Insight Focus
Container rates are soaring due to an import rush. The EU reinstated tariffs on Ukrainian farm goods, amid protests from European farmers. Meanwhile, the US navigates complex trade talks and faces domestic agricultural budget concerns.
Import Rush Fuels Container Rate Surge
Container spot freight rates on Transpacific and Asia-Europe trades saw massive jumps this week as June 1 general rate increases took effect. Shanghai-Los Angeles rates climbed 57% week-on-week to USD 5,876 per 40 foot container, while Shanghai-New York rose 39% to USD 7,164/40ft.
Source: Drewry
Many US importers are rushing to take advantage of the current tariff pause before it closes in mid-July. Asia-Europe routes also surged, with Shanghai-Rotterdam up 32% to USD 2,845/40ft. Carriers have announced additional rate increases for June 15 and July 1, though demand could plummet when Trump administration tariffs potentially resume after the timeout period ends.
US and China Resume Trade Talks
US and Chinese officials resumed trade talks in London on Tuesday, seeking a breakthrough over export controls for rare earths and other critical goods. The talks, led by US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng, focus on China’s suspension of rare earth magnet exports—crucial for electric vehicle motors—which has disrupted global supply chains since April.
The negotiations follow a preliminary Geneva deal last month and come as China’s exports to the US plunged in May. Both economies face pressure from Trump’s tariff policies, which have cost companies billions and rattled global markets.
Following two days of intense discussions in London, US President Donald Trump announced that a deal had been reached, pending final approval from both him and Chinese President Xi Jinping. Under the agreement, China will resume supplying rare earth metals and magnets to US companies, while the US will back away from plans to revoke visas for Chinese students. While details remain limited, officials described the outcome as a framework to implement the Geneva consensus, signaling cautious progress in easing tensions between the two sides.
Source: China’s General Administration of Customs
EU Ends Tariff-Free Trade for Ukraine
On June 6, The EU officially ended the temporary tariff-free trade privileges granted to Ukraine since June 2022, which had supported Ukraine’s war-impacted economy. This move reinstates import limits on key Ukrainian agricultural goods such as grain, corn, eggs, poultry and sugar. These goods will now be subject to tariff quotas set under a 2016 agreement, replacing the previous duty-free regime.
Agricultural exports accounted for about 60% of Ukraine’s total exports last year, with roughly 60% of those destined for the EU—worth an estimated USD 15 billion. A senior Ukrainian lawmaker warned that losing tariff-free access could cost Ukraine up to EUR 3.5 billion (USD 3.99 billion) annually in export revenue.
Source: Eurostat
The end of these privileges comes amid mounting discontent from EU farmers, particularly in eastern Europe and France, who have raised strong concerns that the large influx of cheaper Ukrainian products under the wartime exemptions has disrupted local markets and depressed prices.
For instance, Ukrainian sugar imports surged to over 500,000 tonnes in the 2023/24 season, far exceeding the pre-war quota of 20,000 tonnes. The EU triggered “emergency brakes” to re-impose quotas on several products including sugar and eggs in the past year, in response to surging imports.
Source: USDA
Protests have flared across the bloc, with Spanish farmers gathering in Madrid to protest against cheap grain imports. Last year, French farmers staged widespread protests demanding fairer trade terms, stronger regulatory reciprocity, better traceability, and clearer labelling of imported goods.
The European Commission is now working to negotiate a new trade agreement that balances continued support for Ukraine with the protection of EU farmers’ livelihoods.
EU-Mercosur Deal Sparks Farmer Protests
Concerns over a flooded market have been exacerbated by anxieties over the pending EU-Mercosur trade deal, with French and Spanish farmers warning that both agreements could severely undermine local agriculture. These concerns come as Brazilian President Luiz Inácio Lula da Silva prepares for an official visit to France, where discussions around the stalled EU-Mercosur agreement—finalised in December but still awaiting confirmation—are set to intensify.
