In another Trump trade war, farmers could lose billions in export sales

If President-elect Donald Trump ignites a trade war with China, Mexico and Canada, many Wisconsin farmers may find themselves caught in the crossfire.

U.S. agriculture hasn’t fully recovered from a trade fight that Trump started in his first administration when he imposed higher tariffs, essentially a tax, on $370 billion in products from China.

The Chinese government retaliated with countervailing tariffs of up to 25% on over $100 billion worth of U.S. products, targeting soybeans, beef, pork, wheat, corn and sorghum. It then turned to Brazil and other countries, rather than the United States, for those commodities.

American farmers lost $27 billion in export sales in 2018 and 2019, largely from the China tariffs, according to the U.S. Department of Agriculture.

Even now, the share of China's soybean imports from the U.S. — the top American export to China — has dropped to 18% from 40% in 2016, Reuters reported in November.

With Trump threatening more trade sanctions, farmers could again suffer market losses.

“We’ve played the tariffs game before,” said dairy farmer Tina Hinchley, a board member of the state Department of Agriculture, Trade and Consumer Protection.

Trade wars can create unintended consequences

Unintended consequences of trade wars create hardship in rural America that's already stressed from economic forces beyond its control.

“When farms go out, other businesses close, schools close and churches close, because farmers are the backbone of everything,” said Hinchley, a Democrat.

Over the past 12 months alone, Wisconsin has lost more than 350 dairy herds and is now at fewer than 5,400 herds, the lowest point on record. Since 2019, more than 2,000 dairy farmers have called it quits, according to the state Agriculture Department.

“We can’t continue this way and still be America’s Dairyland,” Hinchley said.

Proponents of tariffs argue that the fees help keep the U.S. from being flooded with cheaply produced foreign goods including products subsidized by the Chinese government.

Some Republicans say Trump’s tariffs will help pressure America’s trading partners into more favorable deals. They point to an agreement he signed with China, in 2020, which helped end the 2018 trade war and boosted sales of U.S. agricultural products.

Many farmers are encouraged about Trump returning to the White House, according to a November survey from Purdue University.

A third of those surveyed said they expect their farm’s finances to improve next year. Looking ahead five years, 52% predicted widespread prosperity for U.S. agriculture.

However, 42% indicated they believe it's “likely” or “very likely” that agriculture could face a trade war, potentially leading to a significant decline in exports.

Chinese tariffs could hurt U.S. farmers

Chinese retaliatory tariffs can have damaging effects with permanent consequences, the American Soybean Association and National Corn Growers Association said in a study evaluating the impact a trade war would have on farmers today.

Trump has said he will impose a 25% tariff on all products coming into the United States from Mexico and Canada.

“This Tariff will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country,” he said on his social media platform, Truth Social.

Mexico’s president, Claudia Sheinbaum Pardo, responded with a warning that Trump’s plan would cause more inflation and hurt American businesses, such as the automakers that rely on Mexican assembly plants.  

“The response to one tariff will be another, until we put at risk companies that we share – yes, that we share," Pardo said in a recent press conference.

A generous share of Wisconsin milk production ends up in dairy products outside of the United States, with much of it going to Mexico.

Proposed tariffs on Mexico, Canada, and China — three main export destinations for U.S. dairy — are likely to reduce dairy exports to a degree that would harm farm milk prices and processor profitability, according to Charles Nicholson, an associate professor of agricultural and applied economics at University of Wisconsin-Madison.

Wisconsin farmers have come to rely on exports for selling beef, pork, soybeans, cranberries, cherries, ginseng and dairy products. In another trade war, farmers may once again find themselves at the mercy of federal government programs that act as a safety net when commodities prices fall.

The first Trump administration gave farmers around $28 billion to compensate them for their losses in the trade war with China.

"The amount of money raises questions about the strategy of imposing tariffs and permitting the use of taxpayer money to shield policymakers from the consequences of their actions," the National Foundation for American Policy said in a study in 2020.

Climate-smart farming at risk

Over the next five years, hundreds of millions of dollars could be funneled into efforts to help farmers preserve their soil, produce alternative fuels, and reduce the 10% of U.S. greenhouse gas emissions that come from agriculture.

That’s if Congress passes a Farm Bill that includes significant funding for climate-smart farming practices. Some lawmakers have sought to eliminate that funding in the five-year legislation.

Launched in the depths of the Great Depression, the Farm Bill has become the single largest piece of federal legislation supporting the livelihoods of farmers across the nation.

It assists farmers with risks, provides payments for many crops, and funds efforts to protect farm soil and water. A significant portion of the funding, about 80%, goes to low-income families to buy food through the Supplemental Nutrition Assistance Program known as SNAP.

The current Farm Bill, signed into law in Trump’s first term in office, has expired. But Congress has yet to produce a new plan, and until that happens, the current one will likely be extended into 2025.

Lawmakers will also be eyeing Project 2025, a plan for conservative political leadership, which may influence farm policies in the Trump administration.

Michael Slattery, a grain farmer from Manitowoc County, says the basic tenets include reducing taxpayer-funded subsidies, eliminating funds related to climate change, and moving SNAP to control outside the Department of Agriculture.

Project 2025, according to an analysis done by Slattery, seeks to eliminate the Environmental Protection Agency’s authority to implement a Renewable Fuels Standard for corn-based ethanol.

Around 40% of U.S. corn is grown for use as ethanol in vehicle fuel. Without that market, farmers could expect lower corn prices and reduced income. A significant number of farms, Slattery said, would be pushed into bankruptcy.

There's hope for organics

Some in organics agriculture are hopeful that Robert F. Kennedy Jr., Trump’s nominee to head the Department of Health and Human Services, will help promote their cause.

Kennedy has called for banning hundreds of food additives and chemicals, such as food dyes. He has called for getting ultra-processed foods out of school lunches as part of a goal to reduce the incidence of diet-related chronic diseases.

“We might have a more sympathetic administration than we’ve ever had in organics, in terms of protecting farmers who are being undermined by unfair and illegal competition from offshore,” said Mark Kastel, founder of Organic Eye, a Wisconsin based nonprofit focused on family-scale farms.

But while Kennedy has embraced organics, no one knows how much influence he would have over policies that have favored industrial-scale food production.

“I have been an equal opportunity critic of Democrat and Republican administrations. We praise them when possible, but not very often, sadly,” Kastel said.

Who is Brooke Rollins?

Trump’s nominee to head the U.S. Department of Agriculture is Brooke Rollins, a 52-year-old lawyer with an undergraduate degree in agricultural development from Texas A&M University.

In the first Trump administration, Rollins was the director of the Domestic Policy Council and served as assistant to the president on intergovernmental and technology initiatives.

After leaving the White House, she became president and CEO of the America First Policy Institute, which promotes conservative political ideologies.

AFPI has sought federal legislation to prevent foreign governments from accessing American farmland.

“The Chinese Communist Party already owns a significant and growing amount of American agricultural land. According to the U.S. Department of Agriculture, Chinese holdings of U.S. agricultural land surged from 13,720 acres in 2010 to 383,935 acres in 2012, and this land is now valued at nearly $2 billion,” AFPI said in July 2023.

In the second Trump administration, Rollins would head an agency that currently has nearly 100,000 employees overseeing farming, forestry and food safety policies. USDA also oversees federal nutrition programs, including SNAP, and sets standards for school meals.

Rollins would replace Agriculture Secretary Tom Vilsack, who was nominated by President Joe Biden to return to a role where he served for eight years under President Barack Obama.

Paste BN contributed to this article.