Trump’s tariff plan doesn’t look promising for farmers already facing low prices and foreign competition – The South Dakota Standard

Look at longer term price charts soybeans And cornDating back to 2016 when Trump won his first term, it is indeed depressing to see the stagnation in prices for American farmers growing these crops. Why depressing? Because both crops are trading at about the same level as they were eight years ago, which is actually pretty terrible when adjusted for inflation.

Furthermore, the near-term future doesn’t look particularly promising as President-elect Trump has announced his intention to begin imposing significant tariffs against Canada, Mexico and China. How these countries will react if Trump makes good on his announcement remains to be seen, but one thing is certain: international grain trade has undergone some profound changes, and a new set of tariffs is unlikely to have the same disruptive impact that followed Trump’s first attempt to to start a trade war.

More specifically, the most telling development is the way China has turned away from American agricultural products since Trump’s first trade war. China is no longer as dependent on American grain shipments as it was eight years ago.

A Reuters analyst writes: “In the years since (Trump’s trade war), the share of Chinese soybean imports from the US – the top American export to China – has fallen from 40% in 2016 to 18% in 2024, according to Chinese customs data, China reports has instead focused on imports from Brazil, which has also replaced the United States as China’s top corn supplier.”

In my view, the damage done to our agricultural sector is irreversible. The Kentucky Corn Growers Association agrees, saying last October of Trump’s initial trade war and the resulting development of alternative sources of supply to China that “U.S. farmers have worked for more than 40 years to build and maintain their strong trade relationship with China” and that “it’s been decades “It took them a while to fully develop.” While we expanded trade with China, the trade war quickly undid years of effort in a way that will be difficult to recover from.”

As I said, I think the damage to our agricultural exporters is probably irreversible.

So how will Trump’s latest tariff hike program affect South Dakota corn and soybean farmers? Probably some, but now that the Chinese market is significantly smaller than it was eight years ago, already low prices are likely to fall further from their current low levels.

The USDA is not particularly optimistic about the outlook. Nationally, the agency expects corn prices to decline to an average of $3.90 per bushel during the 2025-26 marketing period, about $2.60 less than in 2025-23. The USDA expects the price of soybeans to fall to an average of $10.00 per bushel, down $4.20 from the 2022 peak. For 2024, American Farm Bureau Federation, expects soybean revenues to “drop precipitously” by 14.6% and corn revenues to “plunge” by 20%. Due to global surpluses and resulting weaker grain and oilseed market prices, AFBF expects total farmer income to be 23% lower than in 2022.

A University of Illinois study Earlier this year shows that Brazilian soybean exports, which lagged behind American exports just 20 years ago, are now twice as high as American overseas sales. They exceeded U.S. sales in 2016, the year Trump was first elected, and rose sharply in 2018 as Trump’s trade war intensified. Farmdoc provides data showing that Brazilian soybean production has increased nine-fold over the last 30 years.

South American farmers should regularly thank Donald Trump, whose recent tariff threats, if followed through, are likely to increase China’s demand for agricultural products from suppliers outside the United States.

John Tsitrian is a businessman and writer from the Black Hills. He was a weekly columnist for the Rapid City Journal for 20 years. His articles and commentary have also appeared in the Los Angeles Times, the Denver Post and the Omaha World-Herald. Tsitrian served in the Marines for three years (1966-69), including a 13-month tour of duty as a radio operator in Vietnam. Republish with permission.

Photo: public domain, Wikimedia Commons