Farmers and meat producers across the U.S. can expect the new tariffs on Mexico, Canada and China and the retaliatory action from those countries to hurt their bottom lines by billions of dollars if they stay in place a while, and consumers could quickly see higher prices for produce and ground beef.
But some of the impact on farmers might not be felt until the next harvest and some products might actually get cheaper in the short run for consumers if exports suffer. And the price of corn, wheat and soybeans accounts for relatively little of the price of most products. Plus, President Donald Trump could offer farmers significant aid payments, as he did during the trade war with China during his first administration, to offset some of the losses.
In his address to Congress Tuesday night, Trump argued that agricultural imports hurt American farmers and asked them to “bear with me again” as he seeks to protect them. He didn’t mention any additional aid.
“I love the farmer,” he said.
If the tariffs make farmers uneasy about investing in expensive tractors and consumers worry so much about groceries that they cut other spending, that would hurt the economy overall and could even lead to a recession. And consumers were already worried about record egg prices amid a bird flu outbreak.
“Exactly how strong our economy is over time has a lot to do with U.S. consumers’ comfort with continuing to go out to restaurants and continuing to buy washers and dryers and just that general activity. And a lot of what we’re talking about here is probably going to slow some of that,” said Glynn Tonsor, an agricultural economist at Kansas State University.
The situation has some farmers stocking up on equipment and supplies in preparation for prices to go up, but it’s not like they can easily buy all their fertilizer ahead of time. And consumers might have a hard time stockpiling perishable products like avocados and ground beef.
The details of how the tariffs are implemented and whether any products are excluded will also matter.
How will farmers be hurt?
Corn and soybean prices for this year’s harvest already fell roughly 10% since the tariffs were first announced a couple of weeks ago.
Joe Janzen, an agricultural economist with the University of Illinois, said that has “snuffed out” any profitability in those crops. He called Trump’s comments that farmers may be able to sell more of their products at home “at best tone deaf.”
“There is no domestic market for the amount of corn, soybeans, wheat, and other agricultural products that we now export in significant quantities,” he said.
Meanwhile, as crop prices decline, farmers might see their fertilizer bill jump because 85% of the potash American farmers use in fertilizer comes from Canada, which also supplies some nitrogen fertilizer as well. The Fertilizer Institute President and CEO Corey Rosenbusch said “an open, fair, predictable and transparent trade environment between the U.S. and Canada is vital.”
“We need potash to raise healthier crops,” said Minnesota farmer Danny Lundell, who hosted Gov. Tim Walz on his corn and soybean farm near Cannon Falls on Tuesday. “And it doesn’t matter if you’re big, medium or small, it’s going to affect you.”
