Tariffs on feed raw materials: how will they affect us?

Tariffs on feed raw materials: impact, uncertainty and the search for solutions for the livestock sector

The agri-food sector, particularly animal production, is facing a scenario of growing uncertainty due to the imposition of tariffs on key raw materials for feed manufacturing.

A recent “Agrícola Café” session by EDITORIAL AGRICOLA brought together experts on 22 April 2025 to analyse the current situation and its repercussions for feed manufacturers and, by extension, for nutritionists, all poultry meat and egg producers, and ultimately for the consumer, who will be the one bearing the cost of this uncertainty.

The four invited experts were of the highest calibre, namely: Jorge de Saja (Director of CESFAC), Javier Sierra (Agricultural, Fisheries and Food Counsellor at the Spanish Embassy in the USA), José Ramón Freire (Director of AECEC – Spanish Association for the Foreign Trade of Cereals and Analogous Products –) and Lola Herrera (representative of the U.S. Soybean Export Council for Southern Europe).

A chess board in mid-air: the current tariff situation

Javier Sierra described the current situation as a “chess game where all the pieces are up in the air”. The US government has implemented tariffs in a disruptive manner, breaking the rules established over years of negotiation. Although tariffs on the European Union were not a complete surprise, their intensity and speed — especially towards neighbours such as Mexico and Canada — were.

In response to European retaliatory measures against steel and aluminium tariffs, the United States announced a 90-day “pause” on the imposition of reciprocal tariffs on EU products, which could reach up to 20%. During this pause, a negotiating window exists with more than 40 countries.

From the US perspective, it is expected that Europe will continue buying soybean and maize, keep markets open for products such as Californian almonds, and increase imports of dairy and meat products (beef and poultry). These demands, particularly regarding meat products, pose challenges due to differences in quality and food safety standards between the EU and the USA.

The European Union negotiates as a bloc, which gives it strength as an “economic giant” but also entails slowness due to the need for agreement among member states and legal procedures. Although Europe has equipped itself with instruments to respond, its pace is different from that of a country like the USA, which acts swiftly through executive orders.

Direct impact on the sector’s competitiveness

EU tariffs on soybean and maize of US origin have a direct and measurable impact on the competitiveness of feed manufacturers and, indirectly, on livestock operations. José Ramón Freire highlighted that Spain absorbs 50% of the US maize entering the EU and more than 20% of the soybean, meaning that our country bears a significant share of any European measure applied to these raw materials. This directly results in an increase in production costs for the livestock and feed sectors.

Jorge de Saja explained that the impact differs between maize and soybean. Maize has more suppliers in other parts of the world (including Europe) and from other cereals, meaning its potential impact is lower. However, soybean is a raw material that is very difficult to substitute, with far more limited origins (primarily the Americas, with hemispheric seasonal offsets). Soybean requirements for animal feed are fundamental, and here the price increase effect is potentially far greater. For Spain, soybean is strategic because it has virtually no domestic production of alternative protein sources such as sunflower or rapeseed, making it almost entirely dependent on soybean imports.

The increase in costs is already being partially felt. Even though tariffs on whole soybeans were postponed, forward reference prices already rose, generating an additional cost that will eventually be passed on to feed and, from there, to livestock production costs. Animal feed is highly transparent: when raw material prices rise, feed prices rise, and vice versa.

Beyond the direct cost, there is a strategic opportunity cost. Spain is highly efficient at processing and exporting livestock products, particularly pork to Asia (mainly China). At a time when China has imposed even higher tariffs on US meat, Europe, by imposing tariffs on strategic raw materials imported from the USA, is increasing its own livestock production costs. This places us in a worse position to capture a share of the Asian meat market previously held by the United States.

José Ramón Freire warned that if this situation persists, it could jeopardise the competitiveness of other Spanish agri-food sectors (“Brand Spain”) against international competitors, and could even lead to a serious risk of delocalisation of the livestock industry and related sectors.

Price dynamics and supply

Lola Herrera and Javier Sierra agreed that the main driver of rising soybean prices is the conflict between China and the United States. China is the world’s largest soybean importer. China’s tariffs on US soybean (six times higher than before) have effectively removed the American origin from the Chinese market. This diverts Chinese demand towards other origins, primarily Brazil, which has caused Brazilian soybean prices to rise exponentially. Even if Europe does not impose tariffs on US soybean, the effect of the US-China conflict is already pushing global prices higher.

Javier Sierra cited IFPRI models showing that in this scenario “there are no winners”. Soybean is a strategic commodity for the value chain of animal protein production worldwide. With climate change and geopolitical disruptions, adding trade wars between key players (China as importer, the USA as supplier) is detrimental to all.

Trump’s tariffs on raw materials have ushered in an unprecedented era of negotiation and disruption

Regarding supply, the experts conveyed a reassuring message in the short term. The market will remain supplied. The experience of past crises, such as the war in Ukraine, demonstrated the resilience and flexibility of the Spanish import sector in seeking alternative origins. Lola Herrera stated that supply is guaranteed at this moment, albeit at a given price. The price will depend on supply, demand and the role of China. However, future harvests must be closely monitored, as climatic problems could seriously affect medium-term supply.

José Ramón Freire noted that the situation creates a market distortion that is seeking a new equilibrium, implying a loss of global efficiency and competitiveness. This cost increase will be distributed among all actors. Interestingly, the devaluation of the dollar against the euro has partially moderated the tariff impact, since payments are made in dollars and the dollar is worth less.

