American farmers are facing difficulties due to new tariffs imposed by the Trump administration, which threaten exports amid already low prices. With China retaliating against U.S. goods, farmers recall past challenges when soybeans faced significant tariffs, resulting in major revenue losses. The agricultural sector is also grappling with increased competition from Brazil, which is projected to outpace U.S. soybean exports. Overall, ongoing trade tensions have created a disruptive environment for American agriculture.
American Farmers Brace for Export Challenges Amid New Tariffs
American farmers are already struggling with low prices, and now they face the looming threat of diminished exports following the recent imposition of new tariffs by Donald Trump. Many in the agricultural sector backed him in the last election, but now they are apprehensive about the consequences of these trade policies.
“We anticipated this situation,” shares Jim Martin, a soybean and corn farmer from northern Illinois. “Our main concern is how this will all pan out.”
This past Saturday, the U.S. government enacted a universal 10% tariff on imports, adding to existing tariffs. Starting Wednesday, the Trump administration will escalate these rates for numerous countries, with China facing an additional 34% tariff.
In retaliation, China has already introduced equivalent tariffs on American goods, effective Thursday. Last year, U.S. agricultural exports to China totaled $24.6 billion, making it the third-largest trading partner after Mexico and Canada, with soybeans comprising a significant 52% of that total. In comparison, beef and cotton accounted for just 6% each.
Farmers are reminded of the challenges faced during Trump’s first term when China imposed a 25% tariff on American soybeans in 2018, resulting in a staggering 75% drop in exports that year. To mitigate the $27 billion loss in export revenue, the Department of Agriculture provided $23 billion in support during 2018 and 2019.
Despite these challenges, voters in 444 American counties reliant on agriculture overwhelmingly supported Trump, with 78% backing him in the recent presidential election, an increase from 73% in 2016. “The president assured us it would improve in the long run,” observes Martin, “so we need to evaluate how long we’re willing to wait.”
Market Pressures and International Competition
The recent increases in tariffs come at a time when soybean prices are already struggling, nearing their lowest levels since 2020 due to high production levels and stockpiles. Even before this trade conflict began, American soybeans were at a disadvantage compared to Brazilian exports, benefitting from a stronger dollar.
In 2015, both the U.S. and Brazil were competitive in soybean exports; however, projections for this year indicate Brazil will export more than double the amount of soybeans than the U.S. (105 million tons compared to 50 million), a stark contrast to a decade of stagnation for American soybeans.
Brazil’s competitive edge has been bolstered by the recent opening of the Chancay port terminal in Peru, financed by a Chinese company, which enhances Brazil’s capability to export food products directly to China. “This gives fewer reasons for buyers to consider American soybeans,” predicts Michael Slattery, a farmer in Wisconsin who grows corn, soybeans, and wheat. “It’s far more economical for them to source from Brazil.”
The potential loss of the Chinese market is concerning, as finding alternative buyers can be a costly endeavor, warns Christopher Barrett, a professor at Cornell University. Unlike 2018, when tariffs were primarily directed at China, this time Trump is imposing tariffs on all trading partners, which could provoke retaliation from other nations.
For exporters, the ongoing trade tensions between the U.S. and China represent a dual challenge. They face potential declines in sales while simultaneously dealing with increased costs for supplies, from equipment to fertilizers, as noted by the American Farm Bureau Federation. “This is a significant disruption to the global trade landscape,” Slattery reflects. “I attempted to sell as much corn and soybeans as possible before the tariff announcements.”