Insight Focus
As the August 8 US tariff deadline approaches, many countries still lack a deal. The US is continuing to exert pressure even as the IMF warned global tariffs and elevated uncertainty are weighing on the global economy. There has been yet another development in the saga over the sale of the Panama Canal ports by CK Hutchison.
Global Economic Growth Falters
In a new report, the IMF has projected slower global GDP growth for 2025 and 2026 than 2024 due to the effects of tariffs and elevated uncertainty. While it expects global inflation to fall, US inflation will remain above target.
Source: IMF
In the lead up to the August 12 expiration of a 90-day extension on China-US tariffs, talks are taking place in Stockholm to agree another extension. President Trump would have to approve this extension. As it stands, China would be the most impacted if the deadline lapses, with tariff rates at around 55%, while China’s retaliatory tariffs would be between 32% and 34%.
The deadline for the rest of the world is August 8, when those without a deal will face tariffs of up to 50%.
The US president has also threatened the EU that he will increase the 15% tariff currently on the table to 35% if the EU does not commit to investing at least USD 600 billion in the US and purchasing USD 750 billion of US energy.
And India, which initially thought it would emerge relatively unscathed from the threat of tariffs due to President Trump’s close relationship with President Modi, is also facing the prospect of 25% tariffs. The US president has threatened a further increase if the South Asian country does not stop buying Russian oil. India has become a major buyer of the commodity.
President Modi hit back, saying India began importing from Russia because “traditional supplies were diverted to Europe after the outbreak of the (Russia-Ukraine) conflict”. However, President Trump insists that India is profiteering, purchasing sanctioned Russian oil for a lower price and selling for a profit on the international markets.
Another Setback for Panama Canal
The Panama Canal is still steeped in challenges related to global geopolitics. The deadline of July 27 for the deal has now passed without resolution and the Panama Ports Company (PPC), which operates the Balboa and Cristobal ports, has been left in limbo.
Hong Kong-based CK Hutchison holds a 90% stake in PPC, and the US has piled on pressure for a sale due to Chinese involvement. And despite shipping giant MSC’s willingness to buy the ports in a 40-asset deal alongside BlackRock, Chinese officials have reportedly threatened to pull the deal unless national shipping company COSCO is involved.
Now, in a new development, Panama’s comptroller general has filed two cases with the country’s supreme court against PPC after an audit was triggered. Anel Flores, the comptroller general, this week called the PPC contract “unfair” and “abusive” and claimed that the company had not paid sufficient royalties to the government.
He added that the company’s 25-year extension, signed in 2023, was made without the necessary permissions. The cases before the supreme court aim to either nullify the contract or declare it unconstitutional. If this happens, the concession will have to be re-tendered.
Extreme Weather Creates Breadbasket Failures
A report by insurance broker Howden for the European Commission estimated that the current average annual loss (AAL) for agricultural production in the EU27 is EUR 28.3 billion as a result of extreme weather events. The report warned that AAL is set to increase by 42-66% to 2050, meaning the monetary loss would reach EUR 40 billion.
Indian agriculture has been hit hard by extreme weather in recent months. A heatwave between April and July saw temperatures soar to 50 degrees Celsius, causing damage to several crops and harming yields. Rainfall deficits across Assam also led to a 12% decline in tea production for June, according to the Times of India.
And in Bengal, an excess of rainfall resulted in flooded fields and sent the cost of vegetables soaring. In May, heavy rainfall in Akola led to crop damage across 3,000 hectares of summer onion, banana, groundnut, maize, lemon and pulses.
Across Africa, a combination of overly wet and overly dry conditions in different regions have caused chaos for the harvest of cereals and decreased yields. A report by Reuters suggests that as much as 75% of the Syrian wheat crop could fail this year due to drought, although some economic reprieve could be offered to the country in the form of a lifting of sanctions by the US and EU.
Source: USDA
Additionally, eastern European farmers are also battling severe weather. In the south of Hungary, increasingly severe drought has caused some farmers to abandon growing crops altogether. The region produces corn, grain and sunflower seed. The Rostov region of Russia is also experiencing its second year of drought – risking it being displaced as the country’s largest wheat-producing region.
Australian Wheat Productivity on the Up
But while farmers around the world battle with adverse weather issues, Australia seems to be the exception. Wheat productivity has continued to increase despite lower rainfall, according to a recent Reuters report citing USDA data.
Source: USDA
This has led to a sharp increase in wheat exports.
Source: USDA
But exports have stalled in the past three years and now, companies are warning that logistics bottlenecks are compromising future growth. According to GrainCorp, an eastern Australian grains and oilseed storage, handling and processing company, freight and logistics costs in Australia can be up to triple the cost in Canada or Ukraine, throttling competitiveness on the world stage.
Access to wheat is particularly important as global stocks begin to plateau.
Source: USDA
Argentina Gains as China Boosts Soy Imports
As China continues to diversify its supply chains away from the US, Argentina could be a big winner when it comes to soybeans. According to trade data, China has purchased more Argentinian soy from the South American country. China is the single largest soybean importer in the world, importing almost 10 times the amount of the second-largest importer – the EU.
Source: USDA
This comes after Argentinian President Javier Milei reduced the export duties on a handful of grains. Corn duties dropped to 9.5% from 12%, soybeans and byproducts to between 24.5% and 26% from 31% and 33%, respectively. China has been by far Argentina’s largest soybean buyer in 2025 so far.
But as Chinese soybean stocks continue to build, there are worries of a “glut”, with some Chinese processing plants having to shut down due to lack of storage space.
Source: USDA
This could be a concern for US soybean farmers in the lead up to their peak season – typically the final quarter of the year. If China stockpiles enough soy and pushes ahead with plans to reduce its breeding sow numbers, US sellers could find themselves with an oversupply, which will pressure prices.
