Farm Futures logo

Will more Trump tariffs hurt or help U.S. farmers?

President Biden’s new tariffs demonstrate how the American philosophy on free trade with China is rapidly evolving.

U.S. and China shipping containers clashing.
Getty Images/Rawf8

The possibility of Donald Trump returning to the Oval Office has elicited plenty of concern over how his trade policies will affect American agriculture. You may recall the former president imposed steep tariffs on China and other nations during his term.

According to a USDA report, those tariffs cost U.S. ag producers approximately $27 billion in lost exports between 2018 and 2019. Approximately 95% of those losses were due to the resulting trade war with China.

Keep in mind that it wasn’t just Democrats who opposed the tariffs. Free trade has long been a central tenant of Republican fiscal policy.

A few weeks ago, I asked Republican Sen. John Boozman if he thought higher tariffs on China were good for agriculture. Boozman, the Ranking Member of the Senate Ag Committee, wasn’t about to let some pesky reporter put him on record against Trump.

“Well, the tariffs must not be too bad if Biden kept them,” he quipped.

Snarky as the reply might have been, it is a valid point. It’s also a question many Democrats are asking themselves. If Trump’s trade policies were so bad, why haven’t they reversed them?

Evolving thoughts on free trade

When President Biden came into office, he vowed to improve relations with China. It was thought those efforts would include rescinding the Trump tariffs. Since then, he and other lawmakers have been hesitant to reverse them. That’s partially because nobody knows how China would respond. There are also other factors at play.

Related:Why rural voters ride or die with Trump

Now the effectiveness of Biden’s China policy remains a subject of fierce partisan debate. Still, even the president’s harshest critics must concede the U.S. has avoided the type of ag market disruptions caused by higher tariffs in the late 2010s. At least it has so far.

But is that about to change?

In May, Biden imposed new tariffs on Chinese electric vehicles, advanced batteries, solar cells, steel aluminum and medical equipment. The move was just the latest example of the longstanding free trade philosophy in both parties rapidly changing.

For decades, economists have touted the benefits of free and open trade with China. When Trump first proposed higher tariffs, economists from the left and right warned that prices for many goods would likely go up. In many cases, that’s exactly what happened. Still, multiple indicators now show that free trade with China might not be all it was cracked up to be.

Farm Futures Grain Market Analyst Jacqueline Holland notes China is currently dealing with major demographic shifts, fewer workers, rising government debt and a challenging commercial real estate market. Those struggles have significantly stunted the nation’s consumer spending.

Related:Expect an upper cut to ag’s gut

“China has been trying to offset economic struggles in its domestic property market by exporting a massive variety of consumer products at cheaper prices than what other foreign countries are producing,” Holland says. “Essentially, it is choosing to boost its GDP by exporting a large volume of goods instead of making meaningful economic repairs at home.”

Nowhere is that more apparent than in the green technology industry. In 2022, China installed as much solar capacity as the rest of the world combined. It then doubled that capacity in 2023.

This year, the average price for an electric vehicle in the U.S. is around $54K. That’s a 10% drop from last year. However, China is cranking out EVs for half that price.

Much of President Biden’s China trade policy has focused on addressing disparities in the market share for solar panels and electric vehicles. He’s introduced multiple initiatives intended to those industries in the U.S.

In early June, Biden also reinstated tariffs to protect the U.S. solar industry from foreign competition that had been paused for two years. Indeed, the rationale seems almost identical to Trump’s position.

What does this mean for agriculture?

Over the past 10 years, approximately 17% of total U.S. ag exports have gone to China. While USDA has looked to increase trade in other parts of the world, those efforts can only do so much in the short term. China represents close to 18% of the total world population. There simply isn’t another market that can take its place.

U.S. ag exports to China by volume

Farmers recognize the importance of China’s trade relationship. In a March 2024 Farm Futures survey, 87% of surveyed growers indicated they would prefer increased agricultural volume exports over increased tariffs on agricultural exports to China as a potential outcome following the 2024 presidential election.

During an April speech in Washington, Agriculture Secretary Tom Vilsack warned against concerted efforts to demonize China, including harsh rhetoric and law targeting Chinese land ownership. Simply put, constantly bashing your biggest customer can’t be good for business in the long term. Vilsack also noted that the U.S. will need Chinese support to effectively address global issues like terrorism and climate change.

“The relationship with China is such a nuanced and incredibly complex relationship,” he says.

Of course, there’s not a lot of nuances in a presidential election year. According to a recent Pew Research poll, only 6% of Americans view China as a partner. The other 94% say it is either a competitor (50%) or an enemy (42%). Those types of views have candidates jumping over themselves to look tough on China.

While a tougher stance on China may bring positive results, higher tariffs aren’t likely to help American agriculture. Biden’s latest moves are remarkably similar to Trump’s. Farmers are hoping the consequences won’t also be the same.

Read more about:

TradeChina

About the Author(s)

Joshua Baethge

Policy editor, Farm Progress

Joshua Baethge covers a wide range of government issues affecting agriculture. Before joining Farm Progress, he spent 10 years as a news and feature reporter in Texas. During that time, he covered multiple state and local government entities, while also writing about real estate, nightlife, culture and whatever else was the news of the day.

Baethge earned his bachelor’s degree at the University of North Texas. In his free time, he enjoys going to concerts, discovering new restaurants, finding excuses to be outside and traveling as much as possible. He is based in the Dallas area where he lives with his wife and two kids.

Jacqueline Holland

Grain market analyst, Farm Futures

Holland grew up on a dairy farm in northern Illinois. She obtained a B.S. in Finance and Agribusiness from Illinois State University where she was the president of the ISU chapter of the National Agri-Marketing Association. Holland earned an M.S. in Agricultural Economics from Purdue University where her research focused on large farm decision-making and precision crop technology. Before joining Farm Progress, Holland worked in the food manufacturing industry as a financial and operational analyst at Pilgrim's and Leprino Foods. She brings strong knowledge of large agribusiness management to weekly, monthly and daily market reports. In her free time, Holland enjoys competing in triathlons as well as hiking and cooking with her husband, Chris. She resides in the Fort Collins, CO area.

Subscribe to receive top agriculture news
Be informed daily with these free e-newsletters

You May Also Like