America’s farmers have once again found themselves at the center of global trade tensions this week as Donald Trump’s implementation of new tariffs was met with countermoves that could raise food prices and impact rural economies.
China’s immediate retaliation Tuesday largely focused on agriculture. Canada also offered a focus on the sector in a reflection of the importance of farmers — both politically and economically — to Trump.
It’s a partial replay of Trump 1.0 trade fights that played out in 2018 and 2019. But there are plenty of differences this time around as global trading relationships have shifted and Trump’s 25% duties on Canada and Mexico open up another set of issues for farmers.
Canadian Prime Minister Justin Trudeau underlined Tuesday that the fight with his country will impact US agriculture when he addressed the tariffs and said Trump’s actions would, in part, impede access to crucial products like “fertilizers that we have and that the United States needs to grow and prosper.”
Trump appeared to try to get ahead of the various moves earlier this week by posting online Monday that he would be imposing his own agriculture tariffs on April 2 and telling American farmers to “get ready to start making a lot of agricultural product to be sold INSIDE of the United States.”
He added that farmers should “Have fun!” Whether farmers’ bottom lines agree very much remains to be seen. The 2018/2019 standoff took such a deep toll on US farmers that the first Trump administration was forced to step in with more than $20 billion in financial assistance to make up the shortfall.
Read more: What Trump’s tariffs mean for the economy and your wallet
“Agriculture is often dragged into trade wars even in smaller-scale fights, and this is true regardless of who was in the White House,” said Wendong Zhang, an assistant professor of applied economics focused on agriculture at Cornell University.
He has analyzed China’s trade retaliation tactics and noted Tuesday that there are clear parallels to Trump 1.0 (as well as earlier trade fights), as China responded to trade limits with a focus on agriculture to “hit the US stakeholders where it’s economically meaningful and politically salient.”
It’s a playbook that China unfurled again this week when, as it has been signaling for weeks, the country responded to Trump’s blanket tariffs with a wave of agricultural-focused duties.
China imposed tariffs of up to 15% on a series of US farm products, including some top exports to China such as soybeans, wheat, meats, corn, and cotton.
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China’s retaliation also included halting Chinese goods to 15 American companies. But the influence on agriculture could be the most directly felt, with China a top overseas market for American farmers and the ups and downs of US-China relations flowing through the price of soybeans and other products.
A farmer used a barn to show support for Donald Trump August 2024 near Charles City, Iowa. (Scott Olson/Getty Images) ·Scott Olson via Getty Images
What Trump rolled out Tuesday were 25% tariffs on all Mexican and Canadian imports — except for Canadian energy products, which will face a lower 10% rate. Trump also doubled his blanket tariffs on China to 20%.
For his part, Trudeau tried to speak Tuesday to American voters, saying “there are no winners in a trade war” and then adding directly in remarks focused on Trump that “this is a very dumb thing to do.”
And the focus on fertilizer is clearly being watched in the heartland. Canadian fertilizer is a key ingredient in US farms and even led Iowa Sen. Chuck Grassley — otherwise a stalwart Trump ally — to recently “plead” with Trump to exempt the product, but to no avail.
Mexico also announced 25% retaliatory tariffs on Tuesday, with Mexican President Claudia Sheinbaum saying “there is no motive or reason, nor justification that supports this decision that will affect our people and our nations.”
The focus on farmers now is likely to persist in part because of the issue’s political resonance among Trump’s agriculture base.
“Selling the public and Trump’s voters on this will be paramount in the months ahead, hence other nation’s focus on penalizing red states and farmers,” wrote Henrietta Treyz of Veda Partners in a note Tuesday.
She added that these impacted Americans, in a political sense, “are the main source of leverage they might ultimately be able to exert on Trump to have him relent on the tariff front.”
Canada also followed through Tuesday with tariffs targeting key sectors in GOP-run states, like Florida orange juice and Kentucky bourbon.
Donald Trump speaks to supporters before a Farmers for Trump banner in Council Bluffs, Iowa, in 2023. (Scott Olson/Getty Images) ·Scott Olson via Getty Images
Democrats were also quick to pounce on the impact on farmers.
“American farmers and exporters are already seeing their markets evaporate and jobs destroyed as a result of Trump’s senseless trade war,” offered Oregon Sen. Ron Wyden in a statement slamming the move.
Perhaps the key question for farmers is what comes next. Beijing has offered more limited retaliation so far — and suggested an openness to talks — but also indicated that plenty more products could be in for additional Chinese tariffs if the talks break down.
In the years since Trump’s last standoff, Zhang notes, China has shifted many of its trading relationships to places like Brazil, but it still remains reliant on things like American soybeans.
The bottom line, he says, is that the trade fight is likely to hurt both economies.
“If this carries on, as we saw before, then we might see a replay of a significant need,” Zhang said Friday of Americans, suggesting that Trump will likely need to offer up another round of billions in financial assistance if tariffs are left in place for an extended period.
Ben Werschkul is Washington correspondent for Yahoo Finance.
Every Friday, Yahoo Finance’s Rick Newman and Ben Werschkul bring you a unique look at how U.S. policy and government affects your bottom line on Capitol Gains. Watch or listen to Capitol Gains on Apple Podcasts, Spotify, or wherever you find your favorite podcasts.
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