Trump’s tariffs return uncertainty for farmers

Bob Hemesath has spent his entire life on his Northeast Iowa farm, raising corn and hogs alongside his brother. His business depends on open global markets and stable trade agreements.

But under President Donald Trump’s second term, that stability has once again been disrupted with the president’s push for higher tariffs on some of the nation’s most important trading partners.

“Anytime that a tariff is put on goods that I sell or export to those countries, that’s going to put me at a disadvantage to the marketplace,” Hemesath said.

A few weeks after returning to the White House, Trump threatened a 25 percent tariff on Canadian and Mexican imports. He also imposed a 10 percent tariff on Chinese goods, prompting retaliatory tariffs from Beijing and escalating tensions between the world’s two largest economies. Last Monday, Trump imposed a 25 percent tariff on all steel and aluminum imports.

Mexico, Canada and China account for more than 40 percent of total U.S. trade, valued at more than $2 trillion. As these trade relations become increasingly strained, economic uncertainty has deepened in rural America, leaving farmers bracing for a financial blow similar to what occurred during Trump’s first-term trade war.

“It certainly does increase the level of uncertainty,” said Ernie Goss, an economist at Creighton University in Omaha. “This uncertainty manifests itself in areas such as purchasing farmland and agriculture equipment.”

Mexico is the United States’ largest agricultural trading partner in terms of total exports and imports, with Canada following closely behind, according to the Economic Research Service of the U.S. Department of Agriculture. Agricultural trade with Mexico and Canada is crucial for U.S. farmers, particularly in the exchange of grains and meat products.

Meanwhile, China is also one of the United States’ top agricultural trade partners, especially as an importer of soybeans.

Trump has claimed any financial harm will be short-lived.

But Hemesath, who is also president of Farmers for Free Trade, a national nonprofit that mobilizes farmers to support trade agreements that expand export opportunities, said trade wars have a lasting impact.

“Those other countries are going to start looking elsewhere for those products, and if they can find them, that’s a market that I lose as I as a farmer,” Hemesath, a fifth-generation farmer, told Investigate Midwest during a phone interview. “And that directly affects my bottom line.”

During Trump’s first-term trade war, China imported fewer soybeans from the United States as it turned to other countries, including Brazil, which emerged as China’s primary soybean supplier. Much of that business didn’t return to U.S. farmers once the trade war ended.

“During the previous U.S.-China trade war, China learned a valuable lesson: diversifying supply chains to reduce dependency on U.S. agriculture,” Julien Chaisse, a trade expert and professor at the City University of Hong Kong, said in an email to Investigate Midwest. “Brazil and Argentina were already beneficiaries, and this move will deepen China’s commitment to alternative suppliers.

“Beijing does not treat agricultural imports as purely economic transactions but as strategic tools,” Chaisse added. “This shift is unlikely to be reversed, even if tariffs are later lifted.”

Farmers curb spending among uncertainty

Retaliatory tariffs from other countries also can increase costs for American farmers.

In response to Trump’s 10 percent tariff, China imposed 15 percent tariffs on coal and liquefied natural gas, along with 10 percent tariffs on crude oil, agricultural machinery and pickup trucks.

China also has responded with expanded export controls on rare earth minerals, an antitrust investigation into Google and the addition of two U.S. companies to its Unreliable Entities List, which tracks and penalizes foreign companies deemed threats to its national interests.

Meanwhile, Canada’s proposed retaliatory tariffs, currently on hold for a month, would impose a 25 percent surcharge on a wide range of U.S. products, including live poultry, dairy products, vegetables, coffee, tea, sugar and milling industry products.

Trade uncertainty and higher import costs can cause farmers to curb their own spending, which can have a negative impact on rural communities.

“If some of (a farmer’s) machinery was getting old, they need a new tractor or combine harvester, they’re not going to buy it in this environment,” said Colin Carter, a professor of Agricultural and Resource Economics at the University of California, Davis. “They’ll delay the purchase because if we get into a large trade war, revenues are going to go down. Who knows whether they’ll be compensated this time. It’s just not a good environment to make investment decisions.”

With high fixed costs — land, machinery and loan payments — farmers don’t have the luxury of sitting out bad years, Carter added.

“They don’t have a lot of flexibility,” Carter said. “Even if tariffs are imposed, they still are going to have these large costs. So they have to plant crops, even if they lose money doing it. These lose less money by planting compared to not planting”

For Hemesath, the Iowa farmer, that’s not just a theoretical concern — it’s his daily reality.

“We sit here now with margins that are still negative margins on raising crops,” he said. “Any loss of market share is only going to make that worse.”

Earlier this month, during a hearing of the U.S. Senate Committee on Agriculture, Nutrition and Forestry, agricultural leaders voiced their concerns about the potential return of Trump’s tariff policies.

Josh Gackle, chair of the American Soybean Association, warned that U.S. soybean farmers are facing significant uncertainty.

“With the new administration threatening tariffs on major export partners, our access to global export markets is in jeopardy,” he said.

The concern is backed by a 2024 study from the University of North Dakota, which found that if China implemented a 20 percent tariff increase on U.S. soybeans in response to a new trade war, North Dakota’s soybean exports could drop by 59.1 percent, amounting to an estimated $639.9 million in losses.

Nationwide, the study predicts a 32.4 percent decline in soybean exports, a blow that could devastate farmers already struggling with tight profit margins.

“I don’t want to be too extreme,” Gackle told Investigate Midwest in an interview last year, “but it creates a lot of anxiety and uncertainty for U.S. soybean producers, especially those in North Dakota.”

Trump’s unconventional trade war

Ron Baumgarten, a former deputy assistant U.S. trade representative who now works at the Washington-based firm BakerHostetler, said Trump’s tariff-driven trade strategy is a fundamental shift.

“One of the reasons for the tariffs is to get leverage,” Baumgarten said. “Trump’s theory is that U.S. tariffs are historically low compared to other countries, so why not use them as a negotiation tool?”

During Trump’s first term, he weaponized trade policy through Section 232 and Section 301 tariffs — key measures used by the United States to address economic and national security concerns. Now, in his second term, he is taking this approach even further.

By using the International Emergency Economic Powers Act — a never-before-used legal tool to impose tariffs under the guise of national security — Trump has bypassed public comment periods and regulatory hurdles, making trade decisions without checks or balances. Trump has threatened tariffs on Mexico and Canada in an effort to tighten border security and curb drug trafficking.

“This is the first time trade policy levers have been used on unrelated issues,” Baumgarten said. “We’ve always sanctioned countries like Russia over Ukraine, but using trade tools for domestic issues like immigration or fentanyl overdoses? That’s a completely new approach.”

During his first-term trade war, Trump offered billions in farm subsidies to offset the damage. While some farmers appreciated the aid, Hemesath saw it as a short-term fix for a long-term crisis.

“Certainly, it helps, but it doesn’t compensate fully for what you lose in the market, Hemesath said.

“Ag trade is basically 30 percent of the farm net income, so anytime we lose any trading, any ability to export our products affects the bottom line of our country and our fellow citizens and fellow communities.”

Mónica Cordero is a Report for America corps member and part of the Mississippi River Basin Ag & Water Desk team. Investigate Midwest is an independent, nonprofit newsroom. Our mission is to serve the public interest by serving as a watchdog over influential agricultural corporations and institutions through in-depth and data-driven investigative journalism.