US Farm ETFs Hit Hard by New China Tariffs

In a significant blow to the American agricultural sector, China has announced retaliatory tariffs ranging from 10% to 15% on U.S. farm products, affecting approximately $21 billion worth of agricultural exports. This development comes at a time when farm ETFs were already struggling, as reported by etf.com. The timing of these tariffs could not be worse for ETF investors, as many agriculture funds have been experiencing negative asset flows.

Impact on Farm ETFs

Recent data from etf.com indicates that the sector’s farm ETFs were already on a downward trajectory before Beijing’s latest trade countermeasures. The recent tariffs have compounded the issues faced by these funds, with three out of four major agricultural ETFs reporting negative flows in recent months. The performance metrics reveal a concerning trend, with the following declines noted:

• WEAT: down 8.1%
• CORN: down 7.7%
• SOYB: down 7.5%
• CANE: down 0.1%

The dollar impact is stark, with WEAT experiencing outflows of $1.22 million in the past month alone. Similarly, CORN has lost $1.87 million, SOYB has shed $539,300, and CANE has seen outflows of $2.7 million.

Long-Term Performance Trends

Looking at longer periods, the outlook for most funds appears grim. SOYB has been particularly hard hit over the past year, with returns down 13.6% and assets under management totaling $26.1 million. Despite this challenging environment, SOYB has managed a slight three-month gain of 0.2%.

WEAT, the largest fund in this group with $116.4 million in assets, has posted a one-year loss of 11%. Its performance has been consistently negative, with a three-month decline of 1.3% and a year-to-date loss of 2.5%. CORN, which has $59.4 million in assets, has reported annual returns of -5.4%. While it has shown some resilience with a three-month gain of 4.3%, it remains down 1.3% year to date.

Even CANE, with its $11.4 million in assets, has not escaped the downturn, reporting a one-year loss of 7.9%. However, it is the only fund showing positive year-to-date performance at 1.7%, despite a recent three-month dip of 7%.

Future Implications

The year-long impact of these tariffs is evident, with WEAT experiencing outflows of $26.2 million and CORN seeing $4.3 million in outflows. SOYB has been the exception, managing to attract $3 million in positive flows annually. However, these impacts may intensify as China continues to diversify its agricultural supply chains.

According to reports, since the United States and China began imposing tit-for-tat tariffs during Trump’s first term, Beijing has actively sought to reduce its reliance on American farm goods. This strategy includes boosting domestic production and increasing imports from countries like Brazil. In fact, Chinese imports of U.S. agricultural goods have plummeted from $42.8 billion in 2022 to $29.3 billion in 2024, with Brazil now surpassing the U.S. as China’s largest agricultural supplier, accounting for 22% of China’s total farm imports, as reported by Reuters.