French President Emmanuel Macron remains a vocal critic of the deal in its current form, amid mounting pressure from domestic agricultural groups. French industry leaders have urged Macron to rally enough EU member states to block the agreement, citing potentially devastating consequences for sectors like beef, poultry and sugar. Farmers have also flagged concerns over genetically modified grains from Mercosur countries, calling for stronger protections.
Australia, EU Push to Revive Stalled Trade Deal
On the topic of EU trade deals, momentum is building to revive the long-stalled EU-Australia free trade agreement, which collapsed in 2023 over agricultural market access disagreements. The deal is back on the table, driven by escalating US trade tensions and both sides’ desire to reduce reliance on US markets.
Australian Trade Minister Don Farrell and EU Trade Commissioner Maroš Šefčovič held “productive” talks in Paris last week, paving the way for detailed negotiations in Brussels.
Agriculture remains the central sticking point, with Australia pushing for greater beef and lamb access while EU resistance—particularly from France—persists over concerns about further strain on domestic producers. According to the European Australian Business Council, a completed deal is estimated to boost Australia’s GDP by between AUD 4.8 billion and AUD 7.4 billion by 2030.
House Passes Clean Fuel Credit Extension
On May 28, the US House narrowly passed President Trump’s sweeping HR1 — the “One Big, Beautiful Bill” — with a 215-214 vote. The bill includes significant provisions for farmers and ethanol producers, particularly through extending the 45Z Clean Fuel Production Credit by four years.
The US Energy Department followed with expanded eligibility rules, allowing more producers to qualify, including those using corn wet-milling or coal mine methane.
The policy momentum comes as US Farmer Sentiment has climbed to its highest level since 2021, with growing optimism around farm income and export prospects. HR1 now moves to the Senate for further debate.
Proposed USDA Cuts Stir Concern
While US farmers have grown more optimistic about trade and income due to HR1’s biofuels incentives, newly proposed Trump administration budget cuts have stirred concerns about future support.
The administration’s 2026 budget calls for nearly USD 7 billion in USDA reductions, including almost USD 1.2 billion from key farmer-facing agencies: the Farm Service Agency (FSA), Natural Resources Conservation Service (NRCS), and Risk Management Agency (RMA).
Source: USDA
The cuts would sharply reduce conservation and risk management programs, with NRCS funding slashed by USD 800 million and FSA’s budget down by USD 372 million. The USDA justifies the reductions as eliminating waste and reprioritizing services toward market expansion, though the scale of proposed cuts to conservation and disaster programs may test farmer support as budget debates intensify.
US Secures Billions in Vietnam Ag Deals
The Trump administration has ramped up agricultural trade diplomacy across Asia and Europe. In Vietnam, over USD 1.4 billion in agreements were signed for US corn, soybeans and animal feed exports, following the postponement of 46% reciprocal tariffs.
Agriculture Secretary Brooke Rollins met with Italian officials in Rome to push for dismantling EU trade barriers limiting US exports. In India, ongoing negotiations toward a fall 2025 bilateral trade agreement face resistance, with India’s agriculture minister emphasizing protection of domestic farmers before opening markets to US corn and soybeans.
These developments reflect a broader US strategy to diversify export markets and secure new buyers for US agricultural goods.
Santos Port Strike Disrupts Brazil’s Imports
Brazil’s customs auditors announced a new five-day ‘zero clearance period’ at the Port of Santos from June 2-6, with no physical inspections conducted. The action extends a year-long strike that has disrupted logistics at Latin America’s largest port, creating delays for fertiliser imports feeding Brazil’s agricultural sector.
Ship loading at Santos Port in Sao Paulo, Brazil
Santos is also a major export port for agricultural goods, with soybeans, coffee, beef and sugar accounting for around 19% of its throughput.
Under the strike conditions, cargo requiring physical inspection faces extended delays, while most goods cleared automatically remain unaffected. The union demands salary increases and better working conditions, while President Lula’s government attempts to control spending amid fiscal concerns.
Chemical companies warn of rising logistics costs and storage difficulties for perishable goods, with the strike threatening implementation of Brazil’s New Import Process system due in the second half of 2025.
