Tariffs hurt farmers, consumers, North Dakota Farmers Union president says

Yahoo

19-04-2025

Apr. 19—JAMESTOWN — Tariffs are almost a "lose-lose" for North Dakota and hurt farmers and consumers, according to Mark Watne, president of North Dakota Farmers Union.
"It creates a certain amount of uncertainty on our reliability to both buy and sell to other countries," he said. "When you do it alone, then you really open up the world for moving trade to other areas. If you want to do a tariff, if you pick a specific problem and get multiple countries to come with you and then go after a single country, you might have some good rationale and good success, but broad-based tariffs without a lot of support of anyone else is never a good thing for North Dakota agriculture."
President Donald Trump signed an executive order on April 2 to impose a minimum 10% tariff on all imports to the U.S. effective April 5. Higher tariffs — ranging from 11% to 50% — were scheduled to take effect on April 9 on imports from 57 countries. On April 9, Trump announced he would suspend tariffs on all countries other than China for 90 days. The 10% tariff remains in effect.
Watne said tariffs will affect crop prices on commodities.
"You can't really project exactly how much movement it will mean, but they will go down if we have less trade," he said, referring to prices on commodities. "So if we don't garner that trade back, that recovery also will be less than what it may have been when prices start to move back up again."
He said commodity prices depend on multiple factors including weather conditions and what other countries will do in response to the U.S. tariffs.
"Will they increase acres and replace us," he said. "But the past trends, ever since tariffs were enacted, was it causes a downplay in the marketplace for commodities."
Watne said the only way the consumer wins is if manufacturing companies come back to the U.S. and can manufacture goods at a lower price.
"If you come back here, unless you're going to lower the labor cost here, which you're not going to be able to do, prices are going to go up," he said
NDFB recognizes the importance of both national security and fair trade, said Daryl Lies, president of the North Dakota Farm Bureau, on March 4. At the time, he said Trump's tariffs on Mexico, Canada and China are part of a broader effort to ensure that American industries, including agriculture, compete on a level playing field while strengthening our nation's security.
"We understand that these actions may bring short-term hardships to farmers and ranchers,," he said. "Agriculture has always been a cornerstone of our state's economy, and we remain hopeful that negotiations will lead to swift and fair resolutions that uphold the long-term interests of our producers and country."
North Dakota Soybean Growers Association President Justin Sherlock, who is from Dazey, North Dakota, said tariffs increase input costs for farmers.
"A lot of our inputs are crop protection products, fertilizer, parts for machinery, and the machinery itself is manufactured in other countries, so we pay more for those inputs," he said.
Sherlock said agriculture is a bright spot in U.S. export markets and oftentimes countries hit back on agriculture with retaliatory tariffs when the U.S. puts tariffs on their goods.
"The farmer often takes the first hit in a trade war on the U.S. side," he said.
He said trade wars aren't good for farmers.
"We've been here before," he said. "In 2018, that was just China. Now we seem to be taking on the entire world all at once."
In 2018, Sherlock said the biggest impact on farmers was on the basis — the difference in value between the local cash price of the commodity and its future price of the crop.
"The basis just really widened out," he said. "The market was telling us that it didn't want North Dakota soybeans at that time."
Sherlock said soybean prices took a huge hit which triggered the Market Facilitation Program payments to farmers to help offset some financial losses.
"Payments like that are a Band-Aid on an open wound," Sherlock said. "They maybe help you hang on for a little while, but government aid never really makes the farmer whole."
Although China eventually started purchasing soybeans from the U.S. again, the country shifted its soybean demand to Brazil, he said.
"Since 2018, Brazil has continued to expand its production every single year, and Brazil has now overtaken the U.S. as the largest soybean exporter in the world," Sherlock said. "They are right there neck and neck with the U.S. as the world's largest corn exporter. The reality is Brazil will likely continue to expand and especially now that we find ourselves in a trade war again, China will likely shift as much of their demand to Brazil as they can."
During a trade war, another country is forced to either comply or search for products elsewhere, Watne said. He said if the tariffs were to stop and that country has found products elsewhere, that country is less likely to come back and purchase the U.S. products.
"To think that the price is automatically just going to recover if we take the tariff off isn't true," he said.
Watne said the U.S. exports around 80% of its crops from North Dakota.
"Some goes domestic and some goes into the foreign markets, but most of the soybeans and soy meal and soy oil ends up going out the Pacific Northwest into the Asian markets," he said.
He said Canada and Mexico are the next biggest trade partners which are more friendly countries to the U.S.
"If you were to try to go after the relationship and trade with China, and you brought Europe and Canada and Brazil with you to the table, you'd probably have substantially more influence on China," Watne said. "When you go after Mexico, Canada, China, and you don't have any real path forward for them to fix it, and you have no other support, then you're making a mistake. That's not what I would say is a very good strategy."
He said the U.S. doesn't have the economic power it used to have with trade.
"A lot of these countries that we had this distinctive advantage in logistics and transportation and ports have caught up to us, so we're not as impactful to the market all right as we used to be," he said.
Sherlock said farmers won't know how the tariffs will affect soybean demand until the summer or even closer to harvest. He said many countries start placing orders for soybeans during the spring.
"But a lot of the orders don't come until summer for fall delivery or winter delivery so the impact isn't going to be known for a while yet," he said. "I think that's one thing that maybe trips people up that don't know about that is we haven't seen a drop in soybean demand yet, perhaps because this isn't our typical season where we ship soybeans."
Watne said it isn't easy for farmers to switch to growing other crops. He said the vast majority of crops grown in the U.S. is corn, which the price is based off of the Chicago Board of Trade.
"Even if you go to a specialty crop or anything like that, they're never going to pay a lot more than what it gets to make somebody switch their acres from corn," he said. "So if corn price and soybean price are lower, for example, that means all the other crops prices go down. So this stuff tracks very well together. There's been proof of some direct relationships between the price of corn and soybeans with everything else, even to the price of fertilizer, even to the price of crude oil because you got an energy market too and all that so you've got just a lot of commodities that move together."
Although farmers have the ability to store crops, they are getting no income for doing that. If commodity prices keep declining, Watne said farmers are in a scenario where their banks won't loan operational funds until grain is moved because the markets don't always respond as they hope. He said it costs money to store grain as well.
"You're paying interest and you don't know if the price is going to come up," he said.