How Tariffs Affect Agriculture Markets

Recently, someone asked me about the potential impact of the Trump tariffs on the Crop Protection (CP) industry. The answer is clear: tariffs would significantly affect the costs of chemicals sourced from key trading partners like China, Mexico, and the European Union (EU). In the case of China, further tariff increases seem unlikely since the Biden administration has maintained the tariffs established during Trump’s first term. However, the conversation expands when considering new potential targets, particularly the EU and Mexico. A critical question arises: how much of the U.S. crop protection market relies on imports from these regions? For perspective, the U.S. CP market was valued at $15.7 billion at the grower level in 2023 (source Crop Life 100). The top five companies—Syngenta ($2.7B), Bayer ($2.5B), Corteva and BASF (both ~$2B), and FMC (~$1B) —together represent 66% of this market. While two of these companies are headquartered in the U.S., around 45% of the market originates from the EU. Moreover, many raw materials used by U.S.-based companies are sourced from the EU and China. In the last one, these costs are already embedded unless tariffs are increased again. What happens with Indian manufacturers and their value proposition then? Additionally, the impact on costs will likely not be linear. Tariffs typically affect one component of a product's total cost (unless the product is imported as a finished goods), such as the AI or specific inerts and stabilizers. Packaging costs, however, are less likely to be impacted due to robust manufacturing capabilities within the U.S. On the other hand, beyond the Crop Protection industry, new tariffs could pose broader challenges for U.S. agriculture, particularly if they target major trade partners like China, Mexico, and the EU. The potential impacts include: 1- Export Challenges: Retaliatory tariffs on key exports like soybeans, corn, and meat could lead to significant economic losses, as seen during the 2018-2019 trade war. 2- Higher Input Costs: Tariffs on imported machinery and fertilizers would squeeze already tight profit margins, particularly for smaller farms. 3-Price Volatility: Trade tensions could cause significant market uncertainty, complicating long-term planning for farmers. 4- Regional Economic Impact: Agricultural states like Iowa and Nebraska would face economic strain due to their export reliance. 5- Global Competition: Prolonged trade restrictions might enable competitors like Brazil and Argentina to capture market share at the expense of U.S. producers. Final Thoughts: "While these projections draw from past experiences with trade policies, actual outcomes will depend on the specific tariff structures, global economic conditions, and responses from trade partners. Nonetheless, the potential for increased costs, market disruptions, and competitive shifts underscores the need for U.S. agricultural stakeholders to prepare for possible challenges ahead."

🍎 When Trade Wars Begin, Agriculture Bleeds First. Let’s not sugarcoat it. When countries enter into trade disputes, fresh produce is among the first and worst casualties — and often the most overlooked. Think about it: Seeds are planted months or even years in advance — based on trust in stable demand and cross-border cooperation. But when that demand suddenly slows due to tariffs, retaliation, or shifting alliances, what happens? Postharvest costs skyrocket. Labor and inputs have already been paid — with no volume to recover them. And worst of all: perfectly edible food goes to waste. That’s not just economic damage. That’s ethical and environmental loss. We're talking about fruits and vegetables — grown with care, labor, sunlight, water, and time — being left to rot because they can't cross borders. And the impact is everywhere: 🌍 The environment suffers — water, land, energy… wasted. 🧑🌾 Growers suffer — their work devalued in an instant. 👨👩👧👦 Consumers suffer — with higher prices or empty shelves. Food should never be a political pawn. We owe it to everyone in the value chain — from seed to shelf — to call for balanced, long-term trade policies that protect what matters most: ✅ The farmer ✅ The planet ✅ The people 🙏 As someone deeply connected to this industry, I share this not out of frustration, but from a place of respect for the effort behind every harvest — and hope that we can build a more stable, collaborative future for agriculture. Let’s raise awareness. Let’s speak up — not just for economics, but for ethics. Because when food becomes collateral damage, we all lose. 💬 What are you seeing in your region? Are you feeling this impact too? Let’s open the conversation — and protect the future of food, together. #FoodSecurity #TradeWars #AgriculturePolicy #FoodWaste #Sustainability #FarmersVoice #EnvironmentalImpact #AgLeadership #FreshProduce #GlobalFoodSystems

