The U.S. Department of Agriculture (USDA) has revised its agricultural trade outlook, projecting the trade deficit will fall to $41.5 billion in fiscal year 2026, down from an estimated $47 billion in FY25. While this offers some optimism, the long-term shift from trade surplus to deficit continues to weigh on U.S. agriculture.
Outlook Highlights
-
Exports: USDA raised its FY25 export projection from $170.5 billion to $173 billion, but expects them to slip to $169 billion in FY26.
-
Imports: Imports are projected to drop from $220 billion this year to $210.5 billion in FY26, accounting for most of the narrowed deficit.
-
Soybeans: Soybean exports are forecasted to decline sharply — from $24.2 billion in FY24 to $21.5 billion in FY25, and further down to $18.3 billion in FY26.
China’s Pullback
Soybean growers are facing the toughest hit. USDA’s Economic Research Service projects U.S. ag exports to China will fall from $17 billion in FY25 to just $9 billion in FY26, the lowest level since 2007. For comparison, China purchased $25.7 billion worth of U.S. ag products in FY24.
Economist John Newton of Terrain notes that 80% to 90% of soybean exports to China normally occur between November and April. With no fall orders booked yet, he warns that U.S. exports could struggle to keep pace before Brazilian supplies come online next spring.
Trade Deficit Hits Record Levels
Bloomberg reports that the U.S. ag trade deficit reached a record $28.6 billion in the first half of 2025 alone, marking a historic reversal after decades of consistent surpluses. Much of the decline stems from:
-
Trade wars under President Donald Trump, which drove China to source more crops from Brazil.
-
Limited capacity to expand U.S. crop and livestock production.
-
Rising U.S. demand for imported produce and specialty foods.
Is the Deficit a Problem?
Former USDA chief economist Joe Glauber, now with the International Food Policy Research Institute, cautions that the imbalance may not be as troubling as headlines suggest. The U.S. exports bulk commodities like corn, wheat, and soybeans, while importing products such as fruits and vegetables that can’t be grown domestically.
Still, the shift has real consequences for farm incomes, global market influence, and U.S. trade strategy. Mexico and Canada remain top buyers of U.S. ag goods, while China falls behind the EU, Japan, and South Korea in projected FY26 rankings.
Bottom line: The USDA expects the agricultural trade deficit to narrow slightly in 2026, but U.S. farmers — especially soybean producers — remain caught in the crosshairs of shifting global trade dynamics and political uncertainty.
