How Trump’s trade policy puts pressure on American farmers

Caleb Ragland, a soybean farmer in Magnolia, Kentucky, voted for President Donald Trump in 2016, 2020 and 2024. But now we have to navigate the customs minefield when the sector is already facing major headwinds.

Ragland works with his wife and three sons and has deep roots in the community. His family has been farming on the land for over two centuries. But over the past few years he has seen a double-digit percentage drop in crop prices while production costs have risen. Soybean futures have fallen by more than 40% over the past three years, along with corn futures.

He worries about the lifespan of his business, as pressure is placed on the industry as a result of tariffs imposed by the second Trump administration and as a result of retaliation from other countries.

“My sons could potentially become 10th generation if they could farm,” Ragland, who is also the president of the American Soybean Association, told CNBC. “And when we have our out-of-control policy, they operate our prices 20%, 30%, and on the flip side, and our costs go up.

This is not the first time farmers have had to deal with new tariffs. Returning to Trump’s first term, the trade war with China in 2018 – in the days when Ragland said the agricultural economy was “in a much better place than it is now,” the US agricultural industry costs more than $27 billion, with soybeans effectively making up 71% of annual losses.

That trade war caused lasting damage. To date, the US has not yet fully recovered its loss in market share for soybean exports to China, the world’s number one product buyer.

“Taxes break trust,” Ragland said. “It’s much harder to find new customers than to keep what you already have.”

Last week, the White House imposed a 25% tariff on goods from Canada and Mexico, and a further 10% obligation on China’s imports.

Trump quickly reversed the course by granting a month’s tariff delay to the carmaker on Wednesday, then suspended the tariffs a day later for Canadian and Mexican goods until April 2nd, but he said in an interview aired on Fox News on Sunday that tariffs “were up over time.”

China’s tariffs were not included in these exemptions. China retaliated with its own taxation targeting primarily US agricultural products. Specifically, US soybeans are subject to an additional 10% tariff, while corn will hit an additional 15% charge.

“We’re already at the point where we can’t hire,” Ragland said. “Why are we trying to humiliate injuries in the AG sector by essentially adding taxes?”

Ragland pointed out that he “values ​​the president’s ability to negotiate” and that he hopes Trump will succeed for the country. However, he emphasized that people in the industry, particularly soybean producers, “have no resilience in their ability to survive the trade war that they take away from the final bank.”

“People are upset,” Ragland said of feelings from other farmers, emphasizing the need for bailouts through transactions that reduce trade barriers and transactions that cut the new five-year comprehensive farm bill. “You’re talking about people’s livelihoods,” he said.

Agriculture Secretary Brook Rollins said last week that the Trump administration reportedly weighs some agricultural exemptions from tariffs in Canada and Mexico. Trump’s adjusted measures on Thursday included a 10% reduction in tariffs on potassium used in fertilizer.

Over 80% of American farmers’ needs for potash are provided by Canada, Ken Seits said. Nutrien – Canada-based crop input and service provider – BMO Global Metal, Mining & Critical Minerals Conference last month.

“If we look at the meaning of Nutrien’s tariffs, of course, the biggest argument is about potash, because we ourselves supply about 40% of that market in a market of 10 to 11 million tonnes a year.” “We believe that the costs of tariffs will be passed on to farmers in the US.”

Even within the scope of Trump’s tariff implementation, American farmers were warnings. Barometer readings from Purdue University/CME Group Ag Economy show that farmers’ sentiment overall improved in February, but 44% of survey respondents revealed that trade policy is the most important factor for farms over the next five years.

“When you ask insurance questions, the most important insurance is crop insurance,” said Michael Langemeyer, an agricultural economist at Purdue University. “Crop insurance is right there with Apple Pie and Baseball. It’s a very popular program because it offers a very effective safety net.”

“The fact that crop insurance is the second-faster in trade policy speaks volume,” he said.

A February survey found that nearly 50% of farmers thought the trade war was “highly likely” or “very likely” leading to a significant drop in US agricultural exports. Langemeier estimated that between mid-February and early March, the net profit margins on soy and corn associated with tariffs fell 33% per acre. That’s what he made, in addition to the fact that 2025 is not “to be a very profitable year before this.”

Economists believe there may be a slight downward adjustment in the feelings of the entire farmer in the short term. Nevertheless, the constructive outcome of the tariffs could be that they speed up signing new farm bills, he said.

“Well, if you don’t even know what the amount of the farm bill is, how can you come up with the amount of trade payments in the world,” Langemier argued. He hopes that the new farm bill will be signed at some point this year.

Aiming for the upcoming spring season, Bank of America analyst Steve Byrne said on February 25 that tariffs could lead to “more conservative purchases of crop inputs.” That means the risk of a reduction in the purchase of fertilizer. This can affect not only Nutrien, but also mosaics and other things. CF Industryanalysts pointed out.

Stocks of these companies, and other agricultural stocks Agco and DearAll were sold on March 3rd and March 4th, shortly after Trump’s tariff announcement.

“I think we saw the sale of AG shares this year due to general concerns that farmers aren’t that profitable,” Morningstar Seth Goldstein said in an interview with CNBC.

Over the past month, Mosaic has slipped almost 8%, while CF Industries has dropped by nearly 10%. Nutrien also lost over 1%. Agco and Deere got better during that time, earning 1.7% and 0.3% respectively.

When it comes to how this trade war will affect American farmers in the long term, Goldstein doesn’t think it has any meaning. He expects global trade trends to change over the next two or three years and cancel each other.

“This year may have a short-term impact of soybeans sitting in warehouses without any real available buyers, but I think we will eventually start buying more soybeans after looking at other countries,” the equity strategist said. “Maybe China will buy more soybeans from Brazil, but places like Europe may buy more soybeans from the US.

Currently, Brazil is projected to become the world’s largest soybean producer ahead of the US in the 2024/2025 marketing year, accounting for 40% of global production at the time, according to the Department of Agriculture. On the other hand, in the case of corn, the US is expected to be at the top, accounting for 31% of global production in the year of marketing.

But others on Wall Street believe that tariffs will become more important than trade dynamics.

Oppenheimer analyst Kristen Owen predicts that the job could bolster Brazil and become a major global producer of both corn and soybeans, but the US will become the kind of progressive supplier of the world.

“Brazil has the ability to grow area, particularly to grow, and to increase its share of the global grain trade,” she told CNBC. “Taxes and some of the other decisions the administration is making just to accelerate some of it.”