China Strikes Back: Retaliatory Tariffs Threaten U.S. Agricultural Exports The U.S.-China trade war is back, and agriculture is once again at the center. After the U.S. doubled tariffs on Chinese imports to 20%, Beijing hit back with targeted levies on $21 billion worth of American goods—including corn, wheat, soybeans, pig meat, raw cotton, poultry, and sorghum. These tariffs strike at the heart of rural America, where 78% of counties reliant on agriculture backed Trump in 2024. China has long been the top buyer of these U.S. products, but with new tariffs in place, can the U.S. be replaced? Brazil already supplies 70% of China’s soybeans, and the latest restrictions could accelerate the shift, forcing U.S. farmers to compete at lower prices while China diversifies its supply chain. The stakes are high. If history repeats itself, farm incomes could decline, supply chains could be upended, and inflationary pressures could mount. In 2024, China imported $12.76 billion in U.S. soybeans, $2.1 billion in beef, and $1.8 billion in cotton—flows now at risk. Will American farmers absorb the impact? How will these tariffs reshape agricultural markets for years to come? #TradeWar #Agriculture #China #USExports #Tariffs

Here’s a chart from the presentation I have been giving this spring at CoBank’s annual customer meetings around the country, focused on federal policy uncertainty and its impact on rural industries. The first U.S.-China trade war in 2018 has had highly negative consequences for America’s competitive position in the global marketplace for agricultural commodities. One manifestation of that is Brazil’s continued rise as a peer competitor in soybean production. As shown on the chart, Brazil and the U.S. each had about 90 million acres devoted to soybean production in 2018, the year the trade war started. Since then, Brazil’s acreage has increased steadily and was about 30% higher than the U.S. in 2024. I strongly believe policymakers need to be mindful about the long-term risks that a new trade war with China poses for America’s farm economy and to take them into account as they make decisions in this incredibly uncertain environment.

The Trump tariffs will reroute global food & agribusiness (F&A) trade flows. The basic effects are similar to the impact of universal tariffs, which we described just after the US elections (https://lnkd.in/eP-pkCBZ). But the "reciprocal" tariffs are different in two important ways. First, imports from major F&A trading partners are charged at different rates. Second, some key agricultural inputs appear to be exempt. The most important agricultural trade partners of the US – Mexico🥑 and Canada🥗 – fall under the USMCA trade agreement exemption and can expect to benefit from reduced competition from other countries. Major agricultural players like Brazil☕, Argentina🧃, Australia🐮, New Zealand🐮, and Ukraine🌻 will be under 10% tariffs. Because they compete directly with the US in many farm products, these countries could benefit as others retaliate against US agricultural exports, . Luxury foods and beverages from the EU🍷 may suffer from both the higher tariff rate and from US consumers trading down as they economize to deal with renewed inflation. China and other Asian countries will likely suffer the most due to punitive tariff rates. This would impact processed foods🥫 among other sectors. Retaliation will probably hurt US agricultural exports. During the first Trump administration farmers👩🌾 received financial support from the government to soften the blow. We also think that negotiating a better deal for US farmers will be a priority for Trump and it may be one of the few ways some countries can strike a deal. One of the impacts we highlighted earlier is that tariffs could make important farm inputs more expensive because China is a major player in agrochemicals. However, many agrochemicals appear to be exempt, which will help US farmers avoid margin pressure from higher input costs (see https://lnkd.in/eFWs_cs2). Follow RaboResearch Food & Agribusiness for ongoing analysis of global F&A trade. Justin van der Sluis, Roland Fumasi, Ph.D., Cindy van Rijswick