President-elect Donald Trump keeps promising new tariffs on imports from America’s largest trading partners.
On the campaign trail, he talked about imposing 10-20% tariffs on all imports and 60% tariffs on most products from China. Last month, he said he would impose 25% tariffs on all goods coming from Mexico and Canada until they tighten their borders to prevent illegal drugs and immigrants from entering the country. Trump also said he would impose “an additional 10% tariff, above any additional tariffs” on China.
Shortly after, Trump talked about 100% tariffs on so-called BRICS countries (Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran and the United Arab Emirates) that have proposed replacing the U.S. dollar with other currencies to trade in international markets.
But raising tariffs on other countries can lead to those countries imposing their own import taxes on U.S. products, said Chad Hart, an agricultural economist at Iowa State University. And agricultural exports are often targets in those trade wars, he said.
“If the tariffs hit places like China, Canada, Mexico, they're more likely to retaliate with tariffs against U.S. agriculture,” Hart said. “And since those three countries are the three biggest trade partners we have within agriculture, they can have a disproportionate impact on how U.S. agriculture fares.”
Hart emphasized that until there’s clarity about the scope and scale of tariffs, trying to predict the exact impact they could have on the U.S. puts “the cart before the horse.” But increased tariffs in the past have led to billions in losses for U.S. agricultural products.
What are tariffs and why do they matter?
Tariffs are taxes on imported products. Under the Trade Expansion Act of 1962, the president can raise tariffs on imports that pose a threat to national security without approval from Congress.
Corn and soybeans are easy targets in trade wars, according to The National Corn Growers Association and American Soybean Association. The crops are the top two export commodities in the U.S., representing roughly a quarter of the nearly $175 billion of U.S. agricultural exports in 2023.
Beef and pork also rely heavily on export markets.
Glynn Tonsor is an agricultural economist at Kansas State University who focuses on the livestock and meat industry. Products go to countries where they’re most valuable in an open trade environment, he said.
For example, a lot of bacon stays in the U.S. because there’s high demand from consumers, while a large volume of ham and other pork products go to Mexico. Meanwhile, the U.S. imports ground beef from countries to help meet domestic demand but exports products like tongues and livers.
Tonsor said the livestock producers at the start of the supply chain tend to be the most affected by sudden market shifts.
“It's harder for that segment of the industry to adjust,” Tonsor said, explaining that buying sows to birth piglets or cows to supply calves are long-term decisions.
“I anticipate they will get the most economic benefit from anything that boosts demand and will be the ones that are harmed the most if we have disadvantageous tariffs,” he said.
The last major trade war
In 2018, Trump’s administration added tariffs to nearly all steel and aluminum imports and to a wide range of imported products from China. In response, Canada, China, the European Union, India, Mexico and Turkey responded with retaliatory tariffs on a range of agricultural and food products exported from the U.S.
Estimated U.S. agricultural export losses from mid-2018 to the end of 2019 exceeded $27 billion, according to the USDA’s Economic Research Service.
Commodities most severely targeted were soybeans, sorghum, pork and cotton, according to the report, and the states that produced these experienced bigger losses.
Iowa, Illinois and Kansas were hit the hardest. Iowa and Illinois each had over $1 billion in annualized losses, and Kansas had $955 million in losses.
To offset losses caused by trade disruptions, the USDA created the Market Facilitation Program, which distributed $23 billion to farmers.
“[The payments] didn't necessarily make farmers whole, but the idea is it was providing an income injection in agriculture that was at least partially offsetting the loss of trade flows during that time,” Hart said.
Other programs aimed to develop alternative foreign markets for U.S. commodities and to purchase commodities targeted by tariffs for nutrition assistance programs.
In May 2019, the U.S. removed Canada and Mexico’s tariffs. The U.S. signed a “Phase One Agreement” with China in January 2020, which helped end the trade war, and the U.S. and E.U. reached arrangements with steel and aluminum in October 2021.
Ag groups warn of new losses
American Farm Bureau Federation is the largest farmers’ organization in the U.S. Its president, Zippy Duvall, recently told reporters that the organization does not support tariffs. He’s urging the incoming administration to focus on expanding trade.
The National Farmers Union sent a letter to Trump in November, asking the incoming administration to be “measured and cooperative when negotiating trade policy.”
“Our members suffered significant losses due to the earlier trade dispute with China, and we lost valuable market share, particularly for soybeans, to competitors like Brazil,” said NFU President Rob Larew.
A study released earlier this year and commissioned by the American Soybean Association and National Corn Growers Association found a new trade war with China “would result in an immediate drop in corn and soy exports to the tune of hundreds of millions of tons.”
It said China would turn to Brazil and Argentina for its supply, which would make it difficult for American farmers to regain their market share.
“The study highlights the dangers that come with broad tariffs on imports,” Krista Swanson, the National Corn Growers Association’s lead economist, said in a statement. “While launching widespread tariffs may seem like an effective tool, they can boomerang and cause unintended consequences. Our first goal should be to avoid unnecessary harm.”
‘Net of lots of changes’
In general, tariffs are not a top priority for farmers in Missouri, said Ben Brown, an extension specialist of agriculture economics and markets at the University of Missouri.
But he emphasized that farmer sentiment may depend on the commodity they produce and whether they’ve been impacted before.
“Many soybean producers recognize that whole soybean exports, just like in 2018, could be constrained due to retaliatory tariffs by international destinations, whether it be Mexico or whether it's China or Canada,” said Brown, who's also a researcher with the University of Missouri's Food and Agriculture Policy Research Institute.
However, he said many also believe tariffs on imported soybean oil and other competitors, like palm oil and used cooking oil, could offset some of the possible losses from whole soybean tariffs.
Brown and Hart said farmers may also expect federal support similar to what happened in 2018 if a trade war unfolds in 2025.
In the week after the presidential election, 42% of farmers surveyed in the Ag Economy Barometer said they think it is either likely or very likely that U.S. agriculture is at risk of a trade war that results in a significant decrease in U.S. agricultural exports. Purdue University and financial services company CME Group lead the barometer, which surveys 400 agricultural producers each month across the U.S. to track farmer sentiment.
But overall optimism jumped 30 points – the highest it’s been since May 2021.
The report’s authors said that increase “reflects growing optimism about a more favorable regulatory and tax environment for agriculture following the U.S. election.”
One-third of November’s respondents said they expect their operation to be better off financially a year from now, compared to nearly 20% who felt that way in October.
One-third of respondents also said they expect good times financially for the U.S. agricultural sector in the next year, and more than half expect good times in the next five years.
“At the end of the day, one's business is impacted by the net of lots of changes,” Kansas State University’s Tonsor said, reflecting on the Ag Economy Barometer. “It's not just a tariff on one product with one country. We're likely to have multiple adjustments…i.e. tax policy or something else.”
This story was produced in partnership with Harvest Public Media, a collaboration of public media newsrooms in the Midwest. It reports on food systems, agriculture and rural issues.
