Recent trade policies have imposed tariffs to boost U.S. production, but Midwest agriculture has suffered, losing ground to competitors like Brazil in soybeans and pork. Farmers urge the new administration to prioritize free trade and stable agreements.
Just as he did in 2016 and 2020, Iowa farmer and rancher Lance Lillibridge plans to vote for Donald Trump this November.
However, this self-described conservative said his vote for the former president will come with concerns.
“His policies didn’t do us any good; his tariffs didn’t do us any good,” said Lillibridge, referring to Trump’s first term as president.
At the start of his second year in office, Trump, responding to what he said were unfair trade practices, enacted the most significant increase in U.S. tariffs since the Great Depression. Trump imposed higher taxes on imports from several countries, including China, Canada, the European Union, Mexico, India and Turkey.
In response, many of the affected countries imposed retaliatory tariffs on U.S. exports of agriculture and food products, leading to an estimated $27 billion decline in foreign sales between mid-2018 and the end of 2019, according to the USDA’s Economic Research Service. The losses were most pronounced in the Midwest, with Iowa, Illinois and Kansas — states that collectively account for more than 50 percent of the region’s total agricultural exports agriculture — hardest hit. Soybeans were the most affected, but the corn and pork industries also suffered significant damage.
The impact of the trade war was felt primarily in transactions with China, one of the top three destinations for U.S. agricultural products.
Lillibridge worries another Trump term would mean a return to high tariffs and another financial squeeze for American farmers. However, his opposition to tariffs isn’t enough to make him vote for Vice President Kamala Harris, the Democratic presidential candidate.
“Trump will get my vote, but it comes with reservations,” said Lillibridge, who once served as president of the Iowa Corn Growers Association. “It would come without reservation (if) we could address these ag policies.”
Lillibridge’s concerns and future vote highlight the dichotomy in feelings many Midwestern farmers have this election season. Trump’s support is strong in much of America’s agriculture center, but this year’s presidential election could determine whether farmers see a return to a costly trade war that reduced profits and weakened the nation’s status as a major exporter of crops and meat.
Harris has called Trump’s tariff strategy a “sales tax on American people” due to its potential to increase prices for U.S. consumers. During last month’s presidential debate, Harris cited economists who estimate Trump’s proposed tariffs could result in middle-class families paying an additional $4,000 annually.
The Biden-Harris administration has maintained some of Trump’s tariffs on China while implementing new ones on specific products. Harris has not detailed her specific tariff strategy, but her campaign spokesman, Charles Lutvak, told The New York Times that she would “employ targeted and strategic tariffs to support American workers, strengthen our economy, and hold our adversaries accountable.”
In response to a presidential candidate questionnaire from the American Farm Bureau Federation, Harris did not specify her stance on tariffs but emphasized that “she will not tolerate unfair trade practices from China or any competitor that undermines American farmers and ranchers.”
The Harris campaign did not respond to Investigate Midwest’s questions.
Trump has promised to be even more aggressive if he returns to the White House, proposing tariffs up to 10 percent on most imports, more than 60 percent on Chinese goods, and a “100 percent tariff” on nations that stop using the U.S. dollar.
He promised that consumers would not bear the cost, insisting higher costs would be passed on to other countries. With the revenue generated from imposing import taxes, Trump said he could fund child care, combat inflation, and finance a U.S. sovereign wealth fund.
The Trump campaign also did not respond to questions from Investigate Midwest.
Trump told the Farm Bureau that tariffs — along with tax cuts and other incentives — would be part of his toolbox to relocate critical supply chains back to the United States, safeguard national security and economic stability, and expand international markets for U.S. agricultural products.
However, many have warned that Trump’s aggressive tariff policy could hurt farmers, especially those in the Midwest who rely on critical regional commodities, such as soybeans.
“The issue is not just the short-run (monetary) losses, but what’s really the problem is that you lose long-run market access,” said Sandro Steinbach, director of the Center for Agricultural Policy and Trade Studies at North Dakota State University.
Steinbach was the coauthor of a 2020 study that found the United States lost over $15.6 billion in trade with countries that imposed retaliatory tariffs. Meanwhile, countries that did not impose such tariffs significantly expanded their trade with these nations, gaining more than $13.5 billion in additional trade.
China, in particular, increased its imports from countries that compete with U.S. agricultural products, such as Argentina, Brazil and Chile. Eastern European nations and the European Union also increased their market share in China, capitalizing on higher prices for U.S. agricultural products.
“In agriculture, you don’t have a lot of buyers,” Steinbach said.
China is the world’s largest consumer of pork and soybeans, and its corn imports have surged in recent years due to increased demand for animal feed and industrial use. For Midwestern states, the Asian giant, along with Canada and Mexico, are the main export markets, with Japan also playing a key role in pork exports.
Stephen Nicholson, a global grains and oilseeds strategist at Rabobank North America, emphasized the need for a different approach when dealing with China because it is a trading partner that requires consistent and ongoing dialogue.
“We may not like their form of government as a democracy, but they’re still a member of the world community that we have to deal with.”
Nicholson believes a proposal to increase tariffs sends a negative message about the U.S.’s commercial relationship with the global market.
