Election Day is Tuesday, and the gravity of the presidential race is becoming very real. One of the biggest potential economic items in the balance: tariffs.
Aiming to protect American industry, former President Donald Trump has called for 20% tariffs on most U.S. trading partners and 60% tariffs on China. And American farmers are worried.
“I farm with my dad and brother, farm about 5,000 acres of soybeans, corn and barley,” said Josh Gackle, a third-generation farmer in North Dakota.
Gackle is also president of the American Soybean Association. His harvest is wrapping up, but not his anxiety about tariffs.
“Just look back to what happened in 2018, the first round of the trade war and the tariffs with China,” Gackle said.
China, one of the top importers of U.S. agricultural products, retaliated with tariffs of its own and bought corn and soybeans elsewhere. U.S. soybean prices fell almost 20%, and competitors like Brazil and Argentina gained market share.
“There was almost overnight a drop in the Chicago market for soybeans,” Gackle said. “We haven’t completely seen it come back yet.”
U.S. agriculture competitors not only gained customers, they also increased their land devoted to farming.
“When that land area comes into production, we’ve seen it continue to stay in production,” said Krista Swanson, lead economist for the National Corn Growers Association.
Swanson said more production in other countries means more competition and possible price-killing gluts in the future.
“So, it becomes a long-term impact,” Swanson said.
Swanson estimated that if China retaliated against the 60% tariffs Trump is proposing for Chinese goods, U.S. corn and soybean exports would crash.
“Corn exports to China could decrease by about 2.2 million metric tons annually, or 83%,” Swanson said.
But Trump’s proposed tariffs would go far beyond just China, extending to most trading partners. And U.S. farm exports in particular are a favorite target for retaliation, “because they hit sensitive political constituencies,” said Jeffrey Schott, a senior fellow at the Peterson Institute for International Economics.
The are so sensitive that the Trump administration spent an estimated $25 billion to $28 billion in support payments insulating farmers from the consequences of the trade war, Schott said — another hidden cost of tariffs.
