The exports of two of Ukraine’s biggest export earners, corn and metals, are falling, which will squeeze the already cash-strapped government and make a €20bn trade deficit with the EU worse in 2025.

In global markets, inexpensive American corn is displacing Ukrainian corn, the biggest foreign exchange earner for the government. Ukrainian corn prices are declining due to low demand, decreasing wheat prices and competition from cheaper grain imported from the US. Current export prices for corn in Ukraine range from $225 to $228 per tonne, while feed wheat prices at ports have dropped to $210 to $214 per tonne. Major traders have momentarily halted their purchases of Ukrainian corn, anticipating new deals, but this effort is being obstructed by the increasing availability of cheaper corn from the US, Argentina and Brazil.

At the same time, iron ore exports, the third biggest export earner, has been declining after a remarkable recovery in iron ore exports in early 2024. Boosted by the re-opening of the sea corridor last year, Ukraine’s metallurgical sector reached nearly 50% of its pre-war levels. However, those gains have now gone into reverse.

Last year, iron ore exports reached $2.8bn, but in 2025, most mining and processing plants are expected to reduce production and exports of iron ore from Ukraine may decrease by 20% this year, say experts. The key problems that metallurgical enterprises cite are the non-reimbursement of VAT, the tariff policy of state monopolies and a shortage of personnel.

Since the beginning of 2025, overseas ore sales are down 10.2% from January to April compared to the same period in 2024, totalling 11.15mn tonnes. The monetary losses are even more pronounced, approaching 21%, despite global ore prices higher than the levels seen between 2015 and 2018. In 2025, the physical volume of ore exports may decrease by 15%, bringing it down to 27mn tonnes.

The increase in electricity prices and logistics services makes Ukrainian or less competitive, while the average ore price in the global market is projected to drop to $73 per ton. Moreover, after the end of visa-free trade with the EU in June the situation will worsen.

The EU's share in total Ukrainian exports increased from 40% in 2021 to over 60% in 2024. In the agricultural sector, this share reaches up to 80%, depending on the group of goods and consequently, this sector will suffer the most from the return of duties.

More than 90% of sunflower oil imported into the EU comes from Ukraine, and Spain is among the three largest importers of Ukrainian grain.

Ukrainian agricultural exporters are currently hunting for new customers to replace the EU and sugar exports to Turkey, for example, have soared this year. Africa and the Middle East are also prospective new customers that could partially compensate for the termination of the EU’s customs visa-free regime, but exports are hindered by complicated logistics, dangerous routes and competition from Russia, which is also expanding its trade regime to non-EU markets to compensate for sanctions.

Oleksandra Avramenko, a representative from the Ukrainian Agribusiness Club, notes that after the end of war-time visa-free trade in June, import quotas for Ukrainian agricultural products to the EU will not be limited to seven products as now but will be extended to 30, UBN reports. Instead of having full market access, Ukrainian exporters will be restricted to using only 7/12 of the annual quotas that were previously in effect before the war (seven months remaining in the year for each product category). This effectively reduces wheat exports from 6mn to 1mn tonnes, corn from 4.7mn tonnes to 650,000 and sugar to a mere 20,000 tonnes. Avramenko asserts that due to internal political dynamics in some EU countries, the European Commission will only start reassessing the trade terms with Ukraine under the association agreement during the summer.

In 2024, Ukraine was in the top three of the largest exporters of agricultural products to the EU with an export volume of €13.1bn, which accounts for 6.7% of total agricultural imports to the European Union, according to Eurostat data. Ukraine was behind Brazil (€17.1bn, 8.8%) and the UK (€16.6bn, 8.5%).

EU import duties to return

The end of the special tariff regime will only worsen Ukraine's external balance of payment situation, which is already running a large and growing trade deficit with Europe.

Poland in particular is lobbying to reintroduce import duties in Ukrainian goods from June. Last year cheap Ukrainian corn wrecked the Polish grain market causing prices to collapse in this key sector. Poland unilaterally banned imports of grain, against EU law, which has the mandate to set trade policy for member states.

