By Vincent H. Smith and Joseph W Glauber
U.S. producers of soybeans, corn, wheat, hogs, and many other agricultural commodities are prime targets in a trade war
Adding to farmers’ concerns is doubt about the Trump administration’s willingness to increase farm subsidies.
American farmers overwhelmingly voted for Donald Trump last November. But now the Trump administration’s leap into levying high tariffs on imports from major trade partners bodes ill for U.S. producers of soybeans (S00), corn (C00), wheat (W00), hogs (LH00) and many other agricultural commodities.
Those tariff-targeted export markets are crucial revenue sources and drivers of higher market prices for U.S. farmers. Many of those markets will be lost as Canada, Mexico, China and other countries threatened by the Trump administration’s trade policies respond by imposing countervailing tariffs and other measures on imported U.S. products, especially agricultural commodities.
China and Canada have already levied substantial retaliatory tariffs on U.S. exports in response to Trump’s tariffs. These reactions should not be a surprise. In 2018, China responded to the first Trump administration’s efforts to use tariffs as a form of economic warfare with prohibitive tariffs on imports of U.S. soybeans and other commodities. Other countries subjected to increased tariffs followed suit.
As a direct result, prices for U.S. farmers’ soybeans declined by at least 30% percent, hog prices fell substantially, and prices received by U.S. farmers for other commodities were also estimated to decline, though more modestly. To placate a frustrated and politically noisy farm sector, then-Agriculture Secretary Sonny Perdue used more than $23 billion of unspent Commodity Credit Corporation (CCC) funds to compensate farmers for losses caused by the trade actions.
This time around, we are seeing what could be a repeat of 2018. China has already explicitly targeted soybean, feed grain, chicken and other U.S. agricultural exports. The European Union has also threatened to take countervailing actions against U.S. exports if Trump levies new tariffs on imports from the EU. The EU imposed duties on orange juice, peanut butter and bourbon imports in 2018, following the imposition of U.S. duties on steel and aluminum. This time, retaliatory actions could be broader and hit other important imports, including California wines and soybeans.
Read: Trump’s reciprocal tariffs could bring stagflation – and deflate his support
Farm organizations are rightly concerned that losses in export markets will sharply reduce crop and livestock prices and adversely affect farm income. Agriculture Secretary Brooke Rollins recently offered assurances that, just as in 2018 and 2019, American farmers would be compensated by the administration for such losses. Many farmers, however, remain concerned about whether Rollins will be able to deliver such subsidies – which also would likely add to the federal budget deficit.
With the Trump administration “laser-focused” on reducing government spending, Rollins may find that the Department of Government Efficiency, (DOGE) or the Office of Management and Budget will tie her hands with respect to the use of congressionally annually appropriated, but unspent CCC funds, which were the source of farmers’ compensation payments in 2018 and 2019.
Adding to farmers’ concerns is doubt about the Trump administration’s willingness to increase farm subsidies. Speaking to a broad array of farm interest groups at the 2025 Commodity Classic on March 2, Rollins clearly stated that she could not guarantee to maintain current subsidy levels for the federal crop-insurance program, almost universally described by those groups as the most important income-support program for their members.
The prospect of significant tariff-driven reductions in 2025 prices and incomes that may not be compensated by a Trump administration raid on federal funds is worrying enough for U.S. farmers. Moreover, farmers are increasingly likely to face long-run losses because of increased competition in traditional export markets. A direct consequence of the 2018-19 trade war, for example, was that China turned to Brazil and other agricultural commodity exporters as potential future sources of soybeans and other commodities.
Importers have also become concerned about the reliability of the U.S. as a source for key agricultural commodities, prompting a search for alternative supply chains. In response, exporters such as Brazil have been willing to expand their production of some commodities, undercutting claims by the Trump administration that U.S. farmers will be able to find other markets for their crops and livestock.
The 2025 Trump trade war is a dark cloud that offers little in the way of silver linings for U.S. farmers, in the short term and beyond as importers of U.S. agricultural products permanently reduce reliance on an increasingly untrustworthy trading partner.
Vincent H. Smith is a nonresident senior fellow and director of agricultural policy studies; Joseph W. Glauber is a nonresident senior fellow, both at the American Enterprise Institute.
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-Vincent H. Smith -Joseph W Glauber
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03-21-25 0735ET
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