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U.S. Agricultural Trade Deficit Reaches $18.2 Billion Through July

July gap hits $2.91 billion as exports remain on track with USDA forecast

Analysis  ·  September 4, 2026

The U.S. agricultural trade deficit widened by another $2.91 billion in July, but the latest numbers still leave fiscal 2026 trade broadly on course to meet — and potentially slightly outperform — USDA’s recently improved forecast. The bigger story is the changing geography of U.S. farm trade: Mexico and Canada remain the dominant markets but also account for virtually all of the projected overall deficit, while export growth to the European Union and Southeast Asia is helping compensate for a much smaller China market.

USDA’s Foreign Agricultural Service reported July agricultural exports of $14.507 billion and imports of $17.417 billion, producing a monthly deficit of $2.910 billion. The July data were released Sept. 3 through USDA’s Global Agricultural Trade System (GATS).

Adding those figures to USDA’s previously reported October-June totals puts fiscal-year 2026 agricultural exports through July at approximately $151.85 billion and imports at $170.09 billion. That leaves the cumulative trade deficit at about $18.24 billion with two months remaining in the fiscal year, which ends Sept. 30. The cumulative figures are calculated from USDA’s October-June totals plus the newly released July GATS data.

Table 1. U.S. agricultural trade, July 2026 and fiscal 2026 to date. Source: USDA Foreign Agricultural Service, Global Agricultural Trade System, July data released Sept. 3; USDA Outlook for U.S. Agricultural Trade, Aug. 27, 2026. Fiscal-year-to-date totals are calculated from USDA’s October-June figures plus July GATS data.

Figure 1. Fiscal 2026 exports and imports through July against USDA’s full-year forecasts. Source: USDA FAS GATS; USDA Outlook for U.S. Agricultural Trade, Aug. 27, 2026.

July Numbers Keep USDA Forecast Within Reach

USDA in its Aug. 27 trade outlook raised its fiscal 2026 export forecast to $179.5 billion from $176.5 billion in May while cutting expected imports to $204.5 billion from $205.5 billion. Those revisions narrowed the projected deficit to $25 billion from $29 billion. That would also be a substantial improvement from the record $42.9 billion agricultural trade deficit in fiscal 2025.

After July, exports need to total about $27.65 billion during August and September, or average roughly $13.83 billion per month, to reach USDA’s forecast. 

Imports need to average about $17.21 billion over the final two months. 

That makes July’s $14.51 billion export performance somewhat encouraging: it was above the monthly pace now required. July imports of $17.42 billion were only modestly above the pace implied by USDA’s full-year forecast.

The trade balance tells a similar story. To finish fiscal 2026 with USDA’s $25 billion deficit, the deficit would need to expand another $6.76 billion during August and September — about $3.38 billion per month. July’s $2.91 billion gap was smaller than that. As a purely mechanical comparison, if August and September each duplicated July, the full-year deficit would finish near $24.1 billion, slightly better than USDA currently projects. Seasonal trade patterns mean that should not be treated as a forecast, but it shows the USDA numbers are readily achievable.

Figure 2. July actual compared with the average monthly pace required in August and September to reach USDA’s fiscal 2026 forecast. Source: Author’s calculations from USDA FAS GATS and the Aug. 27 USDA trade outlook.

China Is No Longer Carrying the Export Outlook

The most striking country development is that USDA’s improved export forecast does not depend on a recovery in China. USDA still forecasts only $12 billion of agricultural exports to China in fiscal 2026, unchanged from its May forecast and down about 26% from $16.22 billion in fiscal 2025. Exports to China totaled $9.90 billion through June, meaning the U.S. had already completed about 82% of USDA’s modest full-year target with three months remaining. Thus, the $12 billion forecast appears attainable, but even reaching it would represent a sharp year-over-year contraction.

Instead, USDA has raised expectations elsewhere. Canada’s export forecast was increased $1.2 billion to $28.9 billion; the European Union was raised $1 billion to $15.8 billion; and Southeast Asia was increased $800 million to $15.6 billion. Mexico, expected to remain the largest U.S. agricultural export market, is forecast at $31.5 billion.

The latest country-specific actuals in USDA’s August outlook run through June rather than July, but they generally support those forecasts. Canada had purchased $21.81 billion, about 75% of its full-year forecast; Mexico $23.31 billion, about 74%; the EU $12.22 billion, more than 77%; and Southeast Asia $11.72 billion, about 75%. Japan and South Korea also were slightly ahead of the straight-line pace needed to meet USDA’s fiscal-year forecasts.