“If I’m a Brazilian, Argentine, or Paraguay producer, I’m going to keep producing and keep producing more because I’m not sure what the U.S. is going to do,” he said.
Driven by Trump’s trade war, Brazil, a leading producer of agricultural and industrial products in South America and a competitor of the United States, significantly expanded its market in China and emerged as the largest supplier of the top three agricultural export commodities from the Midwest.
In 2016, Brazil supplied 46 percent of China’s soybean imports before tariffs were raised, while the United States provided 40 percent, according to Trade Data Monitor, a trade statistics supplier to governments, organizations, and companies. By last year, Brazil’s share of China’s soybean imports had surged to more than 70 percent, while the U.S.’s soybeans share had fallen to 24 percent.
In the pork industry, the United States ranked as China’s third-largest supplier in 2016, with a 13 percent market share, while Brazil ranked eighth. Last year, Brazil became the top supplier, with the United States falling to fourth place. A similar trend can be observed in Chinese corn imports, where Brazil has assumed a more prominent role.
Al Juhnke, executive director of the Nebraska Pork Producers Association, said China is an essential market for the pork industry. However, he worries about the impact that higher tariffs under another Trump administration could have.
The threat of a new trade war
Economic experts have expressed concerns about using tariffs as a tool for trade negotiations and stimulating U.S. industry. While tariffs can protect domestic industries and address trade imbalances, they often lead to retaliatory measures from other countries, harming international trade relationships and increasing consumer costs.
In June, the Tax Foundation, a right-leaning think tank, released a report estimating higher tariffs could raise the cost of parts and materials, driving up consumer product prices.
The report also notes that tariffs could cause the U.S. dollar to appreciate. While this could help offset some price increases for domestic consumers, a stronger dollar would make U.S. exports less competitive in world markets, reducing exporters’ revenues, the report claimed.
Bruce Babcock, an agricultural economist and professor at the University of California, Riverside, believes a new wave of tariffs would be a “disaster for the U.S. economy.”
The U.S. has developed international supply chains with other countries, where each nation contributes to production, Babcock explained.
Higher import tariffs could disrupt these natural advantages in agriculture, electronics and other industries.
“Import tariffs disrupt that natural comparative advantage,” he said.
The effects of a new tariff war could be especially damaging to the soybean industry.
A recent study published by the University of North Dakota found that if China implemented a 20 percent tariff increase on U.S. soybeans in response to a new trade war, North Dakota’s soybean exports could drop by 59.1 percent, resulting in a loss of approximately $639.9 million. It would also mean a 32.4 percent reduction in soybean exports nationwide.
“I don’t want to be too extreme, but it creates a lot of anxiety and uncertainty for U.S. soybean producers, especially those in North Dakota,” said Josh Gackle, president of the American Soybean Association, referring to the findings of the University of North Dakota study.
Gackle said nearly all soybeans produced in North Dakota are transported by rail to the Pacific Northwest, with the vast majority destined for China.
The American Soybean Association is trying to expand into new markets in Southeast Asia, India, and Africa while continuing to strengthen its relationships in Europe and Mexico, Gackle added.
“It takes a long time to find those markets, develop them, and build something that could even come close to replacing the Chinese market,” Gackle said.
Farmers standing for free trade
Despite the economic pain caused by his trade war, Trump maintained the support of most farmers.
A 2019 Iowa State University poll of farmers in the top three soybean and corn-producing states — Iowa, Illinois and Minnesota — showed that more than half were still somewhat or very supportive of Trump’s tariffs on Chinese products. The survey was conducted before the first stimulus payment was made to mitigate the tariff war.
However, more than 80 percent desired a return to normal trade relations. A large majority (76 percent) acknowledged that American farmers would bear the brunt of the tariffs imposed by China, and 62 percent agreed that U.S. agriculture was at risk of losing market access.
Farm organizations are also critical of using tariffs as a tool in international trade. The Farm Bureau has repeatedly emphasized the importance of exports to U.S. agriculture and has expressed concerns about how tariffs and retaliatory measures impact farmers and ranchers.
“The Farm Bureau urges our trade officials to engage in discussions with our trade partners to resolve trade concerns before resorting to tariffs. Tariffs targeting our largest agricultural export markets have resulted in retaliation against U.S. farmers, ranchers and agricultural and food businesses across the country,” the Bureau said in a statement in 2018.
Asked about its stance on how the two candidates approach trade, the Farm Bureau told Investigative Midwest it does not endorse any candidates.
For Lillibridge, the Iowa farmer, if Trump wins and continues to manage trade policy using tariffs, he hopes Trump will create alternatives to mitigate their impact on agricultural operations, such as an increase in ethanol, a fuel made from corn.
“If I had the opportunity to sit down with President Trump, I’d say, ‘Here’s the deal, President Trump: I’ll support your policies, but you need to put policies in place that promote the use of our commodities right here at home,” he said.
“We’re going just to have to have a different mindset when it comes to food and agriculture.”
This story is a product of the Mississippi River Basin Ag & Water Desk, an independent reporting network based at the University of Missouri in partnership with Report for America, with major funding from the Walton Family Foundation.
