Trump’s Trade War Escalates: American Farmers Brace for Economic Fallout

Farmer Trump Trade War

As the next phase of President Donald Trump’s trade war looms, America’s farmers—many of whom helped send him back to the White House—are increasingly caught in the crossfire.

Rural communities were instrumental in Trump’s return to office. But now, many of those same supporters may feel the strain as Trump prepares to launch a new wave of reciprocal tariffs targeting countries with higher trade barriers than the U.S. The new tariffs, set to begin on April 2, could have far-reaching consequences for the U.S. agricultural sector—especially as foreign governments retaliate by slapping tariffs on American farm exports.

Farmers on the Front Lines

In Central City, Iowa, farmer John Airy, who grows over 1,000 acres of soybeans and corn, is already feeling the pinch. Despite battling rising input costs—such as fertilizer, fuel, and labor—and seeing a 20% drop in soybean prices last year, he managed to break even. This year, he’s bracing for more pain as Trump’s trade policies are expected to drive up costs and reduce export demand.

“Nobody is expecting to get rich this year. That’s for sure,” Airy said.

Agriculture Is a Prime Target

The U.S. Department of Agriculture (USDA) forecasts that American farmers will export $170.5 billion worth of goods during the current fiscal year, making the sector a prime target for trade retaliation.

Nations like China, Canada, and Mexico—among the largest buyers of U.S. farm goods—have already imposed tariffs on nearly $30 billion worth of agricultural exports since Trump first took office. These levies represent about 17% of 2024’s projected exports, according to the American Farm Bureau Federation.

Tariffs Could Deepen Financial Stress

Trump’s upcoming tariffs are expected to include agricultural products, making it harder for U.S. farmers to compete abroad. On his social media platform, Truth Social, Trump hinted that farmers should pivot toward selling domestically. His advice? “Have fun!”

But that may be easier said than done. Products like pork variety meats—including organs like pig feet and livers—have limited domestic demand. China, a major importer of these cuts, recently added a 10% retaliatory tariff, bringing the total duty to 47%.

“I don’t think you’re going to be eating any more pigs feet than you currently do,” said Christopher Pudenz, an economist with the Iowa Farm Bureau.

Trade War Impacts Extend Beyond Tariffs

The broader economic picture is just as worrisome. Trump’s administration has increased tariffs on imports of Chinese goods by 20 percentage points. China, in turn, has retaliated with tariffs of 15% on U.S. wheat, corn, and chicken, and 10% on soybeans, dairy, fruits, vegetables, and meat products.

Canada and Mexico have also joined the fray. Canada’s 25% retaliatory tariff targets U.S.-produced wine, sausages, baked goods, and distilled spirits. Mexico, for now, has delayed its retaliation but may act soon.

Supply Chain and Labor Costs Could Rise

The Trump administration’s crackdown on illegal immigration—aimed at reshaping the U.S. labor force—is likely to drive up farm labor costs. According to the USDA, immigrants without work authorization made up roughly 42% of U.S. crop farmworkers between 2020 and 2022.

Farmers may also face rising costs for fertilizers and equipment due to Trump’s new tariffs. A 10% levy on Canadian potash, an essential fertilizer component, could spike prices. The administration has also increased duties on steel and aluminum, crucial for manufacturing tractors, silos, and irrigation systems. Hot-rolled coil steel—a benchmark product—has already jumped 32% this year.

Federal Budget Cuts Add More Uncertainty

As part of Trump’s aggressive plan to shrink the federal government, the USDA laid off 6,000 employees in February. Some of these workers were scientists studying crop-threatening diseases and pests. In response to backlash, USDA Secretary Brooke Rollins promised to rehire many of them, and courts have already ordered reinstatement of some employees.

But damage may have already been done. The Soybean Innovation Lab at the University of Illinois, once funded by USAID, has been terminated. The lab focused on developing soybean farming in sub-Saharan Africa, potentially opening new markets for U.S. growers while also researching diseases like soybean red leaf blotch, a fungus that hasn’t yet appeared in the U.S. but could devastate domestic yields if it spreads.

“There were huge opportunities for the U.S. if [sub-Saharan Africa] flipped to soy from palm,” said Peter Goldsmith, the lab’s director.

Cuts to Farm Programs and Aid

Other federal programs that once supported farmers are also under threat. In March, the USDA slashed over $1 billion in funding that supported food banks and school lunch programs that purchased from local farmers. In addition, a February executive order froze $2 billion in conservation payments from President Biden’s Inflation Reduction Act, leaving farmers with fewer options to invest in sustainable practices.

There’s talk of financial support packages, similar to the $28 billion bailout Trump rolled out during the last trade war in 2018. That program sent direct payments to producers of “trade-damaged” crops like soybeans, corn, and hogs. But despite the help, farm bankruptcies soared to record levels by 2019.

Will Protectionism Pay Off?

According to a Purdue University survey, nearly half of American farmers believe trade policy is the most critical issue for their business over the next five years. Yet, only 47% think a trade war will lead to a substantial drop in exports. That cautious optimism could be tested if export markets continue to shrink.

“Once you have a tariff on U.S. product, the market gets lost very quickly, and even when the tariff goes away, you don’t get it back,” said John Beghin, agricultural economist at the University of Nebraska-Lincoln.

Indeed, trade tensions have already encouraged China to import more soybeans from Brazil—a long-term risk for U.S. exporters.

Looking Ahead

Trump’s push for what he calls a “greatest age of prosperity” for American agriculture is at odds with rising costs, shrinking markets, and government downsizing. Whether farmers will reap the benefits of a more protectionist economy or fall victim to global retaliation remains to be seen.

“If, say, you get another 12 months from now and some of these things aren’t being settled and put to bed, we’re going to really start feeling the pressure,” Airy warned.

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