April Hemmes, a fourth-generation farmer in north-central Iowa, operates on land that has been in her family for nearly a century and a quarter. She has always followed one clear principle to endure whatever comes her way: ‘Plan for the worst, wish for the best’. This principle has been put to the test with unpredictable weather patterns, market fluctuations, and international trade disagreements. Yet, to Hemmes, the present environment, marred by escalating tariffs levied by President Trump against most significant U.S. trade allies, seems uniquely challenging.
The heightened uncertainties arising from the recent trade war leave farmers like Hemmes in a state of confusion. ‘With so much ambiguity around us, how can we possibly strategize? We necessitate a clear route,’ said Hemmes. She compared the current situation to replacing a tire while the car is still in motion, illustrating the difficulty of adapting to rapidly changing circumstances.
During Trump’s initial tenure, American farmers went through a similar trade dispute but had the advantage of an upward trend in commodity prices alongside governmental support. During that period, Hemmes, who cultivates corn and soybeans, managed to reduce her financial burdens and make investments in modern machinery. This preparedness left her fairly resilient and well-equipped for future challenges.
However, the backdrop to the second trade war under Trump’s regime is different. Farmers now grapple with a fragile economic condition. Grain prices have been on a downward trajectory in the last four years. Especially the soybeans, significant U.S. exports and vital for the Midwest’s economy, have faced a 34% depreciation in their international market value.
Furthermore, net farm earnings, though still higher than before the pandemic, have seen a consistent drop over the past three years. Meanwhile, raw material costs needed for farming, such as fertilizer and fuel, have seen a sharp increase over the past half a decade, putting pressure on farmer’s profit margins and overall operations.
Added to the mix is the fact that borrowing expenses for farmers have escalated significantly. Interest rates on loans needed for purchasing land or running farm operations have surged by more than 40% since 2020. This has led to considerable financial stress and challenges for farmers looking to sustain their operations.
After enduring months of economic turmoil, a temporary ceasefire was established between U.S. and China on June 11. This agreement resulted in a significant cut in tariffs, from a record 145% to 55% on Chinese goods and to 10% on U.S. exports. While the tensions with China have cooled off for the moment, high tariffs announced for other significant trade allies in April have only been halted till July 9.
This agreement, however, is perceived as tenuous and temporary by many, including Hemmes. One of the notable impacts of the first trade impasse, she claimed, was that it paved the way for South American countries, notably Brazil, to establish a foothold in the Chinese market, predominantly in the soybean sector.
Although the U.S. isn’t exporting soybeans to China at the same scale as before, the impact of China’s consumption cannot be underestimated, remarks Hemmes. Even as the industry endeavors to broaden its market by reaching out to different Asian countries, the powerful influence of the Chinese market can’t be overlooked.
As the planting season commenced in April, U.S. farmers anxiously monitored the potential fallout from the nation’s trade decisions. According to a survey conducted by Purdue University and the CME Group, most farmers anticipate that the prevailing tariffs will negatively impact their profits this year.
Farmers, in particular, are worried about the rising costs and limited supply of vital resources like fertilizers, agriculturally pertinent chemicals, and machinery parts. While 44% anticipate a decrease in farm earnings in 2025, 53% are apprehensive about continued disruptions in supply.
Despite the challenges and concerns, however, a majority of farmers (70%) remain optimistic that higher tariffs could eventually bolster the U.S. agricultural economy. The current adversity does not deter their optimism, demonstrating the resilience and resolve of the farming community.