I recently spoke to a gathering of 200 corn and cattle producers in central South Dakota. Talking to local producers, I learned that while the corn and soybean markets are a challenge, the cattle market is two thumbs-up. At the end of my riveting talk, the floor was opened for questions.

With the presidential election one month behind us, I was asked the obvious (and dreaded) question: “There is a lot of talk about tariffs. How will this impact the markets and, in particular, prices for agricultural commodities?”

It is the most important question of the day, and I am struggling to come up with a clear answer. To be fair to myself, I am not reading many bold predictions from any of the numerous ag pundits who entertain the same question. As a group, we prognosticators may be frozen in disbelief that the U.S. would take actions that would be so harmful to ag markets.

Back to first war

If you are wondering how this could affect corn and soybean markets, let’s go back to the trade war that started in May 2018.

In early May, cash soybeans in southern Minnesota were trading at about $9.60 per bushel and cash corn was at $3.60 per bushel. The trade war started in mid-May, and by mid-July, prices per bushel were $7.50 for soybeans and $3 for corn. That was a 20% decline in cash prices in just 10 weeks.

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The Trump administration did create the Market Facilitation Program to ease the pain of the trade war. But it is reasonable to question whether another such program would be created while the proposed Department of Government Efficiency is focused on spending cuts.

Ag exports matter

How important is trade to agriculture? Just look at the chart to see how much U.S. ag exports changed from 1974 to 2023.

Besides the commodities listed in the chart, the U.S. also exports soybean meal, soybean oil, dried distillers grain, ethanol and a host of other agricultural products.

All this talk is about trade and the potential impact on market prices. I haven’t even mentioned the possibility of mass deportation and the impact on farm labor.

The new year has arrived — and with it a new administration and an unfriendly approach to trade. I think I know where this is going. But I can’t believe that the administration would do it.

Usset is a grain market economist at the University of Minnesota.