The trade war with China during President Trump's first term hit American farmers violently. This time it could be even worse.
On Tuesday, China's Treasury ministry said it would add a 15% tariff on a wide range of agricultural imports from the US, including chicken, wheat, corn and cotton. Beijing's retaliation for escalating US tariffs on Chinese-made products also includes a 10% tariff on imports of sorghum, soybeans, pork, beef, aquatic products, fruits, vegetables and dairy products.
Without specifying any products, Canada said it would impose 25% retaliatory tariffs on US products worth $20.5 billion on Tuesday, while Mexico promised to outline its response on Sunday. President Trump imposed 25% tariffs from both countries on Tuesday.
Lynn Kennedy, a professor of agricultural economics at Louisiana State University, said farms are targeted because produce makes up a large part of US exports. Politics is probably a factor too.
“Rural areas tend to be much more conservative politically, so if you look at where Trump's bases are, and where Republican bases are, it's more likely to be some of those agricultural nations and regions,” Kennedy said.
As they did during the first Trump administration, retaliatory tariffs could mean that American exports and prices paid by American exports and crops would fall as Chinese, Canadian or Mexican importers are seeking alternatives from Brazil or other large farmers.
China accounts for 14% (approximately $24.7 billion) of all agricultural products exported from the US in 2024, according to USDA data. Mexico and Canada imported more. It costs around $30.3 billion in Mexico and $28.4 billion in Canada.
Mark Regan, a livestock and crop farmer in Putnam County, Indiana, said Mexico is the top export market for pork and China and the largest export market for soybeans, selling to his area's Daniel's Midland plants in Cargill and Archer.
When China began purchasing more soybeans from Brazil during Trump's first term, Regan's income “decreased significantly,” he said. His pork exports to China also fell. This time he is once again worried about fallout. This is especially true because Mexico is also ready to retaliate.
“We are fighting a fierce battle with tariffs to bring both soy and pork into those markets,” Regan said. “In agriculture, we are always dealing with uncertainty, whether it's the weather or the health of our animals. But this adds another level of uncertainty that we are trying to do our best possible.”
Industry lobbying groups quickly criticised tariffs. Shannon Douglas, President of the California Farm Bureau, said tariffs on blankets in China, Mexico and Canada “invite retaliation that could hurt the very farmers they are aiming to protect.” Gregg Doud, chief executive of the National Milk Producers Federation, said in a statement Monday ahead of the new tariffs, the group is “imposed against the trade barriers that are arising from inventing new policies that could hinder the sale of dairy products.”
The Canadian government did not specify which products will be eligible for retaliation fees, but plans outlined last month singled out hundreds of US products, including foods such as orange juice and peanut butter. Ontario Premier Doug Ford said Tuesday he ordered the removal of all US-made liquor from the provincial alcohol distributors.
Farmers of all sizes, from part-time farms and small family farms to large farms, can become a hit as prices drop and some costs rise. According to the Agriculture Bureau, soybeans accounted for about half of US agricultural exports last year in China, but American soybean exporters to China compete with Brazilian companies. US soybean futures fell about 1% on Tuesday. Our corn and wheat futures also fell.
“Farmers were already planting crops, and this year's crop was already on the ground and they were expecting a certain price for the product,” Kennedy said. Now he added, “There is this uncertainty about what the prices they get.”
Many rural communities are already tackling a rapid freeze in the Trump administration's federal funds on a variety of programs and grants. Jill McCrusky, a professor of agricultural economics at Washington State University, said farmers are being forced to borrow money for machines and are facing the bill. “They'll hurt,” she said, if they can't make that much money for the crop, as retaliatory tariffs won't make the goods competitive.
The impact of tariffs is uneven and unpredictable.
Organic product growers can benefit from selling primarily to the domestic market and using domestic input. However, Kate Mendenhall, executive director of the Organic Farmers Association, said some of the organization's members are reporting higher machine repair costs as the parts come from Canada.
“It would hit in an unexpected way.
Other costs could also increase. According to the U.S. Farm Bureau Federation, approximately 85% of potassium, an important ingredient in fertilizer, is imported from Canada.
“Additional tariffs, along with the expected retaliation tariffs, will hit rural America,” federal President Zippy Duval said in a statement Tuesday. “Adding more costs and reducing the market for American produce could create economic burdens that some farmers may not be able to afford.”
In a revenue call last month, Ken Seitz, CEO of Nutrien, Canadian fertilizer company and world's largest producer of potash, said American farmers will bear the cost of tariffs. “U.S. farmers will feel the effects of those after the spring planting season,” he said.
This is not the first time farmers and food producers have found themselves on the cross of a trade war. During Trump's first term in the White House, China responded to his administration's tariffs on Chinese goods with 5-25% retaliatory tariffs on many US agricultural products. These tariffs have cut US agricultural exports nearly $26 billion, according to a research report from the Agriculture Bureau.
At the time, US soybean exports fell to their lowest levels in a few years. In 2018, soybean exports to China, the largest market, fell 75%. A study published last year by the American Soybean Association and the National Association of Corn Growers found that a new trade war would soon drop hundreds of millions of tons of corn and soybean exports.
During his first term, Trump responded to targets of U.S. agriculture in China by providing subsidies to farmers. Whether his administration will do the same this time, and whether those subsidies will be distributed evenly to large farms and small producers remains an open question.
“Farmers want to make money from the market,” said Betty Restnick, an economist with the American Farm Bureau Federation. “They don't want to resort to these government subsidies, but at the same time, if they're changing market access, they'll have to keep their business as well.”
Kevin Draper contributed the report.
