After weeks of intense global speculation over which duties Trump would impose immediately after being sworn in as U.S. president, news that Trump would take more time on tariffs drove a relief rally in global stocks and a dive in the dollar against major currencies.

Trump mentioned no specific tariff plans in his inaugural address, but repeated his intention to create the External Revenue Service, a new agency to collect “massive amounts” of tariffs, duties and other revenues from foreign sources.

“I will immediately begin the overhaul of our trade system to protect American workers and families,” Trump said. “Instead of taxing our citizens to enrich other countries, we will tariff and tax foreign countries to enrich our citizens.”

Trump added that his policies would make America “a manufacturing nation once again.”

During his election campaign, Trump vowed to impose steep tariffs of 10 per cent to 20 per cent on global imports into the U.S. and 60 per cent on goods from China to help reduce a trade deficit that now tops $1 trillion USD annually.

He said after his November election that he would sign “all necessary documents” upon taking office to impose an immediate 25 per cent import surcharge on imports from Canada and Mexico if they failed to clamp down on the flow of illicit drugs and migrants entering the U.S. illegally.

Such duties would tear up longstanding trade agreements, upend supply chains and raise costs, according to trade experts.

The official, confirming a Wall Street Journal report that cited a summary of Trump’s memo, said the new president will instead direct agencies to investigate and remedy persistent trade deficits and address unfair trade and currency policies by other nations.

The memo will single out China, Canada and Mexico for scrutiny but will not announce new tariffs, the official said. It will direct agencies to assess Beijing’s compliance with its 2020 trade deal with the U.S., as well as the status of the U.S.-Mexico-Canada Agreement, the official said.

A more methodical approach

Some industry groups and trade lawyers in Washington had speculated that Trump would invoke the International Emergency Economic Powers Act, a law with sweeping powers to control imports in times of national emergency, to impose immediate tariffs.

But the forthcoming trade memo signals a more methodical approach that would likely involve trade investigations under other legal authorities such as the Section 232 national security trade law and the Section 301 unfair trade practices statute. Trump invoked these laws during his first term, and probes on steel and aluminum and Chinese imports took months to complete.

“It sounds like maybe he’s been listening to the people telling him that immediate tariffs would really hurt the financial markets,” said William Reinsch, a trade expert at the Center for Strategic and International Studies.

But Reinsch and other trade analysts say they still expect Trump to press ahead with a global tariff early in his administration.

“The universal tariff was a core part of the economic plan he ran on and I think he’s going to do what he said he would,” said Kelly Ann Shaw, a former White House trade adviser during Trump’s first term.

“This is an idea he’s supported for a long time,” Shaw, now with the Hogan Lovells law firm, said in an interview last week.

Past trade playbook

In his 2017-2021 first term, Trump’s administration used investigations to impose tariffs on steel and aluminum imports and launch duties on some $370 billion (C$530.1 billion)  worth of Chinese imports, igniting a tit-for-tat tariff war between the world’s two largest economies.

The U.S. and China ended the conflict in 2020 with a deal for Beijing to boost its purchases of U.S. exports from farm goods to aircraft by $200 billion (C$286.5 billion) annually but never followed through as the pandemic hit. The forthcoming memo indicates that Trump’s administration will try to push China to keep those commitments.

Trump also had threatened to quit the 1994 North American Free Trade Agreement, blaming it for draining U.S. manufacturing jobs to Mexico and prompting a renegotiation of the trade pact with tighter rules of origin for autos and stronger labor and environmental standards.

Trump won a sunset provision in USMCA that will allow him to renegotiate it again in 2026, and the tariff threats against Mexico and Canada are seen by some trade analysts as a gambit to open those talks early.

—Reporting by Steve Holland, Rami Ayyub, Doina Chiacu, David Lawder and Andrea Shalal

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The United States had accused Canada of not meeting obligations under the 2020 Canada-U.S.-Mexico Agreement (CUSMA) to open its market to foreign producers.

The three-person independent panel ruled that Canada had not acted unreasonably. The panel’s report was released on Friday.

U.S. Trade Representative Katherine Tai said in a statement that she was “very disappointed” by the ruling.

“The United States continues to have serious concerns about how Canada is implementing the dairy market access commitments it made in the agreement … we will not hesitate to use all available tools to enforce our trade agreements,” she said.