A tension between the Central European countries has arisen, which support Ukraine politically in its struggle with Russia, but want to protect their own agricultural sectors on the other. However, the EU will not cancel all autonomous trade measures and offers Ukraine the opportunity to update the terms of free trade within the framework of its Association Agreement with the EU.

Specifically, the EU is set to extend the preferential import regime for Ukrainian metallurgical products this month. The European Parliament is considering the issue of introducing a preferential regime for exports of Ukrainian steel and iron to the EU following the conclusion of the visa-free trade period on June 5, 2025.

To support Ukraine, it is proposed to maintain the suspension of Regulation (EU) 2015/478, which serves as the basis for abolishing EU safeguard measures on Ukrainian steel products. The new regulation is expected to take effect on June 6 and to be in force for three years.

The EU introduced a preferential trade regime for Ukraine on June 4 2022, which was extended in 2023. However, due to protests by European farmers, Brussels restricted the import of certain types of Ukrainian agricultural products in 2023. Currently, the EU does not plan to extend the general "visa-free trade" for Ukraine after June 5, 2025.

European exports to Ukraine grew faster than imports of Ukrainian goods last year: the EU exported goods valued at €42.8bn to Ukraine and imported €24.5bn, resulting in an EU trade surplus of €18.3bn, according to Eurostat. Compared to 2023, exports and imports increased by 9.4% and 7%, respectively.

The EU's main export products were mineral fuels (€6.8bn), electrical equipment (€4.3bn) and machinery (€4.2bn). The EU's exports of mineral fuels to Ukraine saw the largest increase (€4.1bn), as imports of these fuels from the Russian Federation and Belarus to Ukraine decreased.

The primary categories of goods imported from Ukraine to the EU included agricultural products such as cereals (€4.4bn), animal fats and vegetable oils (€3.1bn) and oilseeds and their processed products (€2.5bn). Compared to 2021, imports of grains rose by €2.7bn, fats and oils by €1bn and oilseeds and their processed products by €1.1bn.

On top of the deteriorating trade balance, Ukraine’s economy is expected to slow, weighed down by the war and the destruction of its power infrastructure by Russia last year and a chronic labour shortage, in particular.

Ukraine's real GDP grew by only 0.8% in the first quarter, according to the Institute for Economic Research, which also noted that the real GDP growth rate in April was 0.7%. Meanwhile, analysts kept the real GDP forecast for 2025 unchanged from last year at 2.9%, but down from 5.5% in 2023. According to the International Monetary Fund’s latest World Economic Outlook (WEO), Ukraine's real GDP growth in 2024 is estimated at 3.5% but will slow to 2%-3% this year.

US free trade outreach

Kyiv is also in discussions with Washington to abolish tariffs on metallurgical exports to the US, specifically those imposed during President Donald Trump's administration, according to the Deputy Minister of Economy, Taras Kachka.

"We are focused on eliminating tariffs on metallurgy, which stand at 25% and 10%. While achieving this goal seems possible, I cannot guarantee it, as we are just beginning negotiations," he said as cited by UBN.

Ukrainian President Volodymyr Zelenskiy has also said that he has asked Trump for a free trade agreement between Ukraine and the US, as well as the rest of the G7 members – a call that has so far fallen on deaf ears.

President of Ukrmetallurgprom Oleksandr Kalenkov noted that the ongoing war has resulted in a 33% reduction in the Ukrainian metallurgical industry's capacity since 2014. Given these setbacks, industry leaders are calling for a reassessment of market access conditions in the EU and US, specifically looking for extended transition periods and the elimination of trade barriers.

The US currently maintains a 25% tariff on Ukrainian steel, a policy established in the 1990s. The expert also stressed the importance of attracting investment from allies, including the US, UK, Japan and the EU, believing this could significantly enhance the economic environment and reshape political attitudes towards trade restrictions.

While metals may be exempted from duties or enjoy a special regime, the majority of agricultural products will not be spared and will return to the high import duties in place before the war. The end of the visa-free trade program between Ukraine and the EU in June will impact the export of 30 types of agricultural products, according to Poland's Prime Minister Donald Tusk, whose country holds the EU presidency until July.

Tusk stressed that while Poland aims to assist Ukraine in its war with Russia, it must not come at the expense of Polish producers.