Analysis
Archer-Daniels-Midland (ADM) has navigated significant headwinds from the U.S. "Liberation Day" and reciprocal tariffs introduced in April 2025. The company initially reported that the financial impact was not "that significant" in 1Q-2025, recording a $34 million expense for anticipated export duties. However, for the full-year 2025, the company highlighted a "dynamic and difficult" market environment, characterized by a "challenged global trade environment" and "global trade policy uncertainty." These factors contributed to a 34% year-over-year decline in Ag Services & Oilseeds (AS&O) segment operating profit, driven in part by lower North American export volumes.
A major mitigating factor for ADM was the high percentage of its product portfolio that remained exempt from specific export tariffs to Mexico and Canada. Management noted that approximately 98% of its products were exempt from these specific regional tariffs, which helped shield the company from broader North American trade disruptions. The primary impact instead came from the broader global trade landscape and the resulting uncertainty, which weighed on trading opportunities and export activity, particularly in soybean flows to China during the middle of the year.
The outlook for 2026 has become "increasingly constructive" following the Supreme Court's ruling in February 2026, which declared most of the April 2025 emergency tariffs unconstitutional. This ruling has initiated a process for issuing refunds to impacted importers and is expected to alleviate the trade policy headwinds that pressured ADM’s margins throughout 2025. ADM’s 2026 guidance assumes a recovery in global trade flows and improved relations with China, supporting a more favorable operating environment for its AS&O and Carbohydrate Solutions segments.
Despite these external pressures, ADM has focused on internal cost management and portfolio optimization to offset the tariff-related headwinds. The company is on track to achieve $500 million to $750 million in aggregate cost savings over the next few years, and management has prioritized the recovery of the Nutrition segment, which continued to face "tariffs and inflation" challenges through the end of 2025. The combination of trade policy normalization and company-specific mitigation strategies is expected to drive adjusted EPS growth in 2026.
Data
Cost Impact of Tariffs and Duties ($M)
| Period | Type | Impact | Status |
|---|---|---|---|
| 1Q-2025 | Anticipated Export Duties | (34) | Recorded |
| FY-2025 | Global Trade Headwinds | (Qualitative) | Realized |
| FY-2026 | Potential Tariff Refunds | TBD | Post-Ruling |
Source: Transcript 1Q-2025, Annual Report FY-2025
Financial Impact
- Cost Impact (Historic): $34M
Sources
North American origination results also reflect the additional expense of $34mn recorded in the period for anticipated export duties.
If you think about Mexico and Canada export tariffs, basically 98% of our products are exempt from that, so we did not feel any impact there.
The recent progress with China trade relations, combined with the expectation of pending U.S. biofuel policy clarity, should support an increasingly constructive market environment throughout this year.