Concerns shared with farmers regarding reciprocal taxes.

In less than ten days after the US announced new tariffs earlier this month, prices of agricultural commodities on commodity futures exchanges have fluctuated wildly, and many exported food items domestically have plummeted in price.

Báo Tiền Giang•19/04/2025

Vegetables and fruits seem to have felt the impact of the new tariffs immediately. Photo: NK

Unlike clothing, household goods, machinery, and vehicles, which are only affected when items are scarce on supermarket shelves or inventory levels are low, the impact of the new tariffs only becomes apparent when prices rise. Agricultural products, from fresh produce and vegetables to essential food items, are the opposite – they seem to feel the effects of the new tariffs immediately. With the tariffs looming, futures prices on agricultural exchanges are plummeting, although many exchanges have recovered slightly after the 90-day suspension. The impact is obvious, but whether agricultural prices will rise later depends on factors such as higher production costs, increased transportation, processing, and packaging expenses. A certain time lag is needed; higher prices may not necessarily translate into higher profits!

However, it should be understood that as long as US tariffs remain in place and unclear, as in the case of excluding certain electronic items, such as smartphones and computers, from the reciprocal tariffs announced by the US on April 12th, prices in agricultural markets will remain volatile and negatively impact agricultural production.

Many experts estimate that the value of the US agricultural and related industries in 2023 will be around $1.5 trillion. The impact of retaliatory tariffs from the US could significantly harm American farmers. American agricultural products with strong export potential, such as soybeans, corn, and cotton, may face difficulties when trading partners impose retaliatory tariffs. Approximately 15% of the US corn exported annually could now be stockpiled due to China – the largest importer of US corn – imposing retaliatory tariffs of up to 125%.

The United States is a significant and valuable market for many Vietnamese agricultural products. In 2024, the US was the largest importer of Vietnamese pepper, importing nearly 73,000 tons worth $407.6 million, accounting for 28.9% of Vietnam's pepper exports. It was also the second largest importer of cinnamon, with over 11,000 tons, representing 11.1% of Vietnam's export market share. Furthermore, the US was Vietnam's number one importer of cashew nuts, importing over 180,000 tons in 2024, valued at over $1 billion, accounting for 27% of the market share. Also in 2024, Vietnam's coffee exports to the US reached 6.1% of the market share with 81,500 tons, generating $323 million in revenue.

If we only consider those numbers, some might think the impact is only "minimal." No, the impact is far more profound because many countries in Europe and Asia buy Vietnamese agricultural products to process and export to the US. Many global food processing companies import goods from Vietnam, process them to their quality standards, and sell them under their own brands. Numerous European brands of pepper, cashews, and even coffee sold in American supermarkets use ingredients that are partly or largely sourced from Vietnam.

Therefore, don't be too quick to celebrate the reduction of US tariffs from 46% to 10% on Vietnamese goods, because the purchasing power of other countries may weaken if they are subject to retaliatory tariffs like Vietnam, or to a greater or lesser extent.

Before the imposition of those "unpleasant" tariffs, most agricultural raw materials imported into the US had a 0% tariff rate. Yet, in less than three months, exporting countries had to pay a 10% "counter-tax" calculated on the CIF base price, which is the cost delivered over the ship's rail (FOB) + insurance + freight. For example, if we sell one ton of pepper for $5,000/ton FOB, the buyer in the US would have to add $500, meaning the official price in the US would be $5,500/ton.

With an additional 10%, even the producing and exporting countries themselves would be hesitant to sell, let alone their trading partners (outside the US) who would also have to bear such a tax burden.

Talking about lowering production costs and offering competitive prices... when is the right time to lower them when world prices are always fluctuating erratically and the tax and import/export policies of many countries are not stable at all, as in the case of India, which tightened and loosened its rice export policy, causing rice prices to plummet from high to low.

In a market with so many layers and intermediaries, and so many tiers of fees, Vietnamese farmers and export businesses have long been accustomed to the "resilience" of countless agricultural supply distributors and numerous expenses for transportation and logistics. If this "reciprocal" tax continues to exist, it's uncertain how long it will last!

