By Jim Meadows
The Trump administration’s tariff announcements this week are bringing uncertainty to farmers going into planting season. Farm groups warn that retaliatory tariffs will add an additional “burden” to U.S. producers.
Farmers in the Midwest are concerned about how they will be affected by the new tariffs President Donald Trump imposed this week.
On Tuesday, the Trump administration imposed 25% tariffs on most imports from Canada and Mexico. Trump has since paused the tariffs on imports that are under the U.S.-Mexico-Canada Agreement for both countries until April 2, NPR reports.
The administration also doubled the existing tariff on Chinese goods to 20% on Tuesday.
China responded with retaliatory tariffs of 10%-15% on several U.S. agricultural goods, including corn, chicken, pork, soy and beef, starting next week. Canada put an immediate 25% tariff on billions of dollars of U.S. goods.
The same day the tariffs were scheduled to go into effect, some 175 farmers were gathered at the annual All-Day Ag Outlook, a farming conference held by the University of Illinois just across the Illinois state line in Covington, Indiana.
There, central Illinois farmer Steve Warters said he’s worried about how Canada and Mexico’s retaliatory tariffs could cut into sales of his corn and soybeans.
But he said he also supports Trump’s stated goal of getting those countries to do more to block fentanyl from coming across the border. (Trump has also stated other goals, including more action by Canada and Mexico to curb illegal border crossings).
“We’re talking about going to Mexico, our largest corn buyer,” Warters said. “But I see what Trump’s trying to do, trying to slow down this drug traffic.”
China and Canada officials have both said fentanyl trafficking does not justify the tariffs, and that the U.S. is only using the issue as a pretext. Canada Prime Minister Justin Trudeau said in a statement Monday that fentanyl seizures on the U.S. border have reached “near-zero.”
Agricultural economist Joe Janzen said in practical terms, the tariffs will put a damper on farmers’ profits. Janzen, a University of Illinois professor who spoke at the Ag Outlook, said farmers are not just in business to survive, but to thrive.
“They're really in business for the times when food demand is really strong, prices are high, and that's when they can really make money,” Janzen said. “This places a limit on how much that can happen. Because part of the profitable times for farmers that we have seen in the last couple decades have been times when global demand for U.S. ag commodities has been really strong. And this limits that.”
During the last major trade war, U.S. agricultural export losses exceeded an estimated $27 billion from mid-2018 to the end of 2019, according to the U.S. Department of Agriculture’s Economic Research Service. Iowa, Illinois and Kansas were hit the hardest, with over $1 billion in annualized losses in Iowa and Illinois, and $955 million in losses in Kansas.
Mike Zuzolo heads up a commodity analysis and consulting service in Atchison, Kansas. He said the farmers he talks to are taking a “sit and wait” approach, to see if the tariffs will be effective in changing other countries’ policies, and how long that might take.
“The middle of the country is, I think, in a mindset that President Trump knows how difficult it’s going to be,” Zuzolo said. “Because agriculture is the tip of the spear when it comes to tariffs, and we’re seeing that now in our markets.”
Agriculture Secretary Brooke Rollins said during her Senate confirmation hearing in January that getting payments to farmers impacted by tariffs to offset losses would be “a top priority.” The last Trump administration dispersed $23 billion.
“We are prepared to execute something similar if approved, if confirmed, but also working with the White House to ensure we can close those holes for our farmers and ranchers moving forward under any sort of tariff execution in the next coming days, in the next few years,” she said during the Jan. 23 hearing.
In the meantime, farm organizations have warned that Trump’s new tariffs could do immediate harm to America's farmers.
On the day they were set to take effect, the American Farm Bureau Federation repeated long-standing warnings that the new tariffs would trigger retaliatory tariffs from the targeted countries that would mean higher prices for essential farm inputs, like fertilizer.
“Approximately 85% of our total potash supply – a key ingredient in fertilizer – is imported from Canada,” Farm Bureau Federation President Zippy Duvall said in a statement. “For the third straight year, farmers are losing money on almost every major crop planted. Adding even more costs and reducing markets for American agricultural goods could create an economic burden some farmers may not be able to bear.”
Thursday's delay of tariffs on Canadian imports includes potash, Politico reports.
A statement from the National Farmers Union questioned whether the Trump administration has a strategy in place to help American agriculture.
“Without a clear plan, family farmers will once again be left to bear the burden of decisions beyond their control, and eventually, so will consumers,” president Rob Larew said in a statement.
At the Indiana Farm Bureau, policy adviser Brantley Seifers agrees that farmers will bear the brunt of these newest tariffs.
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