Iowa farmers are bracing for another possible round of tariffs as incoming President Donald Trump threatens to levy heavy duties on China, Mexico and Canada, agriculture’s biggest trading partners.
Trump, who takes office Monday, has swung widely on the countries and products he plans to slap with big tariffs — including a 10-20% tax on all U.S. imports — but he frequently returns to placing trade penalties on China, Mexico and Canada, leading buyers of U.S. corn, soybeans, pork, dairy and ethanol.
Those farm goods are important to Iowa, the nation’s top producers of corn, pork, eggs and ethanol, second-largest soybean grower and seventh-largest beef and turkey producer.
“Market access is critically important for us,” especially given the downturn that farmers are experiencing, says Stu Swanson, a north-central Iowa farmer and president of the Iowa Corn Growers Association board.
Already, farmers are struggling with lower corn and soybean prices, which have dropped about 40% since 2022. Farm income has tumbled as well, falling 27% over the last two years from a record high three years ago, U.S. Department of Agriculture data shows.
“A trade war never helps agriculture. It always hurts because we’re dependent on exports,” says Chad Hart, an Iowa State University agricultural economist.
USDA data shows that exports make up about 20% of U.S. farm sales.
“Anything that messes up export creates a problem,” Hart says.
Iowa is already seeing the farm downturn affecting ag-related businesses, with companies such as Deere & Co., Kinze Manufacturing, Bridgestone/Firestone, Tyson Foods cutting about 5,600 jobs in Iowa since last year.
With Trump threatening a 60% tariff on China, U.S. corn and soybean growers — and the rural areas that rely on their business — would be hit hard with a retaliatory duty, losing about $7 billion annually over the next decade, a study commissioned by the farm groups show.
Corn and soybean sales would shift to Brazil and Argentina, which already are cutting into America’s sales to Beijing.
China, the top buyer of U.S. soybeans at $15 billion in 2023, has options when it comes to buying farm products, Hart says. And “Brazilian soybeans don’t face a tariff,” he says.
First Trump tariffs still loom over farm goods
In his first term, Trump levied tariffs on imported steel, aluminum, solar panels and other goods valued at $380 billion, according to the Tax Foundation, a Washington, D.C., nonpartisan think-tank.
It sparked big tit-for-tat tariffs that slammed U.S. farm exports, especially to China, experts say. Trump hammered out an agreement with China, called Phase One, requiring the country to purchase $200 billion of U.S. goods, a pact that was disrupted by the global pandemic and recession.
Many of those trade penalties continue to hang over farm goods, industry groups say, since President Joe Biden continued many of the duties and expanded some. Luckily, China has waived tariffs on several U.S. farm goods, beginning in 2020. But farm groups worry that they can be easily reinstated.
If that were to happen, beef would face 40% tariffs for exports to China, according to the Meat Institute, a Washington, D.C., group that represents the nation’s largest meatpackers, in a letter last year to Biden trade officials, urging tariffs against China be lifted.
U.S. soybeans would face a 30.5% tariff; and corn, as high as 90%, according to the American Soybean Association and the National Corn Growers Association study. And China’s tariffs on some U.S. pork products could climb to nearly 70% without waivers, the Meat Institute says.
American pork producers still face a 25% duty, even after China waived a 25% penalty, says Maria Zieba, a National Pork Producers Council government relations vice president. That’s a “25% retaliatory duty that no one else in the world” pay, she says.
U.S. farmers would struggle to find markets to replace China, Mexico and Canada in another trade war, says Hart, the ISU economist.
At $5.4 billion, Mexico bought more U.S. corn than the next three countries’ purchases in 2023, the most recent annual data available. And China bought more than half of the U.S.’s $27.7 billion in soybean exports, more that the next 10 countries’ purchases altogether, USDA data shows.
“That’s an incredibly large customer to try to replace,” Hart says.
China also buys some pork products that U.S. consumers don’t purchase, like offal, which includes an animal’s liver, heart, kidneys and lungs, Zieba says.
“Without that market access, we wouldn’t really have a place for that domestically because of consumer palates,” she says.
Last trade war cost Iowa ag $1.46 billion
Agriculture bore the brunt of the last trade war, hitting the Midwest “most severely,” the Meat Institute wrote in June.
Ag lost $27 billion in exports and states that lead in soybean, pork and corn production took the biggest hits: Iowa lost $1.46 billion, followed by Illinois at $1.41 billion, and Kansas, $955 million, a USDA study of the trade war shows.
Those states also received the largest government payments from Trump, designed to offset trade losses: Iowa snagged the most at $2.58 billion, with Illinois coming in at $2.57 billion and Kansas, $1.56 billion. Altogether, Sonny Perdue, Trump’s former ag secretary, sent $23.1 billion in assistance to farmers.
U.S. subsidies for farmers grew to a record $45.6 billion in 2020, the last year of Trump’s market facilitation payments and the beginning of pandemic assistance to the nation’s farmers and livestock producers, USDA data shows.
Unlike Trump’s first term, though, it’s unclear whether the president could again tap the Commodity Credit Corp. to help offset lost ag income, given congressional members’ efforts to restrict USDA’s access.
“There’s a big question now about where any money for that support would come from,” says ISU’s Hart, especially with Congress sending farmers close to $31 billion in aid late last year as they extended the 2018 farm bill. About $21 billion is slated to help farmers struggling to recover from natural disasters and $10 billion to those struggling with low commodity prices.
The big cash infusion might make providing more trade aid difficult, especially given the need to pass a new farm bill, Hart says.
“There are a lot of budget hawks in Congress that are opposed to additional spending that doesn’t come with budget cuts somewhere else,” he says.
Could tariff threats open up trade options?
Swanson, the Iowa Corn Grower leader, says he could see tariffs threats used to open trade negotiations and expand markets.
Agriculture still struggles with trade challenges, like ethanol imports from Brazil, which can “flow into the U.S. tariff-free. But our ethanol flowing back into Brazil is under tariff,” Swanson says.
“We’d rather not have tariffs, but there could be benefits” if used wisely, he says.
Swanson said past administrations have failed to focus as much as needed on trade, even with Trump’s team reaching a new trade agreement with Mexico and Canada and creating the Phase One pact with China. And Biden’s administration successfully argued for continued U.S. corn exports into Mexico.
“It hasn’t been a priority for our country,” he says, adding that domestic corn use could increase if the U.S. would make gasoline with 15% ethanol available year-round. The renewable fuel has been banned during the summer over emission concerns that the ag industry says are outdated and not scientifically valid.
Aaron Lehman, a central Iowa farmer who leads the Iowa Farmers Union, says it’s frustrating for ag groups to lose trade they’ve spent decades building.
“Trade relations are built over time, after you prove yourself,” he says. “Unfortunately, trade relations can be destroyed in a hurry.”
And Lehman says Trump’s trade assistance brought long-term problems, favoring “mega farmers” who used the subsidies to drive smaller farmers out of business.
“It just helped consolidation,” he says.
A government analysis of the program three years ago found USDA paid $163.4 million to nearly 1,200 high-income farmers who didn’t qualify for payments, among other problems.
Lehman also says he’s concerned that tariffs will come at a time when farmers are “most vulnerable,” looking at another year of production costs outpacing revenue.
“Instead of taking a measured approach that deals with real trade issues” and working with U.S. allies, Lehman worries the Trump administration will rush to tariffs that “puts farmers at a lot of risk. The timing couldn’t be worse,” he says.
