KANSAS CITY — Flooding the zone has become a popular description of the Trump administration’s approach to effect a dramatic transformation in a bureaucratic system famously resistant to change. Simultaneously ambushing myriad government policies, programs and regulations, vested interests seeking to stave off change have struggled to mount a defense. For grain-based foods, the administration’s offensive potentially has far-reaching consequences, touching on issues including labor, food safety and hunger relief programs.
Josh Sosland, editor of Milling & Baking News. Source: Sosland Publishing Co.
Less clear have been objectives surrounding the administration’s fitful approach to foreign trade. Launching a trade war with Canada and Mexico seven years after Trump negotiated the United States-Mexico-Canada Agreement threatens to raise costs across the grain-based foods industry at a time of heightened consumer sensitivity to food inflation. Delayed since March 4, 25% tariffs are impending against goods and services imported from America’s neighbors, and blanket tariffs of 20% have been set for China.
The costs will be vast. The American Bakers Association has estimated tariffs would raise ingredient and other costs by half a billion dollars. Baking equipment manufacturers indicated aluminum and steel tariffs will raise production costs by a billion dollars. Dozens of ingredients and materials would be caught in the impending action were it to take effect.
The facts surrounding oats offer a powerful case study of a commodity caught in the current turmoil. For many commodities imported from Canada, including wheat and canola oil, domestically grown alternatives are available, albeit at higher costs.
Oats are different. Domestic disappearance of oats in 2023-24 was 128 million bus, and only 57 million bus were harvested in the United States last year. A key ingredient in many baked foods as well as the nation’s most popular ready-to-eat breakfast cereal, as well as oat milk, oat imports are essential. Additionally, nearly all the oats grown in the United States are feed quality, meaning the 80 million bus of oats used by the food industry each year are almost all imported from Canada.
Tariffs on oats will not benefit the United States and are not justifiable on fair trade grounds. While oats account for a small percentage of the US food supply (food use of wheat is 23 times greater), the impact of the tariffs on oats would be significant. Economic analysis prepared for the North American Millers’ Association (NAMA) estimate the tariffs would add a quarter billion dollars of costs on households, businesses and the US government.
Still, it’s fair to ask whether Canada displaced US oat production. It’s true the United States used to produce far more oats than Canada, twice as much in 1970, and now Canada oat production is three times that of the United States. Still, oats farmers were not put out of business by Canadian competition. Growers in the United States adapted by shifting to other crops. In Minnesota, for example, oats planted area plunged 96% since 1970, but corn acreage over the period rose 78%, soybean acreage jumped 134% and wheat acreage was up 38%. Similar shifts were recorded in North Dakota, South Dakota and Wisconsin, the other top-four oats states in the past. Between these four states, total harvested area for all crops tracked by the USDA was higher in 2024 than in 1970, demonstrating the success of this adaptation. Data from the Ag Census cited by NAMA offer a compelling reason for the switch away from oats. Returns per acre are far higher for corn ($604) and soybeans ($544) than for oats ($111).
In March, President Trump posted on Truth Social, his social-media platform, that US agricultural producers should prepare to “start making a lot of agricultural product to be sold INSIDE of the United States.” Shifting acreage in the northern United States back to this commodity would benefit neither the growers nor the country more broadly. Ensuring foreign trade is fair represents a legitimate and important function of the US government. Blanket tariffs against USMCA partners are not the way to go.
