American farmers are facing an uncertain future due to new tariffs implemented by the Trump administration, which threatens to reduce exports significantly. The 10% blanket tax, along with increased tariffs on imports from China, has raised concerns among farmers already struggling with low prices. With soybeans being heavily affected, competition from Brazil intensifies, and the loss of the Chinese market poses a major challenge. The situation is compounded by rising supply costs, leading to fears of a bleak agricultural outlook.
American Farmers Face Uncertain Future Amid New Tariffs
Struggling with already low prices, American farmers are bracing for a significant decline in their exports following the implementation of new tariffs by Donald Trump, the candidate they overwhelmingly supported in the last election. “We anticipated this situation,” shares Jim Martin, a soybean and corn farmer from northern Illinois. “Our concern lies in how this will ultimately be resolved.”
On Saturday, the United States enacted a blanket 10% tax on imports, compounding existing tariffs. Starting Wednesday, the Trump administration plans to escalate these tariffs for numerous countries, including a staggering 34% on imports from China. In response, China retaliated on Friday by imposing equal tariffs on American products, set to commence on Thursday.
Impact of Tariffs on American Agriculture
In the previous year, American agricultural exports to China reached $24.6 billion (€22.4 billion), making it the nation’s third-largest trading partner after Mexico and Canada. Notably, soybeans constituted over half of this total (52%), overshadowing beef (6%) and cotton (6%). Farmers recall the significant impact of Trump’s earlier term, particularly the 25% tariffs China placed on American soybeans in 2018, which led to a staggering 75% drop in exports that year due to U.S. protectionist measures.
To mitigate the $27 billion drop in export profits, the Department of Agriculture (USDA) provided $23 billion in assistance during 2018 and 2019. Despite these challenges, voters in the 444 U.S. counties reliant on agriculture still supported Donald Trump with 78% of their votes in last November’s election, a rise from 73% in 2016. “The president assured us that things would improve in the long run,” Jim Martin reflects, “so we must consider how long we are willing to wait.”
The tightening of tariffs coincides with soybean prices nearing their lowest levels since 2020, driven down by an oversupply. Even prior to the trade conflict, American soybeans struggled against Brazilian competitors, bolstered by a robust dollar. Back in 2015, both nations were nearly equal in export volumes. However, this year, Brazil’s exports are projected to surpass those of the U.S. by more than double (105 million tons compared to 50 million), maintaining a stagnant performance for American soybeans over the past decade.
Brazil’s competitive edge has been further enhanced by the inauguration of the massive Chancay port terminal in Peru, funded by a Chinese operator, which streamlines the export of food products to China. “There will be even fewer incentives to purchase American soybeans,” predicts Michael Slattery, a farmer of corn, soybeans, and wheat in Wisconsin. “Purchasing from Brazil is significantly cheaper.” Christopher Barrett, a professor at Cornell University, warns that losing the Chinese market is a substantial setback, as finding alternative buyers can be prohibitively expensive.
Unlike in 2018, when Donald Trump exclusively targeted China, this time he is raising tariffs across all trading partners, which could prompt retaliatory measures from other countries, as noted by Barrett. For exporters, the ongoing conflict between the United States and China represents a double-edged sword. Their sales face potential penalties, while “tariffs will inflate their supply costs,” encompassing everything from tools to fertilizers, according to the American Farm Bureau Federation (AFBF). “This marks a significant upheaval in the international landscape,” Michael Slattery explains. “I attempted to offload as many soybeans and corn as possible before the announcement of the new tariffs.”