How the Trump Administration’s Tariffs Affect Midwestern Farmers

This year, the Trump Administration (the “Administration”) has enacted several tariffs that may have significant long-term consequences for American farmers. Some of the Administration’s tariffs have already prompted major trading partners to retaliate in a way that is harmful to farmers. For instance, the Administration implemented a 25% tariff on steel imports and a 10% tariff on aluminum imports. In response to these tariffs, China imposed a tariff on soybeans, corn, and beef, while Mexico, Canada, and the European Union have imposed tariffs on potatoes, steel, and whiskey.

The retaliatory tariffs imposed by our trading partners will likely result in harm to rural communities that depend on agriculture. The import tariffs will create a higher cost to farmers looking to export their crops, livestock, and other resources—a blow that many farmers will not be able to absorb.

Pork exports to China from the United States have previously accounted for more than 10% of total U.S. livestock exports. The pork industry, as a whole, may experience a significant downturn now that American pork is subject to Chinese tariffs as high as 70%.

The Administration’s tariffs are likely to increase the cost of American agricultural products to foreign customers. Roughly $14 billion worth of soybeans were exported to China from the United States in 2017. With the Administration’s new tariffs, farmers may be forced to charge higher prices in order to obtain equivalent profit margins. Many farmers fear that these higher prices could lead foreign trading partners to look elsewhere for agricultural products—and, in fact, some countries are already doing so.

China has already begun to import crops and livestock from other countries who sell the products at much cheaper prices and with fewer tariffs, and recently announced its commitment to working in South American markets (such as Brazil).

What Are the Long-Term Consequences?

Although the Trump Administration announced plans to aid farmers with a $12 billion emergency relief package, this is likely to be a short-term solution to a long-term problem. It is unlikely that any relief package will restore the conditions of the trading markets that American farmers have spent decades developing.

It is difficult, at this point, to predict the long-term effects of the Administration’s tariffs. The Administration’s $12 billion relief package will, certainly, provide some temporary relief, but the damage to trade relationships and risk of long-term economic loss may outweigh the benefit of any immediate aid.

For questions about the new tariffs, contact one our our Sioux Falls, Sioux City, or Omaha attorneys today.