As the Trump administration’s tariff proposals continue to bring uncertainty, the agricultural sector is assessing how any forthcoming country by country trade deals may offset the disruption, or if the industry needs to brace itself for a different kind of future.
“Farmers are big exporters,” says Jacob Shapiro, director of research for the Bespoke Group. “For a hundred plus years, U. S. agriculture has been all about exporting its surplus abroad. So when you get the decline of U. S. relative power to some other countries in the world and rising protectionism and the threat of tariffs–which this started under the Obama administration but Trump has brought it to a crescendo–you get farmers who are really concerned about what the future looks like. They’re talking about changes that haven’t happened in their lifetimes.”
Shapiro says for the past four months, President Trump has talked about tariffs leaving many to think if he really will act on his intentions.
“People thought, hey, maybe he’s the boy who cried tariff. Maybe he’s going to pull back again and he’s not going to push forward,” Shapiro says. “And it seems like he’s pushing forward. I don’t blame people for being surprised by this because the Trump administration has been fairly mercurial about this.”
The U.S. export policies have been a growth strategy totaling more than $175 billion of exported ag products in 2024, up from $57.3 billion in 1998 according to the USDA. Those exports are currently concentrated with key trade partners.
According to Ty Kreitman, Associate Economist, KC Federal Reserve Bank, U.S. agricultural trade is particularly concentrated among Mexico, Canada, and China, which added up to be the destination for about 50% of the total value of U.S. agricultural exports in 2024. Kreitman cites exports to China account for 20% percent of U.S. soybean production, 55% of sorghum production, 20% of cotton production, and 8% percent of U.S. tree nut production (including 18% of pistachios.)
Vince Malanga, president of LaSalle Economics says farmers in the cross hairs for this latest round of tariff negotiations, along with automotive products.
“In order to reorder world trade, the question is how big and how fair?” Malenga says.
Hear more from him on Tuesday’s Agritalk:
Shapiro says tariffs can be a tool for trade deals, but he says they should be used with surgical intentionality.
“A scalpel is an incredibly useful surgical tool. We couldn’t like do modern medicine without scalpels. But if you took a scalpel to my jugular right now and sliced it, that probably wouldn’t be good for me. So tariffs are the same thing. They’re a surgical instrument. I think you can make a good case that there are particular sectors where it would be very smart to put tariffs on.”
As an example for tariff potential, he points to used cooking oil from China or canola from Canada.
“These have been eating up the market share that American soybean and corn farmers thought was going to go for renewable diesel and things like that,” he says. “You want to keep those products from being dumped into the American market so the American farmer who has planted these things as part of a renewable diesel, sustainable aviation fuel future can get the value that they think they’re going to accrue.”
The timing of the Trump tariffs intersects with new research highlighting “peak population” theories. One such is from Terrain, titled “The Big Shrink.”
Shapiro casts doubt on international trade playing the same role as it has for the U.S. agricultural industry. He says the longer-term wins will come from greater diversification in domestic markets.
“My message literally since early in the Biden administration was exports are not the future,” he says. “The U.S. government is not going to be there to support exports even though all these trade groups have gotten used to telling you that you need to be thinking a little bit differently in terms of what your end markets are. I’m not saying that we’re not going to export anything. The more you can ascend the value chain, the more that maybe you can sell some of these things abroad. But I think we’ve been neglecting the domestic market to our own detriment.”
John Newton, executive head of Terrain, says one of the takeaways from that report is improving the quality of products from the U.S. agricultural industry.
“You’ve got to build domestic demand. You’ve got to improve the quality of the products that we have here in the United States. The beef industry is a perfect example. The quality of our beef has improved dramatically,” he says. “Farmers have invested in the genetics to have a high quality and consistent steak around the country. So I think we’re moving away from produce as much as we can to produce high quality products that the consumers are asking for. And then again, building that domestic demand.”
Per the Terrain analysis, nearly all U.S corn, sorghum, soybean and wheat exports go to countries in population decline by 2050.
Matt Clark, economist at Terrain, offers four options in a path forward for U.S. agriculture:
- Deepening and broadening export markets strategically
- Capturing growing demand for high-value products
- Diversifying revenue streams
- Developing new domestic demand
Clark writes, “If new demand sources are unable to be developed, the long-standing model in U.S. agriculture of continuous productivity expansion could yield surpluses that weigh heavily on the farm economy. A new reality of a future world population that stops growing will require new approaches in U.S. agriculture.”
He highlights how 2050 may seem to be far out in the future, however, a 30-year farmland loan taken out today would pay off in 2055.
The trade policies of today will have a long tail for U.S. agriculture.