Within Southeast Asia, Vietnam is particularly important, with U.S. exports already at $4.03 billion through June versus USDA’s $5.2 billion full-year forecast. Indonesia was at $2.41 billion against a $3.3 billion forecast and the Philippines at $2.72 billion against $3.5 billion. The numbers reinforce the broader trend toward a more diversified U.S. export portfolio.

Table 2. U.S. agricultural exports by market, fiscal 2026 through June, against USDA’s full-year forecasts. Source: USDA Outlook for U.S. Agricultural Trade, Aug. 27, 2026. Country actuals run through June; totals in Table 1 run through July.

Figure 3. Leading export markets: fiscal 2026 exports through June versus USDA’s full-year forecast. Source: USDA Outlook for U.S. Agricultural Trade, Aug. 27, 2026.

Canada and Mexico Explain Most of the Deficit

There is another side to the North American trade story. USDA forecasts $43.4 billion of agricultural imports from Mexico and $41.1 billion from Canada this fiscal year. Against export forecasts of $31.5 billion to Mexico and $28.9 billion to Canada, that implies agricultural trade deficits of roughly $11.9 billion with Mexico and $12.2 billion with Canada.

Together, those two deficits total $24.1 billion — almost the entire $25 billion agricultural trade deficit USDA forecasts for the United States in fiscal 2026.

Indeed, through June, the combined agricultural trade deficit with Canada and Mexico was already approximately $19 billion, larger than the $15.3 billion total U.S. agricultural deficit at that point. Trade surpluses with other countries were offsetting part of the North American imbalance. That is an important distinction when evaluating the agricultural trade deficit. The deficit is not simply the result of collapsing U.S. export demand. Canada and Mexico are simultaneously America’s two biggest farm export markets and two of its biggest agricultural suppliers. The imbalance increasingly reflects exceptionally large two-way North American food trade.

Figure 4. Forecast fiscal 2026 agricultural trade balances with Mexico and Canada compared with the projected U.S. total. Source: Author’s calculations from USDA’s Aug. 27 export and import forecasts by country.

Export Improvement Is Broader Than Bulk Commodities

USDA’s August forecast also shows that the stronger export outlook is not being driven by one crop. The agency raised projected corn exports to $19.1 billion from $18.5 billion, dairy to $10.4 billion from $9.9 billion, tree nuts to $12.2 billion from $11 billion and ethanol to $5.4 billion from $5.1 billion. Total horticultural exports were raised $1.3 billion to $43.9 billion.

Soybeans are an exception. USDA trimmed the soybean export forecast to $18.4 billion from $18.6 billion, and through June soybean exports were valued at $15.51 billion. That underscores the continuing vulnerability of oilseed trade to the weaker China relationship.

On the import side, much of USDA’s improved overall trade-balance forecast reflects a reduced expectation for horticultural imports, now put at $86.4 billion versus $89.3 billion in May. But USDA raised projected beef and veal imports to $16.7 billion from $16.3 billion and total livestock, dairy and poultry imports to $34.4 billion from $33.6 billion.

Figure 5. Changes in USDA’s fiscal 2026 export forecasts between the May and August outlooks. Source: USDA Outlook for U.S. Agricultural Trade, May 29 and Aug. 27, 2026.

Bottom Line

July strengthens the case that USDA’s $25 billion fiscal 2026 agricultural trade deficit forecast is realistic and may even prove somewhat conservative. Exports are running at a pace sufficient to reach the revised $179.5 billion projection, while the accumulated deficit through 10 months is only $18.24 billion.

But the underlying composition of trade has changed considerably. China remains far below its former importance, and USDA’s improved outlook increasingly depends on Canada, Mexico, Europe and rapidly growing Southeast Asian markets. Meanwhile, enormous agricultural imports from Canada and Mexico mean North America accounts for virtually the entire projected national trade deficit.

For U.S. agriculture, that makes the July report less a story of a worsening aggregate deficit than one of market diversification and a restructuring of where U.S. agricultural trade surpluses and deficits are being generated.

AG POLICY & MARKETS DAILY   |   SPECIAL REPORT  |  AGRICULTURAL TRADE — FRIDAY, SEPTEMBER 4, 2026