U.S. Agriculture Faces Uncertainty as Tariffs and Shifting Trade Policies Reshape the Industry
As the Trump administration’s proposed tariffs continue to generate economic uncertainty, the U.S. agricultural sector is evaluating whether upcoming country-by-country trade deals can mitigate potential disruptions—or if the industry must prepare for a fundamentally different future.
Farmers, long reliant on global exports, now face mounting concerns over rising protectionism and shifting trade dynamics.
“Farmers are big exporters,” said Jacob Shapiro, director of research at the Bespoke Group. “For over a century, U.S. agriculture has been about exporting surplus abroad. But with the relative decline of U.S. power, rising protectionism, and the threat of tariffs—which began under Obama but escalated under Trump—farmers are deeply worried. They’re confronting changes they’ve never seen in their lifetimes.”
Will Tariffs Become Reality?
For months, President Trump’s tariff rhetoric has left many questioning whether he would follow through.
“People thought, ‘Maybe he’s the boy who cried tariff,’” Shapiro noted. “They wondered if he would pull back. But now it seems he’s moving forward. I don’t blame anyone for being surprised—this administration has been unpredictable on trade.”
The Stakes for U.S. Agricultural Exports
U.S. agricultural exports have been a key growth driver, reaching over 175billionin2024∗∗,upfrom∗∗57.3 billion in 1998, according to the USDA. However, these exports are heavily concentrated among a few key partners.
Ty Kreitman, an associate economist at the Kansas City Federal Reserve Bank, highlighted that Mexico, Canada, and China accounted for roughly 50% of U.S. agricultural exports in 2024. China alone imports:
- 20% of U.S. soybean production
- 55% of sorghum production
- 20% of cotton production
- 8% of tree nut production (including 18% of pistachios)
Vince Malanga, president of LaSalle Economics, noted that agriculture—along with automotive products—is a prime target in the latest tariff negotiations.
“The question is: How big will the impact be, and how fair?” Malanga said.
Tariffs as a Strategic Tool—or a Threat?
Shapiro argued that tariffs, if used precisely, can be an effective trade tool—but misapplication could backfire.
“A scalpel is vital in surgery, but if you slash my jugular with it, that’s bad,” he said. “Tariffs are the same—they must be surgical. There are sectors where tariffs make sense, like blocking dumped Chinese used cooking oil or Canadian canola that undercuts U.S. soy and corn farmers in renewable diesel markets.”
The “Peak Population” Challenge
The tariff debate coincides with new research, including a report from Terrain titled The Big Shrink, which examines long-term demographic shifts. Shapiro suggested that global trade may no longer be the primary growth engine for U.S. agriculture, urging a shift toward domestic market diversification.
“Since early in the Biden administration, I’ve said exports aren’t the future,” Shapiro said. “Trade groups keep pushing exports, but farmers must rethink their end markets. I’m not saying exports will vanish—higher-value products can still sell abroad—but we’ve neglected the domestic market at our own peril.”
Focus on Quality and Domestic Demand
John Newton, executive head of Terrain, emphasized that improving product quality and boosting domestic demand are critical.
“The beef industry is a perfect example,” he said. “Farmers invested in genetics to deliver high-quality, consistent steaks nationwide. We’re shifting from ‘produce as much as possible’ to ‘produce what consumers want.’”
Terrain’s analysis warns that nearly all U.S. corn, sorghum, soybean, and wheat exports go to countries facing population decline by 2050.
Four Paths Forward for U.S. Agriculture
Matt Clark, an economist at Terrain, outlined four strategies for U.S. agriculture:
- Strategic expansion of export markets
- Capturing demand for high-value products
- Diversifying revenue streams
- Developing new domestic demand
Clark cautioned that without new demand sources, the traditional model of endless productivity growth could lead to surpluses that depress farm economies.
“A world where population growth stalls requires new approaches,” he wrote. “While 2050 seems distant, a 30-year farmland loan taken today matures in 2055.”
The Long-Term Impact of Today’s Trade Policies
The current trade policies will have lasting consequences for U.S. agriculture. Whether through tariff-driven disruptions, new trade deals, or a pivot toward domestic markets, farmers must adapt to a rapidly changing landscape.