Trading partners say that although Canada has over the years agreed in a number of deals to allow some dairy market access to foreign firms through a system of tariff-rate quotas, it was in fact improperly allocating most of them to domestic firms.

“Canada is very pleased with the dispute settlement panel’s findings, with all outcomes clearly in favour of Canada,” Trade Minister Mary Ng said in a statement.

Dairy Farmers of Canada president David Wiens, in a separate one-sentence statement Friday morning, said the organization “welcome(s) the decision of the panel.”

In January 2022, an earlier CUSMA panel said Ottawa had violated the accord by not opening up the domestic market enough. Canada then amended its policies.

The CUSMA agreement kept in place Canada’s decades-old supply management system, which restricts domestic production of dairy, eggs and poultry to stabilize incomes of dairy farmers and protect them from import competition with high tariffs.

Canada’s roughly 10,000 dairy farmers form one of the most influential political lobbies. Most farm in Quebec and Ontario, the provinces with the most parliamentary seats.

— Reporting for Reuters by David Ljunggren in Ottawa; includes files from Glacier FarmMedia Network staff.

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The annual meeting of the Canada-U.S.-Mexico Agreement (CUSMA) Free Trade Commission will take place on Thursday and Friday in the Mexican resort city of Cancun, with participation from Tai, Mexican Economy Secretary Raquel Buenrostro and Canada’s Minister of International Trade Mary Ng.

The meeting is required under the rules of CUSMA, which replaced the North American Free Trade Agreement in 2020, for the trading partners to discuss issues related to the trade pact.

A senior USTR official, briefing reporters on condition of anonymity, said the three ministers will discuss the ongoing implementation of CUSMA, which is scheduled for a major review and potential updates in 2026. A new subcommittee created last year on competitiveness and supply chains also will meet to update officials on work to facilitate trade flows during crisis situations and prevent disruptions, the official added.

The official said North American trade irritants that are in dispute consultations or arbitration — and which could ultimately lead to punitive U.S. import duties — are being handled through separate channels. The “primary place” to discuss these issues are in issue-specific consultations started under CUSMA dispute settlement rules, the official added.

These issues include U.S. complaints over Mexican policies to limit use of genetically modified corn imported from the United States, and over Canada’s allocation of dairy import quotas that U.S. officials have said hurts U.S. producers.

These disputes also include the USTR’s long-running consultations with Mexico over its energy policies that fail to meet commitments to open its energy market to outside competitors.

“Those are obviously very important issues that remain important on all levels, so they’re on the top list of priorities,” the official said. “I wouldn’t say that they’re walled off, but certainly the primary space for discussing them is in the actual consultations.”

After a CUSMA dispute settlement panel ruled in January against the stricter U.S. interpretation of the trade pact’s automotive rules of origin, siding with Mexico and Canada, the U.S. was working separately with its two partners to find a solution for “enhancing North American motor vehicle production and jobs,” the official said.

The Cancun meeting also will include discussions on CUSMA’s “rapid response mechanism” for labor rights violations at specific factories. The U.S. has invoked 11 cases under the mechanism since CUSMA was launched, including an investigation at a Goodyear plant in Mexico that is the sixth this year.

The official said the USTR has brought good co-operation from Mexico on the mechanism, which is aimed at improving labour rights at Mexican factories. A senior U.S. labour official separately told Reuters that Mexico needs stronger institutions to protect workers as companies shift supply chains to the southern U.S. neighbour.

— Reporting for Reuters by David Lawder in Washington; additional reporting by Daina Beth Solomon in Mexico City.

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Rob Stewart, Canada’s deputy minister for international trade, wrote Friday to U.S. and Mexican trade officials, formally announcing Canada’s intent to take part in the CUSMA dispute settlement consultations U.S. officials requested earlier this month.

“Canada shares the concerns of the U.S. that Mexico’s measures are not scientifically supported and have the potential to unnecessarily disrupt trade in the North American market,” federal Agriculture Minister Marie-Claude Bibeau and Trade Minister Mary Ng said in a joint statement Friday.

