As spring approaches and U.S. crop acreages increase, U.S. buyers may face the burden of new tariffs on fertilizers in the short term, analysts have informed Agri-Pulse. Some manufacturers are already considering raising prices in response to potential tariffs.

President Donald Trump has mentioned the possibility of implementing new 25% tariffs on imports from Canada and Mexico as early as Saturday. The U.S. relies on imports for over 90% of its annual potash fertilizer demand, primarily from Canada, which makes farmers particularly vulnerable to any additional costs, according to the Energy Department.

The proposed tariffs are intended to prompt the U.S.’ neighbors to take more decisive actions to curb illegal migration and drug trafficking. However, some potash fertilizer manufacturers are not waiting for the president’s decision and are already contemplating price increases.

Josh Linville, vice president of fertilizer at StoneX, shared that a few manufacturers have discussed a potential $25 per ton price hike. Linville attributed this to higher grain prices, increased demand for potash, and the uncertainty surrounding the impending tariffs.

The exact scope of the tariffs remains unclear, as does Trump’s ultimate decision on implementing them. Although the preferred start date for the tariffs is Saturday, the president has shown a willingness to engage in last-minute negotiations to avoid imposing tariffs. A recent tariff standoff with Colombia was resolved without new duties being imposed.

Despite the uncertainty, some Canadian potash producers are taking precautionary measures. Doug Wright, a fertilizer consultant, revealed that Nutrien, the world’s largest potash producer, has refrained from accepting U.S. potash orders for delivery after Saturday. Nutrien’s media relations lead, Shawn Churchill, declined to comment on specific commercial discussions but acknowledged preparations for potential tariff scenarios.

If the tariffs are imposed and cover potash fertilizer, U.S. importers may have limited options but to absorb the increased costs. With potash application typically occurring in March, importers have little time to seek alternative suppliers. This timeframe poses challenges, especially for regions like the southern U.S. where corn planting season starts early.

Furthermore, the expected rise in U.S. corn acreage this season could exacerbate supply challenges. The Agriculture Department estimates a 1.3 million-acre increase in corn plantings, potentially leading to shortages of various fertilizers due to supply chain and logistical issues.

Even if fertilizer is not initially included in the tariffs, U.S. importers could face higher costs due to retaliatory measures from Canada. Bloomberg reported that Canada was considering export taxes on major commodities, including fertilizer, as part of its retaliation strategy.

Despite the uncertainties and potential challenges, global potash supplies remain adequate, with stable prices worldwide. Linville emphasized that the situation appears to be more localized to North America, indicating that global markets are relatively unaffected by the tariff threats.

In conclusion, the looming tariffs on fertilizers could impact U.S. buyers in the short term, particularly in light of the approaching planting season. While challenges and uncertainties persist, strategic planning and potential adjustments in the supply chain could help mitigate the impact of these tariffs on the agricultural industry.