade balance progress.
• Export and Import Values by Product Category – Values of horticultural imports (49% of total agricultural imports) and exports to specific markets (e.g., $2.18 billion exports to the UK) serve as indicators of trade composition and market access.
• Tariff Rates and Trade Barriers – Changes in tariffs (e.g., removal of 20% duty on U.S. beef in the UK) are indicators of trade policy impact on market access.
• Market Access and Trade Agreements – The existence and scope of trade agreements (such as the U.S.–U.K. deal) indicate progress in partnerships and trade facilitation.
• Labor Costs and Competitiveness – Mention of high labor costs affecting export competitiveness implies the use of labor cost indicators in economic performance assessment.

4. Table of SDGs, Targets, and Indicators

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