Insight Focus
January 2026 saw key shifts in global trade. Tariff threats eased between the US and Europe, the EU finalised a landmark FTA with India, as China met its 12 million tonne US soybean purchase target. At the same time, Arctic cold drove US gas prices higher, while shipping disruptions in the Red Sea highlighted ongoing logistical risks. These developments shaped agricultural, energy and commodity markets at the start of 2026.
Trump Retreats on EU Tariff Threats
President Donald Trump has stepped back from earlier threats to impose tariffs on European allies after talks with Nato leaders produced what he described as a “framework” for future cooperation on Greenland and Arctic security. In the weeks prior, Trump had warned of trade measures against European countries opposing US ambitions over the island, raising the risk of transatlantic trade disruption.
Subsequent statements from the US, Nato, Denmark and Greenland confirmed there is no agreement on American ownership or sovereignty. Discussions are focused on security cooperation, potential investment, and access to strategic minerals, while Denmark and Greenland have ruled out negotiations over territorial control or mineral sovereignty. No formal or written agreement has been released, and Greenland’s government has stressed that it must be directly involved in any negotiations.
The de-escalation has reduced near-term political and trade risk between the US and Europe. With tariff threats withdrawn and no changes to existing defence or trade agreements announced, US–EU agricultural and commodity flows remain unaffected for now.
Landmark EU–India FTA Agreed
The EU and India finalised a broad free trade agreement on January 27 after nearly two decades of negotiations, described by EU Commission President Ursula von der Leyen as the “mother of all trade deals”.
India has excluded sensitive agricultural sectors — including dairy, cereals, poultry, soy meal, and selected fruits and vegetables — from liberalisation, limiting EU export access in these categories. Similarly, the EU maintains tariffs on beef, chicken, sugar, flour, garlic and ethanol to protect domestic farmers.
Source: EU Commission
The deal significantly reduces tariffs on non-sensitive agri-foods such as tea, coffee, spices, seafood and processed foods, and cuts industrial tariffs across machinery, chemicals, pharmaceuticals, and vehicles. Duties on wine, olive oil, and chocolate are also reduced. EU officials project exports to India could double by 2032, saving EUR 4 billion in duties.
The agreement was finalised amid ongoing US tariffs of 50% on Indian exports, imposed last year, which continue to constrain India’s trade options.
US Gas Rallies as Arctic Blast Hits Supply
A severe Arctic blast across the US Northeast and Midwest has pushed natural gas futures above USD 7/mmBtu, the first time since 2022, as heating demand rises and production is disrupted. February delivery contracts settled at USD 6.80/mmBtu, up nearly 70% over the past week.
Source: Barchart.com
Freezing conditions have reduced output in key US shale regions — oil- and gas-producing areas such as the Permian Basin in Texas and New Mexico — where water and liquids in wells freeze. US production has fallen to 108.4 billion cubic feet per day (cf/d), while demand is expected to reach 156 billion cf/d, above the five-year January average of 137 billion cf/d. Lower output could reduce LNG exports, creating a ripple effect in global markets.
As the US is now the world’s top LNG exporter, with two-thirds of shipments going to Europe, Arctic disruptions can affect prices internationally and have short-term impacts on fertilizer production and industrial energy costs.
Natural Gas pipeline during winter
Red Sea Uncertainty Drives Mixed Rerouting Decisions
Shipping group CMA CGM has rerouted vessels on several services around the Cape of Good Hope rather than through the Suez Canal, citing a “complex and uncertain international context.” The move follows renewed regional instability affecting the Red Sea trade corridor. Threats to commercial shipping rebels have resurfaced from Yemeni Houthi rebels, who framed their warnings around potential US military action against Iran. The presence of the USS Abraham Lincoln and other US warships has heightened concerns of escalation, reinforcing CMA CGM’s decision to avoid the canal.
In contrast, Maersk has been making a structural return to the Red Sea–Suez Canal route with its MECL service, which links the Middle East and India with the US East Coast. Westbound sailings depart from Jebel Ali, and eastbound sailings depart from North Charleston, with subsequent trips following the same route. Maersk emphasizes that the return aims to provide faster transit times, potentially cutting a week off Asia–Europe routes and easing freight rates. However, the company has emphasised that any worsening of regional security could prompt contingency plans, including rerouting via the Cape of Good Hope.
The differing approaches highlight ongoing uncertainty in the corridor: CMA CGM remains cautious, while Maersk’s partial return reflects a cautious attempt to resume normal operations under closely monitored conditions.
China Meets US Soy Target, Moves to Ease Canadian Canola Tariffs
China has purchased roughly 12 million tonnes of US soybeans over the past three months, fulfilling a key trade pledge outlined by the US administration. This follows a late-October trade truce that ended a four-month period during which Chinese buyers largely avoided US supplies, reducing US market share from 21% in 2024 to 15%.
Most of the cargoes are slated for the first quarter, with a significant portion expected to enter China’s state reserves. While meeting the target reassures US exporters, China continues to diversify its supply, including sourcing new-crop soybeans from Brazil, where production is steadily expanding.
Source: USDA
Meanwhile, Canada and China reached a preliminary agreement-in-principle to ease trade barriers and strengthen agri-food ties. By March 1, China is expected to lower tariffs on Canadian canola seed to about 15%, down from roughly 85%, while canola meal, lobsters, crabs and peas will be exempt from anti- discrimination tariffs through the end of the year.
These measures follow Canada’s relaxation of tariffs on Chinese electric vehicles, signalling a broader push to normalise bilateral trade. The changes are projected to unlock nearly USD 3 billion in export orders for Canadian farmers, fishers and processors, while also opening opportunities for cooperation in energy, LNG exports and green technology.
These developments showcase China engaging strategically with North American suppliers to secure key food and agricultural products, while North American countries are pursuing targeted access to China’s massive market.
In Other News:
EU-Mercosur Deal Signed: The EU-Mercosur agreement was finally signed in Asunción on January 17, following nearly two decades of negotiations. The deal cuts tariffs on most goods, improves market access for European exports, and includes safeguards for sensitive agricultural products. Beyond trade, it establishes frameworks for political dialogue and broader cooperation, marking a step toward closer economic and strategic ties between the EU and Latin America.
China Pledges Support for Beef and Dairy Sector: China’s agriculture ministry announced measures to stabilise the beef and dairy industries, which are facing a supply glut. Policies have helped beef farming return to profitability and reduced losses in dairy, but production stability remains a challenge. The ministry also pledged increased credit support to strengthen these sectors.
UK Farmers Protest: UK farmers expressed continued dissatisfaction with trade and tax policies, staging a tractor blockade at the Port of Felixstowe to protest cheap lower-standard imports and inheritance tax. The protest caused minor disruption, while the government raised the farmland inheritance tax threshold and launched the Farming and Food Partnership Board. Similar actions also took place at Lidl distribution centres nationwide.
Port of Felixstowe
