For April Hemmes, a fourth-generation farmer on land her household has labored for nearly 125 years in north-central Iowa, life is guided by a easy philosophy: “Put together for the worst and hope for one of the best.”
It’s a mindset that has helped her navigate excessive climate, market shocks and commerce disputes.
However this yr, Hemmes stated, feels completely different: President Trump’s current tariff hikes on practically all main U.S. buying and selling companions have escalated a commerce struggle, fueling uncertainty that’s onerous to arrange for.
“If there’s all this uncertainty on the market, how can we plan? We’d like a path ahead,” Hemmes stated. “It’s like altering a tire whereas we’re nonetheless driving down the highway.”
U.S. farmers needed to navigate a commerce struggle throughout Trump’s first time period, however did so after years of rising commodity costs and authorities help.
Through the first commerce struggle, Hemmes, a soybean and corn farmer, was capable of scale back her debt and spend money on new gear, giving her a cushion and leaving her in “fairly fine condition.”
Nevertheless, this second Trump commerce struggle comes at a time when farmers are in a extra weak monetary place.
During the last 4 years, grain costs have been on a downward development. Soybeans — a significant U.S. export and a pillar of the Midwest economic system — have misplaced 34% of their worth on the worldwide market. Web farm earnings, whereas nonetheless above pre-pandemic ranges, has declined for 3 consecutive years.
On the identical time, enter costs for fertilizer, gasoline and different important provides have surged over the previous 5 years, squeezing farmer revenue margins and placing added pressure on operations.
“The large distinction between the primary commerce struggle and now’s our enter costs. They’re rather a lot greater than they had been,” Hemmes stated.
Borrowing has additionally turn out to be considerably dearer for farmers, as the common rates of interest charged on loans for land purchases and farm operations have elevated by over 40% since 2020.
“I’ve by no means seen a time the place the extent of coverage uncertainty is as excessive as it’s proper now,” stated Patrick Westhoff, director of the Meals and Agricultural Coverage Analysis Institute (FAPRI) on the College of Missouri.
“You may have all the traditional uncertainties that farmers face simply due to climate and so forth. Now you’ve obtained this enormous coverage uncertainty as properly. It might prove properly, or it could prove very badly, and we simply don’t know proper now.”
Westhoff stated the monetary well being of farmers dealing with this second commerce struggle varies by sector, with crop producers in a difficult place, whereas the cattle sector is faring higher due to greater costs.
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“We’ve seen internet returns to crop producers fall again to ranges we hadn’t seen since earlier than COVID,” Westhoff stated. On the identical time, he stated, mounted prices are a lot greater, and land and equipment costs are up.
“In some unspecified time in the future, one thing has to vary. Both they need to get extra earnings or they’ve to cut back some bills.”
Fertilizer is one in all a farmer’s most important bills and has sharply elevated.
Ammonium fertilizer, used closely for corn, elevated by greater than 15% over the previous 5 years. Phosphorus and potassium, important for soybeans, rose by over 10%, in line with Farmdoc, a analysis initiative from the College of Illinois’ Division of Agriculture and Shopper Economics.
Diesel, very important for gear and transport, has seen the second-largest worth hike.
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“Farmers spend some huge cash earlier than we even put a seed within the floor. We have now to borrow some huge cash earlier than we even plant,” Hemmes stated.
Farmers have made it via the yr comparatively properly, Hemmes added, primarily as a result of most purchases for the harvest had been made the earlier yr, earlier than the commerce tensions arose.
“We’re sort of holding our breath for this fall… that’s when it’ll damage essentially the most farmers,” Hemmes stated.
Larger payments, tighter margins and loans farmers can’t repay
By late 2024, farmers had been discovering it a lot tougher to borrow cash. Bankers reported farms had much less money readily available and weren’t anticipating sufficient earnings in 2025.
Chad Hart, a professor of economics at Iowa State College, stated farmers are in a tricky spot: excessive prices and low crop costs drive them to tackle extra loans, but it surely’s getting tougher to pay them again.
Farmers are making use of for extra loans than they did a yr in the past, in line with the Federal Reserve Financial institution of Chicago, which tracks agricultural lending in Iowa, Michigan and most of Illinois, Indiana and Wisconsin.
On the identical time, the index of compensation charges for non-real-estate farm loans has declined year-over-year for the sixth consecutive quarter, suggesting that many farmers are struggling to catch up, at the same time as they tackle extra debt to remain afloat.