U.S. Ag Secretary Tom Vilsack and Trade Representative Katherine Tai on June 2 announced that Washington would seek dispute settlement consultations, following a round of technical consultations with Mexico in March under the sanitary and phytosanitary measures (SPS) chapter of the CUSMA pact.

Those technical consultations “did not resolve the matter,” Tai said in a statement June 2.

Bibeau and Ng said the dispute settlement consultations cover measures laid out in a presidential decree published by Mexico in February — “namely the ban on use of biotechnology corn in tortillas and dough, the intention to gradually substitute the use of biotechnology corn in all products for human consumption and animal feed.”

The consultations are also meant to address Mexico’s plans for “rejection of applications for authorizations covering the importation and sale of certain biotechnology products,” the ministers said.

Mexico has been discussing such a ban since 2020, citing sustainability, self-sufficiency and the protection of native corn varieties, with the stated aim of ultimately replacing its imports of U.S. yellow corn with domestic non-GMO production and halting the use of glyphosate herbicide.

“We have always been clear that Canada expects our partners to uphold their commitments under CUSMA — including sanitary and phytosanitary measures,” the Canadian ministers said in Friday’s statement.

The federal government, they said, is “committed to science-based decision-making and keeping food, feed and the environment safe, while supporting the ability of our farmers, workers and exporters to succeed in an innovative and sustainable agricultural sector.”

In these consultations, they said, Canada will work toward “an outcome that preserves trade predictability and market access for our farmers and exporters.”

“When a key trading partner such as Mexico does not authorize biotechnology applications for Canadian agricultural exports, this creates an asymmetry in North American regulatory conditions that can lead to trade disruptions,” Stewart said in Friday’s letter to U.S. and Mexican officials.

Mexico’s approach in its decisions “may have a significant economic impact on Canadian producers, developers of innovative agricultural technologies, as well as consequences for trade flows into and out of Canada,” he wrote.

Canada, he added, has “an important systemic interest in ensuring the correct interpretation of the sanitary and phytosanitary (SPS) obligations of CUSMA, namely that SPS measures are based on scientific principles, relevant international standards, guidelines and recommendations, or appropriate risk assessments.”

Also, he wrote, Canada maintains that “SPS measures shall not be more trade-restrictive than required to achieve a party’s appropriate level of protection and shall be applied only to the extent necessary to protect human, animal, or plant life or health.”

The Canada Grains Council, in a separate release Friday, hailed Ottawa’s decision, saying “Mexico’s decision to ban products with a proven record of safety has far-reaching consequences.”

The introduction of Mexico’s decree has “injected uncertainty into North American markets,” CGC vice-president Krista Thomas said, and if the measure is not withdrawn, “it has the potential to trigger food price inflation and undermine food security within the intricate supply chains of North America.”

There have been “some positive signals from Mexico recently” on the matter, the Canola Council of Canada said Friday in a separate statement, but “more formal and substantive assurance is required to provide clarity and certainty about the regulatory approach moving forward.

“Without that, there is concern that similar issues could arise in the future and precedence established for approaches not based on science.”

For its part, the U.S. government “has been clear that it would consider all options, including further steps to enforce U.S. rights under (CUSMA), if Mexico did not return to science- and risk-based biotechnology policies that are in compliance with (CUSMA) commitments,” the USTR said June 2. — Glacier FarmMedia Network

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That word came Oct. 16 from an Australian government source and two China-based cotton traders briefed on the matter.

Relations soured after Canberra accused China of meddling in domestic affairs, and worsened when Prime Minister Scott Morrison sought an independent inquiry over the origins of the coronavirus that emerged last year in the Chinese city of Wuhan.

The first casualty was Australian barley, which in May China imposed anti-dumping and anti-subsidy duties totalling 80.5 per cent on, effectively stopping a billion-dollar trade in its tracks.

China is the biggest buyer of Australian cotton, considered the highest quality of all import origins, and the trade was worth about A$900 million (US$637 million) during the 2018-19 crop year.

The suspension of cotton purchases comes just days after Canberra scrambled to confirm reports of another suspension ordered by China, of coal buys from Australia.

“The millers essentially get a quota they can import, and essentially they’re being told they might not get their quota next year if they buy our cotton,” an Australian government source, briefed by Australian officials in China, told Reuters.

