From the Desk of the CEO: December 2024

Dear Food Export Community, 

The 2024 election has brought renewed attention to trade policy, with Donald Trump returning to the presidency and signaling potential shifts in tariffs, trade negotiations, and USDA priorities. For those of us in the food and agriculture sectors, these developments highlight both the risks and opportunities that come with change.

Trade is more than an economic activity—it’s a cornerstone of rural communities, small- and medium-sized enterprises (SMEs), and the broader U.S. economy. As we navigate this evolving landscape, our collective challenge is to approach it with resilience and strategy, ensuring American food and agricultural products thrive in global markets.

Understanding the Impact of Tariffs

Tariffs are expected to remain a central feature of U.S. trade policy under this administration. Historically, the food and agriculture sector has faced disproportionate impacts from tariffs:

• Retaliation hits hard: During previous trade disputes, retaliatory tariffs from key markets, including China and the European Union, specifically targeted American agricultural products. A report by the USDA estimated that U.S. agricultural exports subject to retaliatory tariffs declined by $27 billion annually between mid-2018 and the end of 2019, compared to pre-trade war levels. This led to substantial revenue losses for producers and exporters across a range of products.
• Cost pressures ripple through the supply chain: Tariffs on inputs such as packaging materials and specialized ingredients consistently raise costs for U.S. producers and exporters, reducing price competitiveness in global markets.

While tariffs are often intended as negotiation tools, their short-term effects—reduced market share, price volatility, and increased uncertainty—pose significant challenges for SMEs. This underscores the importance of strategies like market diversification and proactive pricing models to navigate these disruptions.

Navigating Geopolitical Risks

Beyond tariffs, geopolitical tensions continue to shape the trade landscape. Key factors include:

• Global conflicts: Ongoing conflicts in Ukraine and Gaza have disrupted supply chains, increased energy costs, and heightened uncertainty in global markets. According to the International Monetary Fund (IMF), these pressures could reduce global trade volume growth by as much as 1.3% in the coming year.
• Shifting alliances: The U.S. pivot away from multilateral trade agreements in recent years has allowed competitors like the European Union and China to solidify their influence in emerging markets. For instance, China’s Belt and Road Initiative has deepened its trade relationships across Southeast Asia and Africa, while the EU and Mercosur have struck a landmark trading framework.

These dynamics emphasize the need for agility and forward-thinking strategies. Regions like Southeast Asia and South America, which are less affected by current conflicts, offer SMEs opportunities to offset risks while tapping into growing demand. Markets such as Chile, Korea, and Morocco—benefiting from free trade agreements with the U.S.—remain competitive options for American exporters.

Opportunities in Value-Added Agriculture

Despite these challenges, the future remains bright for value-added and consumer-oriented agricultural exports:

• Growth in processed foods: Processed foods now account for 32% of U.S. agricultural exports, up from 28% two years ago, according to data from the USDA Foreign Agricultural Service. This reflects a broader shift toward high-value products that deliver greater economic benefits.
• Consumer demand for quality and sustainability: Buyers in high-income markets increasingly prioritize products aligned with health, wellness, and environmental goals. A 2024 Rabobank report found that sustainability is a top purchasing driver for European and Asian consumers, giving U.S. exporters a competitive edge with their focus on quality and innovation.
• Economic and political impact: Agricultural exports support 1.25 million U.S. jobs, including 773,000 non-farm jobs, according to the USDA Economic Research Service. The electoral map underscores how vital these exports are to rural communities, a reality that will likely influence trade policy moving forward.

Emerging markets in Latin America, Southeast Asia, and, over the long term, Africa and India, offer significant growth potential. SMEs that position themselves strategically in these regions can capitalize on rising purchasing power and expanding middle-class demand.

Preparing for the Future

As we approach 2025, proactive preparation and strategic decision-making are essential. For SMEs, this means:

1. Understanding your product’s HS code: Accurate classification is critical for analyzing tariff regimes and pricing strategies in key markets. Developing a model now will help you adapt as conditions change. Food Export’s resources are designed to assist with this foundational step.
2. Diversifying market opportunities: Expanding into high-growth regions like Southeast Asia and Latin America can offset risks in traditional markets. Evaluating new opportunities in Africa and India offers long-term potential. Food Export programs provide cost-effective, low-risk entry points into these markets.
3. Focusing on value-added goods: High-quality, consumer-oriented products continue to drive demand and deliver higher margins in competitive markets. Food Export’s Branded Program offers critical support by reimbursing SMEs for international marketing efforts.

Food Export’s Proven Value

Since 1969 and 1973, Food Export-Midwest and Food Export-Northeast, respectively, have helped SMEs navigate political transitions, economic shifts, and evolving consumer demands. Our programs consistently deliver extraordinary value: While USDA export promotion programs generally generate $25 in export sales for every program dollar, Food Export achieves closer to $50. This exceptional return reflects the effectiveness of our approach and reinforces the value of these investments for American taxpayers.

While change can feel daunting, it also creates opportunities for those prepared to adapt. Together, we’ll ensure that U.S. food and agricultural products continue to thrive in global markets, driving economic growth and supporting the communities that rely on them.

Warm regards,

Brendan Wilson 

CEO/Executive Director 

Your Input Matters: If there is a topic you wish for me to discuss in this space, let me know. You can reach me at info@foodexport.org. Just put Attn: Brendan Wilson in the subject line.