US Farm Economy Under Siege: Tariffs and Trade Wars Impacting Agricultural Markets

The U.S. farm economy is entering uncharted territory as Trump-era tariffs and retaliatory trade measures take a toll on export-driven sectors. From plummeting soybean prices to record farm debt, the ripple effects of protectionist policies are reshaping investment landscapes. Here’s a deep dive into the risks and opportunities emerging in this critical sector.

The Export Collapse: Ports and Partners in Crisis

Tariffs have slashed demand for U.S. agricultural goods, with China’s retaliatory measures hitting hardest. Soybean exports to China dropped from 40% of total U.S. sales in 2016 to just 21% by 2024, while Brazil’s share surged to 71%. Ports like Portland, Oregon, saw a 51% decline in exports, and Tacoma, Washington, reported a 28% drop in agricultural shipments. Even major hubs like the Port of Los Angeles faced a 17% export slump, signaling a systemic crisis.

Commodity prices have fallen below USDA reference levels, triggering payouts under the Price Loss Coverage (PLC) program. Corn prices dropped to $3.90/bu in 2025 (vs. a $4.26 reference price), while soybeans lost $3.1 billion in receipts. Investors in agribusiness should monitor these futures closely, as further declines could strain already overleveraged farmers.

Government Aid: A Lifeline, Not a Cure

The USDA’s $42.4 billion surge in direct payments in 2025—a 354.5% jump from 2024—has temporarily boosted net farm income to $180.1 billion. However, this rebound is artificial. The USDA warns that reliance on one-time disaster aid masks underlying market weaknesses, including debt and weak commodity prices.

Farm debt now totals $542.5 billion, with working capital down 6.9% in 2024. Farmers are “one crop away from bankruptcy,” as noted by critics like Sen. Thom Tillis. Investors in lending institutions or farmland REITs should assess credit risk carefully, as defaults could rise if tariffs persist.

Corporate Winners and Losers

While farmers struggle, some corporations are profiting. Cal-Maine Foods (CX) exploited the 2025 bird flu crisis to raise egg prices, netting over $1 billion in windfall profits. Meanwhile, Deere & Co. (DE) faces headwinds: farmers cutting capital spending may delay equipment purchases. Deere’s stock has dropped 18% since late 2023 amid weak demand signals.

Supply Chain and Input Costs: A Hidden Tax

Tariffs on imports like fertilizer and potash threaten to further squeeze margins. Non-USMCA-compliant goods face 25% tariffs, while energy and potash imports are taxed at 10%. Fertilizer prices fell 11.1% in 2025, but farmers may face shortages or delays, compounding production challenges. Investors in fertilizer companies like CF Industries (CF) should watch trade policy shifts closely.

Investment Takeaways

1. Avoid Export-Dependent Commodities: Soybeans and corn futures remain vulnerable to tariff-driven demand shocks.
2. Be Cautious on Agribusiness Stocks: Companies like Deere and John Deere (DE) face demand risks as farmers cut spending.
3. Monitor Government Aid Dependency: Sectors reliant on PLC payments or disaster aid lack sustainable growth.
4. Consider Short Positions on Farmland ETFs: Funds like the Invesco S&P 500 Equal Weight Consumer Staples ETF (RSG) may underperform if food inflation and supply chain bottlenecks persist.

Conclusion: The Farm Economy’s Tipping Point

The U.S. farm sector is at a critical juncture. Despite a $180 billion income rebound in 2025, 74% of that growth stems from temporary aid, not market recovery. With farm debt at $542.5 billion and export markets contracting, the sector faces a “national economic emergency.” Investors must prioritize sectors insulated from trade wars, like domestic food processors or companies with diversified supply chains. Those betting on a quick recovery in agricultural exports may be sorely disappointed—unless tariffs are rolled back, the farm economy’s decline will outlast the current fiscal patch.

The data is clear: tariffs have reshaped global trade, and the U.S. farm economy is paying the price. For now, caution remains the watchword.