If Chinese millers continue to buy from Australia they could be hit with a tariff of 40 per cent, added the source, who sought anonymity as he was not authorized to speak on the matter.

In an email, Australian Trade Minister Simon Birmingham said the government was “aware of changes in exports conditions” for cotton, and warned China against steps to choke trade.

“Impeding the ability of producers to compete on a level playing field could constitute a potential breach of China’s international undertakings, which would be taken very seriously by Australia,” he said.

China’s embassy in Australia did not immediately respond to requests for comment.

Two China-based cotton traders said many mills had received verbal instructions early this week or the last. The move will hit supply of top cotton grades.

“It’s very supportive to the price of high-grade cotton,” said one trader, adding that this year’s domestic crop included a smaller proportion of high-grade fibre.

China imported about 400,000 tonnes of Australian cotton in 2019, customs data shows.

Some Chinese firms may still use Australian cotton in their mills in Vietnam, added the second trader, while top grades from Brazil and West Africa could be used more in China.

China has said it has also begun an anti-dumping investigation into Australian wine imports.

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The Trump administration has for more than two years been blocking appointments to the top body that rules on trade disputes, which means that after Dec. 10 it will have too few members to function.

The mandates of two of the three Appellate Body’s members end on Dec. 10.

David Walker, New Zealand’s ambassador who chairs the Dispute Settlement Body (DSB), proposed to WTO members that the Appellate Body should be allowed to conclude three cases that have already had hearings, trade officials said. A further 10 pending appeals are to be left in limbo.

However, even that limited case load drew an objection from U.S. ambassador Dennis Shea at the meeting, the officials said.

“We have heard today statements actively encouraging the Appellate Body to continue to break the rules set out in the DSU (Dispute Settlement Understanding). We strongly disagree with this approach and do not consider it to be constructive,” Shea said in a speech, the text of which was seen by Reuters.

“It appears there will be no consensus between members on how to proceed on the Appellate Body by Dec. 10,” he said, voicing disappointment.

The European Union (EU) told the talks that the impasse was undermining the dispute settlement system. China’s delegation said the “illegal blockade” by Washington had resulted in an unprecedented number of pending appeals, trade officials said.

The three appeals for which hearings have been completed are a combined case on Australia’s plain packaging for tobacco products, one on Russian measures to limit imports of railway equipment filed by Ukraine, and another concerning U.S. anti-subsidy duties on paper from Canada.

The proposal would mean that no appeal could be heard in a WTO panel decision on Monday on subsidies for EU planemaker Airbus.

Two appeals brought by the United States will also not be settled.

— Reporting for Reuters by Stephanie Nebehay.

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The United States has blocked appointments of judges to the Appellate Body, throwing the WTO into crisis as it runs out of legal muscle to rule on international trade disputes.

The European Union has made proposals to reform the way the judges work, but U.S. Ambassador Dennis Shea poured cold water on several of them on Thursday, saying appeals judges had “strayed” from what was agreed when the WTO was set up in 1995.

One diplomat from a large developing country said on Friday the United States regretted setting up the appeals system and it was not putting forward any ideas to reform it.

“We have no leverage,” he said. “The other side is flexing its muscles.”

“Moral suasion is all that is left,” said a Geneva-based trade lawyer.

Another trade lawyer and former negotiator for a U.S. ally said various alternatives being put forward were “band-aids.”

“I don’t think there’s anything right now that the other (WTO) members can do. And I don’t think that any of these other band-aid solutions amount to anything,” he said.

A trade lawyer and former staffer on the Appellate Body’s secretariat said the United States was using hard leverage in many areas of trade, with its tariff war and regional trade agreements as well as at the WTO.

The trade experts were speaking at an event organized by the Cato Institute at Geneva’s Centre for Trade and Economic Integration, on condition that the names and affiliations of speakers were not reported.

Attendees included senior officials from the WTO and ambassadors from WTO missions as well as veteran trade lawyers. Organizers said that U.S. officials had been invited to take part but declined.

— Tom Miles is Reuters’ chief correspondent in Geneva.

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After five years of bumper harvests worldwide that depressed crop prices, trading margins are on the rebound. For Archer Daniels Midland, market volatility from the trade disputes, as well as a drought in South America, helped its trading unit report the best first-quarter performance in four years on Tuesday.