Faced with difficulties caused by reciprocal tariffs, the North American Coffee Association (NCA) has repeatedly urged the Trump administration not to impose tariffs on raw coffee imported from Central and South American countries. NCA President William “Bill” Murray admitted that “every dollar of coffee-related imports creates $43 in value for the U.S. economy , and coffee supports 2.2 million jobs in the country and is the most beloved beverage in America.” He also hoped this would apply not only to coffee but to many other agricultural products, as the U.S. is a country that exploits the superior added value of many agricultural commodities.

Some French friends reported having to pay 30 euros per kilogram of black pepper, almost 5.5 times higher than the price of black pepper sold by export suppliers. Of course, a one-to-one comparison is impossible because when buying goods and bringing them back to their country, buyers incur significant costs and effort to increase the product's value, and they spend tens of millions of euros/US dollars on marketing to get their imported goods into the most stable and reliable supply chain.

This is how our agricultural importers make money. Of course, no one would be foolish enough to tell the "source" sellers to do that and risk losing their livelihood. But the sellers, who are our farmers, either forget or lack the financial and material resources to do so.

For years, people have been planting and harvesting, only to plant again, clinging to the crop when prices are high and abandoning it when prices are low. In a Japanese lotus field, the owner cultivates the tubers, carefully harvesting and sorting them. Some tubers sell for several hundred dollars per kilogram, while others fetch only a few cents. However, the meticulous food hygiene practices during harvesting, sorting, attractive packaging, and inviting wealthy customers from abroad to sample the product – all contribute to the owner's success and sustainable livelihood.

The US "reciprocal" tariffs have, to some extent, awakened farmers worldwide, including those in Vietnam. This will be a setback, and many other obstacles are lurking for Vietnamese agricultural products. Finding ways to help farmers overcome the difficulties they will face in exporting agricultural products means integrating them into domestic and international supply chains, ensuring their goods reach the right consumers and the right stage of the supply chain. Only then can farmers hope for a more secure livelihood. The joy of a price increase for a short period is not as valuable as living a fulfilling life with the produce of their own farm for generations to come.
Vegetables and fruits seem to have felt the impact of the new tariffs immediately. Photo: NK

Unlike clothing, household goods, machinery, and vehicles, which are only affected when items are scarce on supermarket shelves or inventory levels are low, the impact of the new tariffs only becomes apparent when prices rise. Agricultural products, from fresh produce and vegetables to essential food items, are the opposite – they seem to feel the effects of the new tariffs immediately. With the tariffs looming, futures prices on agricultural exchanges are plummeting, although many exchanges have recovered slightly after the 90-day suspension. The impact is obvious, but whether agricultural prices will rise later depends on factors such as higher production costs, increased transportation, processing, and packaging expenses. A certain time lag is needed; higher prices may not necessarily translate into higher profits!

However, it should be understood that as long as US tariffs remain in place and unclear, as in the case of excluding certain electronic goods, such as smartphones and computers, from the reciprocal tariffs announced by the US on April 12th, prices in agricultural markets will remain volatile and negatively impact agricultural production.

Many experts estimate that the value of the US agricultural and related industries in 2023 will be around $1.5 trillion. The impact of retaliatory tariffs from the US could significantly harm American farmers. American agricultural products with strong export potential, such as soybeans, corn, and cotton, may face difficulties when trading partners impose retaliatory tariffs. Approximately 15% of the US corn exported annually could now be stockpiled due to China – the largest importer of US corn – imposing retaliatory tariffs of up to 125%.

The United States is a significant and valuable market for many Vietnamese agricultural products. In 2024, the US was the largest importer of Vietnamese pepper, importing nearly 73,000 tons worth $407.6 million, accounting for 28.9% of Vietnam's pepper exports. It was also the second largest importer of cinnamon, with over 11,000 tons, representing 11.1% of Vietnam's export market share. Furthermore, the US was Vietnam's number one importer of cashew nuts, importing over 180,000 tons in 2024, valued at over $1 billion, accounting for 27% of the market share. Also in 2024, Vietnam's coffee exports to the US reached 6.1% of the market share with 81,500 tons, generating $323 million in revenue.

