Local farmers worry trade wars could hurt 'razor-thin margins'

Yahoo

07-03-2025

Farmers throughout Frederick County are bracing for the impacts of President Donald Trump's trade war with the United States' three biggest trade partners.
Mark Townsend, associate agriculture extension educator for Frederick County through the University of Maryland, said farmers and exporters are 'freaked the hell out.'
On Tuesday, Trump imposed 25% tariffs on imports from Mexico and Canada and raised the tariff on imports from China to 20%.
In response, the Chinese finance ministry announced a 15% tariff on corn, among other items, and 10% tariff on soybeans, among other items, coming from the U.S.
The Canadian government announced a 25% tariff on unspecified American goods. The Mexican government said it would impose its own retaliatory tariff, with details to come Sunday.
Agricultural goods are priced on global markets, said Townsend, with the specifics of these trade wars impacting major agricultural products locally.
Soybeans and corn accounted for over 80,000 acres of farmland in the county, according to the USDA, the two largest crops by land use in Frederick County.
Of the $24.5 billion in total U.S. export of soybeans, $12.8 billion went to China in 2024 and $2.3 billion went to Mexico, according to the USDA.
Mexico was the largest importer of U.S. corn, $5.6 billion, with Canada, at $449 million, and China, at $328 million, also major importers, according to the USDA.
Townsend said he worries the trade war will hurt Frederick County farmers, particularly given the rise of Brazil's competing soybean production.
'On a global side of things, this makes us non-competitive,' he said. 'Brazil is going to eat our lunch.'
David Burrier, a farmer in Union Bridge and a vice president of the Frederick County Board of Directors for the Maryland Farm Bureau, said China has invested heavily in Brazil and other South American countries.
'We absolutely don't want to lose our number-one buyer,' Burrier said.
MARKETS
The markets for corn and soybeans reacted even before Tuesday's news.
'The money we are losing in the market was ahead of this tariff,' Burrier said.
A look at the futures markets for both corn and soybeans on the Chicago Mercantile Exchange paint the picture.
Feb. 4 marked the high-water mark for soybean futures. The March and May markets closed at $10.75 and $10.88 per bushel, respectively, according to the CME Group.
Those markets closed at $9.84 and $9.99, respectively, per bushel on Tuesday, before rebounding slightly Wednesday to $9.97 and $10.11, respectively, according to the CME Group.
Townsend said on Wednesday morning that it was a 'pretty nasty, dramatic' decline.
Corn markets experienced similar trends.
Corn markets
Corn markets have been down since the end of February. Futures markets exist for different months and are priced per bushel here. Farmers throughout the county worry that this trend may lead to thin or negative margins on their crops this year.
Another concern is how avian flu could impact the grain markets, according to both Burrier and Townsend. Both added that such concerns had not been reflected in markets yet.
Townsend said agricultural imports from Canada could create further issues.
The Fertilizer Institute estimates that 85% of potash imports come from Canada. Additionally, nearly 10% of U.S. nitrogen fertilizer needs are met by Canadian suppliers.
Increased input costs and soft markets led Townsend to say he worried this season will bring 'razor-thin margins, if not negative' ones.
'We sure would hope this brings everyone to the table,' Burrier said.
PRECEDENT
Trump implemented a similar trade war with China during his first term as president.
The president initiated talks with Chinese President Xi Jinping in 2017, before announcing plans to impose tariffs on more than $550 billion of Chinese products, according to reporting at the time.
The Chinese government retaliated with tariffs on U.S. goods.
In 2017, the U.S. exported $12.2 billion in soybeans to China, according to the USDA.
That figure fell to $3.1 billion in 2018.
Burrier said a difference between then and now is the lack of a buffer in the broader agricultural market.
'Our concern right now is that we are on a razor-thin margin,' he said.
Richard Wilkins, a Delaware farmer and executive director of the Mid-Atlantic Soybean Association, agreed.
'The agricultural economy is not as healthy as it was in 2018,' Wilkins said.
THE CASE FOR TARIFFS
Belinda Burrier, David's wife and a former member on the national United Soybean Board, said that while the trade war was tough at first, 'as time went on, it actually benefited us.'
Wilkins said that as 'a humble farmer,' he has long felt international markets were inaccessible to U.S. farmers due to both tariffs and other economic barriers.
'That's been something that's troubled me as a farmer for quite some time,' he said.
Wilkins added that he felt tariffs could provide an economic tool as outlined in the Trade Act of 1974.
He said that such a mechanism could generate income to make whole those who were hurt by foreign actions, as well as create incentives for other countries to negotiate trade agreements with the U.S.
Wilkins pointed to India as an example.
The second most populous country in the world, he said, has historically banned imports of genetically modified soybeans and soy products.
'Basically, India shuts us out of their marketplace entirely,' Wilkins said.
However, in 2021, India allowed shipments of genetically modified soymeal in response to poultry feed prices, according to reporting at the time.
Wilkins said tariffs can help facilitate conversations between countries to open markets for U.S. farmers.
'It doesn't sound like a bad tactic to me,' he said.
But Wilkins said the soybean market in the region is experiencing 'lots of apprehension' in the meantime.
Addressing Congress on Tuesday, Trump said agricultural imports hurt American farmers.
As the trade war develops, he asked farmers to 'bear with me again' as he looks to protect them through better trade deals.
'I love the farmer,' Trump said.