Ag Economist Explains Why U.S. Farmers Are Caught in Crossfire Of Tariff Uncertainty

Recently imposed tariffs – some paused, some rescinded, some increased - have created even more uncertainty in the agriculture economy.

The tariffs included reciprocal tariffs against a number of United States trade partners, and a number of tariff carve-outs, such as the United States-Mexico-Canada Agreement (USMCA) exemptions of 25% duties against our U.S. neighbors.

Currently, a blanket 10% tariff has been imposed on imports from many countries, while imports from China - the third-biggest U.S. trade partner - are tariffed at a prohibitive 145% after both countries continue to escalate retaliations. Other reciprocal duties have been delayed for 90 days, while some reports stated that exemptions are in the works for some electronic goods.

Much is still to be determined about the impact these duties will have on ag imports and exports - from machinery inputs to corn and soybeans. Iowa State University professor Chad Hart, an expert in ag economics, spent time with Successful Farming explaining what to keep an eye on during the trade uncertainty and how he says the current lack of clarity is unsustainable for the ag economy.

Where Are We?

"You could argue this goes back months. If we think about President Trump's trade policy so far during the second term, he has consistently talked about tariffs. So we knew in general what was coming. The chaos comes with looking for the details within that plan," Hart said.

Hart said he is concerned about the amount of moving parts still remaining.

"Agriculture gets concerned mainly because the uncertainty that we have about our own policies leads to uncertainties on how other countries will respond or act in kind. We know, given trade patterns across the globe, that when the U.S. is looking at what we send to other countries, agriculture does tend to be a significant part of that list of goods and services that we export. So we know that agriculture becomes a natural target for other countries' responses when it comes to changing their trade policy. So these higher level tariffs are basically targeting the three biggest agricultural markets that we have," Hart said.

Hart said that while markets are vacillating because they're trying to "reflect what the reality is today," it causes angst in the farming and lender communities. He added that it was reminiscent of the trade war with China in Trump's first term, but he was quick to point out the difference - mainly the amount of tariffs placed on other countries in recent weeks.

"That just creates more uncertainty, because if it was just one country - like it was last time with China - then you can at least work with other markets to hopefully absorb some of the lost sales due to the tariffs. This time around, it's hard to figure out who would be that set of countries that we can work with, because basically all countries are getting hit by at least some form of tariff. It's the old thing of, it's hard to play the game if you don't know the rules," Hart said.