On the risk to food safety from importing from less regulated origins, the panellists were clear: no risk has been detected from the standpoint of impact on human or animal health. The concern about “food security” in this context refers to supply security and food sovereignty, a need that Europe has felt since COVID and the war in Ukraine, and which is now being reinforced.

The future of EU-US relations and the mistrust generated

The trade dispute is testing the strong relationship between the United States and the European Union. Javier Sierra noted that, although what is at stake (trade deficit) represents only 3% of total EU-US trade, a “wound” and “mistrust” have been created that will take time to heal. The trade relationship is the most intense and important in the world, so a complete breakdown is unlikely, but the pieces on the board will fall in different positions.

Lola Herrera expressed the strange feeling generated by the apparent “animosity” of the current US government towards Europe. She considers the USA to be a friend and believes that reaching an agreement is logical, since Europe is “very powerful”. Jorge de Saja used the family analogy: “we are a family… although there is always a brother-in-law who turns up at Christmas and disrupts everything”. He is not pessimistic in the long term regarding purely commercial and economic relations, given the deep business connections and legal certainty involved.

However, there is greater concern at the geopolitical level. A “very large” vessel has been broken. If someone relinquishes part of their capacity to exert influence, they lose the legitimacy to exercise it. This disruption could have positive readings, such as Europeans becoming more aware of their responsibilities. José Ramón Freire added that the relatively short tenure of governments in Western democracies could lead to a change and a renewed rapprochement.

Seeking alternatives and solutions

Faced with this outlook, the sector is looking for solutions. Jorge de Saja highlighted the great resilience of Spanish feed manufacturers in adapting their formulation matrices, based on co-products and “circular economy” approaches. However, he reiterated the limited capacity to substitute soybean.

Alternative origins are being explored. One example mentioned is Argentinian maize, of excellent quality, but whose importation is hampered by the rigidity of EU legislation (particularly the maximum residue limits for plant protection products not used in Europe). CESFAC, supported by the Spanish Ministry of Agriculture, has requested (and temporarily obtained during the Ukraine crisis) a modification of this legislation, which is 200 times more stringent than international standards. This modification would benefit the entire EU and would allow Argentinian supply to be restored, although it would not resolve the issue of US soybean.

In the long term, innovation opens new pathways. Mention was made of the search for amino acids from alternative sources, marine crops, insect proteins, and the biorefining of maize to concentrate its protein and utilise the remaining energy. Nevertheless, Europe requires 30 million tonnes of protein, and replacing soybean on a large scale is a very long-term objective, comparable to the challenge of fertilisers in the context of Russian dependency.

The lesson from past crises is the need for a broad, diversified and reliable raw material supply. Closing markets or imposing “caps” generates price problems, inflation and disruptions, not only in Europe but also for vulnerable populations in other regions. Lola Herrera emphasised that the market needs to have all origins available (Argentina, Brazil, USA, Ukraine, India, etc.) in order to be competitive. Free trade is crucial, and Spain, with access to origins such as the Black Sea, benefits from it.

Commercial strategy and other key factors

The importance of continuing to develop “Brand Spain” and “Brand Europe” in key markets such as the United States and China was raised. Our European model is built on the export of high-value-added products, and quality is a competitive factor in external markets, particularly in China, where there is growing demand for products that inspire confidence. Javier Sierra stressed that we must do more to build a “European brand” and forge stronger commercial networks to make the European business fabric more resilient. There are also alliances with the USA in areas such as biotechnology (transgenic varieties, CRISPR techniques) and tourism.

The implementation of the EUDR, scheduled from 30 December 2025, already faces logistical and regulatory challenges independent of the tariffs. Jorge de Saja estimated that the EUDR could add an additional cost of €2.5 billion to soybean imported into the EU. European administrations were not ready last year, which led to an early extension, and today there is still a considerable gap before effective compliance can be assured. The tariff situation, by adding uncertainty, could mean that EUDR implementation is not the “priority workstream” for EU institutions at this moment. José Ramón Freire added that the import sector is working intensively to comply with the EUDR, anticipating that there will be no further extension; however, if implementation proves unworkable, the tariff situation could facilitate negotiations for a new postponement, or even lead to the USA interpreting sustainability requirements as trade barriers.

Looking ahead to 2026: Uncertainty and Negotiation

When attempting to summarise the situation in a single word, the experts offered different perspectives:

• Mistrust (José Ramón Freire): There will no longer be the security and confidence that previously existed between markets and actors.
• Unknown (Jorge de Saja): The impossibility of predicting the future scenario.
• Systemic (Lola Herrera): The situation is tied to US policy and could continue as long as that policy does not change, unless it seriously damages the USA itself. It is something that Americans themselves must resolve.
• Negotiation (Javier Sierra): Although the US approach is unilateral, the US president is pragmatic and a dealmaker; some form of agreement is expected, particularly with China, since a scenario of total conflict is harmful to all. The inertia of global trade is immense and will force adjustments.

In the short and medium term, poultry production and the entire livestock and feed sector face a complex scenario of rising direct and indirect costs due to tariffs and, above all, to the disruption of the global soybean market caused by the US-China conflict. Supply appears to be guaranteed in the short term, but at higher and more variable prices. Seeking alternative origins and adapting feed formulations are key strategies, but they require regulatory changes within the EU to be fully effective. Added to this are the challenges of the EUDR and the strategic need to maintain competitiveness in export markets. The relationship with the USA is affected, but the economic and commercial foundations are solid.

In the long term, the outlook is one of negotiation, uncertainty and mistrust.