If we only consider those numbers, some might think the impact is only "minimal." No, the impact is far more profound because many countries in Europe and Asia buy Vietnamese agricultural products to process and export to the US. Many global food processing companies import goods from Vietnam, process them to their quality standards, and sell them under their own brands. Numerous European brands of pepper, cashews, and even coffee sold in American supermarkets use ingredients that are partly or largely sourced from Vietnam.

Therefore, don't be too quick to celebrate the reduction of US tariffs from 46% to 10% on Vietnamese goods, because the purchasing power of other countries may weaken if they are subject to retaliatory tariffs like Vietnam, or to a greater or lesser extent.

Before the imposition of those "unpleasant" tariffs, most agricultural raw materials imported into the US had a 0% tariff rate. Yet, in less than three months, exporting countries had to pay a 10% "counter-tax" calculated on the CIF base price, which is the cost delivered over the ship's rail (FOB) + insurance + freight. For example, if we sell one ton of pepper for $5,000/ton FOB, the buyer in the US would have to add $500, meaning the official price in the US would be $5,500/ton.

With an additional 10%, even the producing and exporting countries themselves would be hesitant to sell, let alone their trading partners (outside the US) who would also have to bear such a tax burden.

Talking about lowering production costs and offering competitive prices... when is the right time to lower them when world prices are always fluctuating erratically and the tax and import/export policies of many countries are not stable at all, as in the case of India, which tightened and loosened its rice export policy, causing rice prices to plummet from high to low.

In a market with so many layers and intermediaries, and so many tiers of fees, Vietnamese farmers and export businesses have long been accustomed to the "resilience" of countless agricultural supply distributors and numerous expenses for transportation and logistics. If this "reciprocal" tax continues to exist, it's uncertain how long it will last!

Faced with difficulties caused by reciprocal tariffs, the North American Coffee Association (NCA) has repeatedly urged the Trump administration not to impose tariffs on raw coffee imported from Central and South American countries. NCA President William “Bill” Murray admitted that “every dollar of coffee-related imports creates $43 in value for the U.S. economy, and coffee supports 2.2 million jobs in the country and is the most beloved beverage in America.” He also hoped this would apply not only to coffee but to many other agricultural products, as the U.S. is a country that exploits the superior added value of many agricultural commodities.

Some French friends reported having to pay 30 euros per kilogram of black pepper, almost 5.5 times higher than the price of black pepper sold by export suppliers. Of course, a one-to-one comparison is impossible because when buying goods and bringing them back to their country, buyers incur significant costs and effort to increase the product's value, and they spend tens of millions of euros/US dollars on marketing to get their imported goods into the most stable and reliable supply chain.

This is how our agricultural importers make money. Of course, no one would be foolish enough to tell the "source" sellers to do that and risk losing their livelihood. But the sellers, who are our farmers, either forget or lack the financial and material resources to do so.

For years, people have been planting and harvesting, only to plant again, clinging to the crop when prices are high and abandoning it when prices are low. In a Japanese lotus field, the owner cultivates the tubers, carefully harvesting and sorting them. Some tubers sell for several hundred dollars per kilogram, while others fetch only a few cents. However, the meticulous food hygiene practices during harvesting, sorting, attractive packaging, and inviting wealthy customers from abroad to sample the product – all contribute to the owner's success and sustainable livelihood.

The US "reciprocal" tariffs have, to some extent, awakened farmers worldwide, including those in Vietnam. This will be a setback, and many other obstacles are lurking for Vietnamese agricultural products. Finding ways to help farmers overcome the difficulties they will face in exporting agricultural products means integrating them into domestic and international supply chains, ensuring their goods reach the right consumers and the right stage of the supply chain. Only then can farmers hope for a more secure livelihood. The joy of a price increase for a short period is not as valuable as living a fulfilling life with the produce of their own farm for generations to come.