Trade war costs will be more than taxpayer money

The Trump administration may grant U.S. agriculture special exemptions from parts of its ever-changing tariff regime, but it can’t exempt it from everyday economic reality.

That mainstay of farming — with or without ever-changing White House trade policies — will keep the 2025 American ag economy on its heels, say the farm income specialists in the U.S. Department of Agriculture. Tariffs will only make USDA’s bleak income forecast worse.

According to USDA, 2025′s net farm income will be a slim $137.7 billion, slightly skinnier than last year’s $139.1 billion. Both, however, are miles from 2022′s record of $182 billion.

Recall, however, that Congress poured billions into the ag economy last December. Those “supplemental and ad hoc disaster assistance payments,” USDA notes, “are forecast at $35.7 billion … (for) losses due to natural disasters in 2023 and 2024.”

When other, already-on-the-books USDA payments — like the Environmental Quality Incentives Program and the Conservation Reserve Program — are added in, farmers and ranchers can expect 2025 “federal government direct farm program payments” to be a whopping $42.4 billion.

Only one year tops that amount, 2020′s record-setting $45.6 billion, which included the first Trump administration’s $27 billion Market Facilitation Program introduced to soften the effects of its 2018 tariffs that clipped ag exports to China.

This year’s federal “assistance,” explains USDA, will go straight to farmers’ 2025 bottom line and raise the market-generated total from $137.7 billion to a near-record $180.1 billion.

None of that, however, includes one penny of the money both the White House and Secretary of Agriculture Brooke Rollins promised farmers and ranchers recently when explaining the administration’s ever-evolving tariff policies.

Billions in potential ag exports and billions in future farm program payments are at stake. America’s top five ag buyers — Mexico, Canada, China, the European Union and Japan — accounted for 61% of 2024′s total $191 billion in U.S. ag exports. Any threat to one of them is a threat to every American farmer and rancher.

China, again the target of White House wrath, imported $24.7 billion of U.S. ag goods in 2024. This vital U.S. ag market now faces a 104% tariff.

That means everyone from Beijing to Brooklyn will lose: China will lose its best source of high-quality grain, meat and farm technology; American farmers and ranchers will lose a hard-won, valued customer; and U.S. taxpayers can expect to foot the bill for both.

Ironically, the biggest winners will still be American — South American, mostly Brazil and Argentina.

There will be two other losers. First, giving away any ag export market in a tariff war means the American ag trade deficit will grow.

After almost 60 years of ag trade surpluses, the United States turned an ag trade deficit in 2019, the year after the first Trump administration imposed tariffs on China. Since then, the annual deficit has grown; it hit $37 billion in 2024 and is forecast at $49 billion in 2025.

But that was before White House tariff bulls started pawing for a fight. Today’s tariff war will increase — not cut, as the Trump White House claims — the ag trade deficit.

American taxpayers are losers, too, because, if the administration keeps its word and protects American farmers from tariff losses, “ad hoc disaster assistance payments” could easily double from the forecasted $42.4 billion.

Think not? If anticipated “trade war” payments simply matched the “market facilitation payments” the first Trump USDA paid farmers in 2018 and 2019, they’d receive another $27 billion.

Today’s far bigger tariff war suggests far bigger payments — $40 billion? $60 billion? More? — to stem the bleeding caused by this self-inflicted trade war.

Whatever the cost, it can’t possibly cover what will be lost.