The agricultural trade deficit is not yet under control, but Ambassador Julie Callahan says the Trump administration is making progress and she remains “obsessed” with exporting more United States farm products and getting back to a surplus.
The U.S. Trade Representative’s chief agricultural negotiator said the ag trade deficit stands at a “little over $15 billion” from January through July 2026, according to recently released numbers. Compared to the same time period in 2025, the deficit was $33 billion.
“We have cut our ad trade deficit by more than half, and hopefully by the end of the year we’ll still be under $20 billion,” she said during a virtual appearance at the Flinchbaugh Forum on the Kansas State University campus. “That’s compared to a $44 billion deficit last year.
Callahan said when President Donald Trump left office the first time, “we had a pretty healthy ag trade surplus with the world,” but when Trump entered office in January 2025, our ag trade deficit was more than $6 billion in that month alone. “USDA was projecting more than $49 billion by the end of the year, and so that was an emergency.”
“We’re making progress through new deals and getting commitments from countries,” she explained. However, “It’s like turning the Queen Mary. It’s not going to happen overnight, but we are making progress on improving market access around the world.
Other highlights from her speech:
Tariffs provided leverage
From her decade of work at USTR, Callahan said one constant has been unfair trade barriers erected by trading partners. “We publish what’s called the National Trade Estimate. I call it the ‘Encyclopedia of Bad Behavior’ because it outlines the things that countries do to keep U.S. food and ag out of their markets. What really has changed since January of 2025, is the America First trade policy and the introduction of President Trump’s tariffs. She described the tariffs as a “wake-up call” for our trading partners.
“If you are not treating our farmers and ranchers fairly, you shouldn’t expect to have access to the U.S. market. That really did shake up our global trade relationships and brought trading partners to the negotiating table,” she emphasized.
Sizing up USMCA trade. Callahan underscored the importance of Canada and Mexico for U.S. ag. She said “18% of U.S. ag goes to Mexico, 17% goes to Canada. That said, 60% of Canada’s exports go to the U.S, and 89% of Mexico’s ag exports come to the U.S. So, they rely on us even more than we rely on them in terms of their ag exports.”
When the USMCA entered into force, Callahan said the U.S. had a $3 billion ag trade deficit with Canada. Last year it was up to $11 billion, which she described as “a crazy situation.”
Given Canada’s ban on wine, she said the deficit is up another $1.1 billion. “At the rate the Canadians are going, we will have a bigger ag trade deficit with Canada than we have with Mexico, which is really not okay. We need to make sure we have access to their market and we’re not being taken advantage of.”
Negotiations with Canada
Since the beginning of the second Trump administration, she said Canada, along with China, were the only two countries to retaliate against the U.S. “We had conveyed our concerns (to Canada) over their ban on U.S. wine and distilled spirits. When they were clearly not making progress, we moved forward utilizing Section 338, which allows the United States to take action if a country is unfairly banning our goods, like wine.
She said that got Canada’s attention and prompted new negotiations, while pointing out that Canada “had the best deal of any trading partner before the 338s.”
USTR actually came to a deal that was even better for Canada, she added. “We were pretty confident that this deal would get us to a really good, stable place with the Canadians and the president agreed. Then the Canadian team, came back to D.C. with some additional demands that really were not achievable, and they walked away from the deal. We will see if Canada, changes their tune and comes back to the negotiating table.”
Meanwhile, talks continue with Mexico
The southern neighbor has been “very productive and serious” in our negotiations, Callahan said. “We have a number of issues that we want to work through with them, but we’re quite confident that we’ll be able to come to a really mutually beneficial deal with Mexico and Canada.”
China outlook. The intention with China is to establish a “predictable, more transactional relationship.” She said the U.S. has traditionally had an ag trade surplus with China and ag stakeholders want to maintain access. That was the genesis of two agreements: One in October, where China agreed to purchase 25 million metric tons of soybeans, and in May, when China agreed to $17 billion dollars of additional ag purchases in addition.
“We’re not going to ship two-thirds of our soybeans to China anymore,” Callahan said. “The soybean producers have telegraphed to me they don’t want to over rely on China, but the 25 million metric tons is a good foundation. Likewise, China can meet that $17 billion commitment through purchasing a wide variety of agricultural goods.”
“The intention is to use those commitments as sort of the foundation,” she added.
Editor’s note: Sara Wyant is publisher of Agri-Pulse Communications Inc., www.Agri-Pulse.com.
