Trump's tariff policies set up farmers for bailouts and bankruptcy

The Hill

24-03-2025

For someone who tells us frequently how much he loves farmers, Trump sure has a strange way of showing it.
Look no further than how his tariffs on China have sparked retaliatory actions targeting U.S. exports of products including soy, corn, wheat and pork. American grain farmers still struggle to regain the market share that they lost to Brazilian competitors the last time Trump was in power.
Potential responses from Mexico and Canada will only exact more economic damage. To the north, a possible tariff on potash — a key ingredient in fertilizer — will drive up input prices for our producers and cut into their already thin profit margins. To the south, if Trump's efforts at using tariffs in 2018 are any indication, U.S. farmers can expect their markets for pork, milk and cheese to be negatively affected.
Trump's promise during his address to Congress — that farmers will now be selling into our home market — may be forced upon our nation's food producers because they won't have the chance to sell anywhere else.
Still, agricultural policy doesn't have to operate this way. Tariffs particularly, when used along with a larger ensemble of tools such as targeted investments and antitrust enforcement, could make markets more profitable and competitive. But as tariffs are currently being deployed, farmers can expect four years of economic hardship.
Consider investments. Along with tariffs on foreign imports, say on fruits and vegetables from other countries, the government could dedicate resources to help producers enter the profession and take the place of aging farmers.
But rather than having such foresight when thinking about our nation's food security, the USDA has canceled the Local Food for Schools Program and the Local Food Purchase Assistance Cooperative Agreement, which together represent over $1 billion in funding to support local farmers sell to schools and food banks. Along with funding freezes for specific projects, including initiatives for planting organic crops and improving water lines on operations, farmers are having both their productive capacity and domestic markets taken from them.
What we know from Trump 1.0 is that when markets are harmed, the government may step in — with bailouts. Last time the Republican was in office, trade wars with China led to two relief packages. As much is almost guaranteed now, as export markets are threatened and programs that could help farmers transition for local, domestic production, are being cut.
Agriculture Secretary Brooke Rollins' expedited $10 billion in emergency payments to mark National Agriculture Day for 'market uncertainty' is a taste of what is to come.
Meanwhile, Trump has once again made dairy policy national news, targeting Canada for protecting its producers with tariffs in that country's system known as supply management. In terms of specifics, the Canadian system assures a base price for farmers by coordinating supply and demand, including what is imported into the country.
Back when renegotiating NAFTA, Canada's supply management system caught Trump's attention for limiting the entry of U.S. dairy exports. Part of the USMCA deal, which replaced NAFTA, assured U.S. dairy farmers slightly greater access to Canadian markets.
But even with the USMCA in effect, dairy farm exits have risen. In Wisconsin, from 2014 to 2024, the state experienced a 46 percent decrease in the number of dairies. The state led the country in farm bankruptcies in 2020 and 2021, fresh off the heels of Trump supposedly taking a stand to support U.S. farmers against unfair Canadian trade practices.
Moral of the story: Scapegoating the Canadian system for challenges dairy farmers face didn't help keep U.S. producers on the land when Trump was president the first time. Accordingly, there is no reason why pursuing this approach again will generate any different results.
Agricultural policy could be different, even during the Trump administration.
The National Family Farm Coalition's Milk from Family Dairies Act shows how this is possible.
Agreeing with the current administration on the issue of tariffs, particularly on imports from abroad that could drive down prices for U.S. producers, the proposal also dedicates resources for developing local farm infrastructure and confronting market consolidation.
This latter point must be part of any initiative dealing with agricultural policy, dairy included, as increased concentration in nearly every area of agriculture leads agribusiness corporations to artificially set prices to the detriment of both farmers and consumers. Specifically, as University of Missouri professor Mary Hendrickson notes, consumers suffer from inflation-inducing price fixing, as markets with few buyers force farmers to receive whatever compensation that they are offered for what they grow or raise.
Without tackling the concentrated nature of agricultural markets, Trump's promise to farmers that they can sell domestically is really an invitation to poverty.
Tariffs could be part of an effort to truly assist America's farmers. Trump deserves some credit in this regard, particularly for pushing back on the free trade orthodoxy that has reigned unchallenged for decades. But pushing tariffs on their own while contracts are cut and programs are canceled, is a recipe for disaster for our country's food producers. Farmers deserve better.