“Mortgage compensation has dropped,” Hart stated. “A number of this motion is because of simply the overall decline in crop earnings over the previous couple of years, which began earlier than the commerce combat.”
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In the meantime, agricultural mortgage rates of interest have soared to historic highs, properly above the degrees farmers confronted throughout Trump’s first commerce struggle, making credit score dearer simply when many want it most.
A part of the strain stems from a political conflict in Washington. Trump has repeatedly urged the Federal Reserve to decrease rates of interest, arguing that People want cheaper credit score. He has even threatened to take away Federal Reserve Chair Jerome Powell.
Nevertheless, the central financial institution, designed to function independently, has resisted political strain.
Federal Reserve officers say they’re weighing the inflationary dangers of the tariffs and like to attend for extra financial information earlier than adjusting charges. In addition they fear that yielding to White Home calls for may harm the establishment’s credibility.
Hart stated the present downturn isn’t solely the results of tariffs, however slightly the result of a number of compounding pressures. Because the Federal Reserve raised rates of interest to curb inflation, borrowing prices for farmers additionally rose. Mix these greater financing prices with falling commodity costs from oversupply, and now renewed tariff issues, and “you get a recipe for a depressed market,” he stated.
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A fragile truce on tariffs is probably going short-term
After months of financial fallout, the U.S. and China reached a short lived truce that took impact June 11, reducing tariffs from document highs of 145% to 55% on Chinese language items and 10% on U.S. exports.
Though tensions with China have eased, tariffs on different main buying and selling companions, introduced in April, have solely been paused till July 9. The truce is extensively seen as fragile and short-term.
Hemmes stated one of many penalties of the primary commerce struggle was that it opened the door for South American international locations to enter the Chinese language market, particularly Brazil, which has turn out to be its main soybean provider.
Though the U.S. not sells the identical quantity of soybeans as earlier than, “you can’t discard how a lot China buys,” even because the business works to diversify its markets in different Asian international locations, Hemmes stated.
“We’d like commerce with Mexico and Canada, too,” Hemmes added. “That’s why I believe the reciprocal tariffs are going to harm us extra. We get fertilizer from Canada, ag chemical compounds from China, not less than a few of them. We get components and merchandise made in Mexico.”
‘Our take care of China is completed… Relationship is superb!’ – President Donald J. Trump pic.twitter.com/6NbYDtxuAk
— The White Home (@WhiteHouse) June 11, 2025
As planting season obtained underway in April, many farmers had been on edge in regards to the ripple results of U.S. commerce coverage. A majority of farmers stated they anticipated present tariffs to harm their backside line this yr, in line with the Ag Financial system Barometer from Purdue College and the CME Group, which surveyed 400 producers from April 14 to 21.
Farmers expressed explicit concern about rising prices and restricted availability of key provides, particularly fertilizer, crop chemical compounds and equipment components.
Nevertheless, whereas 44% stated they anticipated a unfavourable affect on farm earnings in 2025, and 53% feared persevering with provide disruptions, 70% stated they nonetheless believed that greater tariffs may in the end strengthen the U.S. agricultural economic system.
The identical research, carried out a month later, additionally discovered that producers had been extra optimistic about each present circumstances and future expectations.
“One of many drivers behind this month’s shift in farmer sentiment gave the impression to be a way more optimistic view of the U.S.’s long-run agricultural commerce prospects,” the report stated.
This shift in tone could mirror what Monetary Instances commentator Robert Armstrong calls TACO, quick for Trump All the time Chickens Out. The time period describes a sample in Trump’s commerce coverage: asserting sweeping tariffs that set off financial shock, panic and inventory market drops, solely to reverse course later with pauses or reductions that assist markets rebound.
“I believe markets have turn out to be a bit skeptical about what’s really going to occur,” Westhoff stated. “So we noticed within the case of the USMCA international locations, Mexico and Canada, that, not less than proper now, tariffs don’t apply to them in terms of agricultural merchandise.”
He added that with these international locations and the European Union — three of a very powerful buying and selling companions for the U.S. farm sector — commerce stays unchanged on the agricultural entrance.
Nevertheless, Westhoff warned that the market response could possibly be extreme if the excessive tariffs transfer ahead.
“If we get to July 9, or regardless of the magic date finally ends up being, and we do certainly impose these very excessive tariffs and international locations reply,” he stated, “then we’re going to see an enormous market disruption.”
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