ADM and its rivals make money buying, selling, storing and processing crops. With networks of elevators, mills and processing plants around the world, the companies can capitalize on shortages in some geographies and surpluses in others.

Taking advantage of market gyrations could be a salve for ADM and its rivals Bunge and Cargill, as they cope with the risks to exports posed by the wave of trade protectionism, analysts said.

“Longer-term, open and free trade is important for the global grain companies, but the near term uncertainty that the trade issues are causing are creating merchandising opportunities,” said Farha Aslam, food and agribusiness analyst with Stephens Inc.

The company’s trading unit represents a fraction of ADM’s overall business. Following a recent restructure, its origination unit, which includes its trading business, earned $45 million in the first quarter of 2018, representing about six per cent of the group’s operating profit for the quarter (all figures US$).

ADM CEO Juan Luciano remained cautious on the future.

“We continue to closely monitor trade developments both in terms of NAFTA, as well as U.S.-China developments that seem to evolve almost on a daily basis,” Luciano said during an earnings day conference call, referring to negotiations over revising the North American Free Trade Agreement.

Growing trade disputes are disrupting the agricultural supply chain worldwide, from corn buyers in Mexico shifting purchases to Brazil, to ships carrying U.S. sorghum exports turning around after China slapped on hefty tariffs.

Overall, the U.S. exported $138 billion in agricultural products in 2017, according to U.S. Census data.

ADM rival Bunge reported its first quarter results on Wednesday. It did not give details on its trading unit, other than to say that it saw “higher results” in global trading and distribution due to increased margins. A change in the fortunes of its trading unit could help it fend off potential suitors. Bunge has been the subject of takeover talk from Glencore and ADM.

Bunge’s trading operation is a part of the larger agribusiness unit that also includes oilseeds and grain processing. In its fourth quarter results, it said margins for grains trading were “under pressure.”

Just a year ago, ADM was cutting costs and consolidating operations as it struggled with poor earnings. It now expects “significantly improved” results for its wider grain trading operations in the second half, boosted by dry weather affecting crops in Brazil and Argentina, it said on Tuesday.

— Reporting for Reuters by Karl Plume and P.J. Huffstutter in Chicago.

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Any trade war with the U.S. will only bring disaster to the world economy, China’s commerce minister said on Sunday.

The U.S. exports about 25 per cent of the pork it produces. China is the U.S. pork sector’s No. 3 market, according to industry experts.

April hogs closed down 0.175 cent/lb. at 67.675 cents, and May finished 0.775 cent lower at 71.225 cents (all figures US$).

Hogs will become more readily available to packers as moderating temperatures this time of year in the Midwest allow pigs to put on weight faster, a trader said.

The April lean hog contract is in line with the exchange’s March 8 hog index of 67.52 cents, but some worry that price premiums in the deferred months may be unjustified due to supply issues, the trader added.

Pork demand should pick up as retailers wrap up Easter holiday ham purchases and spring grilling season approaches, he said.

Live cattle turn lower

CME live cattle futures reversed some of Friday’s gains, undercut by fund selling and uneasiness about a looming supply increase, said traders and analysts.

April led losers after funds in CME’s livestock markets sold, or “rolled,” that trading month’s long positions mostly into the June contract tied to the Standard + Poor’s Goldman Sachs Commodity Index.

Monday was the fourth of five sessions for the roll process.

April live cattle closed 1.575 cents/lb. lower at 121.55 cents, and below the 10-day moving average of 122.860 cents. June finished 1.025 cents lower at 113.275 cents.

Investors await the sale of slaughter-ready, or cash, cattle in the U.S. Plains that last week traded from mainly $126-$128/cwt. The bulk of cash cattle the week before fetched $126.

Increased packer profits and brisk wholesale beef demand supported last week’s cash prices that this week could face challenges.

“Bigger production is coming at the market,” said U.S. Commodities analyst Jason Roose. Cash prices were recently underpinned by dry conditions in the southern Plains and solid wholesale beef demand, he said.

CME feeder cattle followed live cattle futures lower.

March feeders ended down 0.35 cent/lb. at 142.175 cents.

— Reporting for Reuters by Theopolis Waters in Chicago.

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