Trade Policy Update

By: Dalton Henry, USW

Posted: September 8, 2025

Many producers, and organizations that work in trade every day, have found it challenging to keep up with the latest trade discussions and the potential impacts on wheat and other ag exports. With nearly half of all U.S. wheat production being exported, building strong market opportunities and maintaining relationships is extremely important and strong trade policy helps back that. While wheat exports have not faced direct and large impacts due to tariff and trade policy actions, the continued uncertainty does impact our reputation of a reliable supplier – something extremely important in an ever-increasing competitive world market. However, there is opportunity to rethink how we approach trade policy and find opportunities for wheat producers. Dalton Henry, USW Vice President of Policy penned the below article to communicate USW’s strategy during this time of change, focusing on identifying those opportunities. The original article was summarized for space consideration, but the full article can be found at www.uswheat.org.

Finding the Flow: How Does Wheat Navigate Trade’s Changing Reality?

Reading the headlines in any given week this year might give the impression that the U.S. has steered its trade policy into uncharted waters, but the reality is that trade tensions, bilateral deal making and pressure campaigns between governments is hardly new. The pressing question then becomes – how do we find opportunities in the quick-changing trade environment to set the policy stage for market success?

Modern U.S. trade policy was built on the principle of comparative advantage, which assumes two countries benefit from specializing in the production of a good and then trading with each other. In practice, however, trade has always come with a dose of protectionism and management for certain sectors and the argument in favor of these types of agreements isn’t as clear cut as it once was, especially as global competitors have emerged.

Often, once a country makes the decision to open themselves up to U.S. ag imports, they end up making the same offering on a most-favored-nation (MFN) basis. Mexico is one example. The U.S. secured a preferential zero-duty rate for sales of wheat into Mexico as part of NAFTA. Less than 10 years later, that same rate became available to all World Trade Organization (WTO) members, including major competitors for wheat like Argentina and Russia. As a result, Mexico is still the largest customer for U.S. wheat, but the trade advantage is no longer unique to the U.S.

Today, there is increased skepticism in the true power of free trade, so much so that the Trans-Pacific Partnership (TPP) was never even submitted to Congress for a vote.

Instead, there is strong enthusiasm for the negotiated purchase commitments and one-off trade deals that are the current focus of the administration. We can get stuck discussing the good and bad, but the real question is – can we make progress in this environment? The answer is yes. There’s no doubt that the White House’s outwardly chaotic negotiating strategy and repeated tariff cliffs or deadlines have had negative impacts. After all, bulk wheat is purchased two to five months into the future and the impact of retaliatory tariffs or new exorbitant port fees scares global wheat buyers. Still, there are three reasons for optimism.

1. Global trade needed a reset. The WTO did important work for global ag trade and could do more, but the current round of WTO negotiations that started in 2001 has not accomplished any meaningful progress. Many countries perceive that the potential gains from an agreement are outweighed by the benefits of the status quo. An optimist can look at the WTO today and see a future where a new type of global trade could emerge during this tumultuous time, similar to how the WTO was established as a result of shared frustration of trade barriers, import schemes and export subsidies.

2. Purchase commitments open doors for future sales. While generally considered short term, purchase commitments, like those recently secured in Indonesia, Vietnam and Bangladesh, can be a powerful tool alongside USW’s traditional market development work to build familiarity and long-term preference of U.S. wheat. For those benefits to accrue, these purchase commitments need to be seen as binding and in place for multiple years, then it is up to USW and USDA to prioritize work in those countries when planning for trade servicing.

3. Negotiated volumes are the new tariff rate quota. Negotiated volumes for purchases outside of reciprocal or national security tariffs are really just an updated version of tariff rate quotas, a tool as old as free trade itself. Under this tool, a specific quantity of a product can be imported at a lower “in-quota” tariff rate. After the initial shock of the White House’s reciprocal tariff announcement, countries have been eager to find ways to purchase U.S. goods and to negotiate access, including specific volumes for key products. Admittedly, this process is messy, but it is a way for countries (including the U.S.) to open their markets to some level of additional goods, while providing protection against a surge of imports that could threaten or upend key domestic industries.

The coming years are likely to continue to be uncomfortable for those of us in trade-dependent industries. Still, there can be light in this transition. We can bemoan the current U.S. trade policy for what it is – uncertain. Or we can engage and be part of the effort to find opportunities – both in the near term and to prepare for the trade policy work of the future.

For our part, the guiding star of USW’s work since the organization’s inception remains the same – looking for opportunities for America’s wheat farmers in whatever form they may take.