Story by Michael Standaert, North Dakota News Cooperative
Farmers are preparing for a one-two punch as trade threats and tariffs by the second Trump administration lead to higher costs and diminishing markets.
While potential tariffs of 25% on goods from Canada and Mexico have again been delayed until early April, a current 10% tariff on Chinese imports led China to target U.S. agricultural goods with a 10% tariff on soybeans and a 15% charge on corn.
In response to Trump administration tariffs on aluminum and steel imports from the European Union, the EU countered with tariffs of its own, including raising levies on American beef and poultry.
Export reliance means bigger exposure
“North Dakota gets hit hard,” Mark Watne, president of the North Dakota Farmers Union and a farmer himself, said of how tariffs impact the state. “We export the vast majority of what we produce.”
Watne pointed to a study released by North Dakota State University in January that details how important the agriculture sector is for the state, contributing roughly one-fourth of the state’s economy.
The sector generates a gross business volume of over $41 billion annually, with $25 billion of that from production and another $16 billion in transport, processing, manufacturing and commodity handling. It also contributes $10 billion in labor income and supports over 123,000 jobs.
According to the USDA’s Economic Research Service, the state exported $5.4 billion in agricultural products in 2023, making it the ninth-largest agriculture-exporting state in the country.
“Farmers will lose money, so this is an extremely negative thing for us, even when it is just a threat or even if it is short term,” Watne said of tariffs and tariff threats.
Watne remarked that tariffs and threats lead longtime trade partners like China, Canada and Mexico to adjust their own trade away from U.S. farm products, making them less reliant and reducing markets for North Dakota farmers.
Greg Lardy, vice president for agriculture affairs at NDSU, and who was raised on a farm and ranch in southwestern North Dakota, said it is hard to generalize about the impacts since there’s so much uncertainty with some of the potential tariffs taking effect.
“Because of our dependence on export markets, I think there’s a general concern about what the tariffs might mean for the long term,” Lardy said.
“Especially as you think about relationships that have been built with trading partners. Those relationships have been built over years and years and years of work to get products into certain markets,” Lardy said.
Agriculture commissioner Doug Goehring, who also farms near Menoken, said it is hard to tell what the impacts will be since there’s so much uncertainty right now, but added that the North Dakota agriculture economy is very integrated with both Canada and Mexico.
Besides the tracked $5 billion in export sales the USDA numbers show, Goehring said there’s another $7 billion in agricultural trade that doesn’t always get accounted for in the trade statistics.
“Almost $4 billion is Canada alone,” Goehring said of the cross-border trade. Some of that is manufacturing, services, parts and supplies, and a lot is integrated between companies on both sides of the U.S.-Canada dividing line, he said.
“Sometimes I think what’s lost on the consuming public, is trade is not a short-term type of issue. It’s a long-term goal. It’s all about relationships, and it takes time to establish those relationships,” Goehring said.
“You can’t just replace the market, you can’t just go someplace else,” he said.
Domestic fallback not an option
One suggestion President Donald Trump made recently was for American farmers to focus on selling products domestically if the full tariffs go into effect.
“You know, that sounds fine and dandy, except if you realize that we are a country with a surplus. So that’s really not an option,” Goehring said. “Yeah, we’ll sell all we can to whoever will buy it. But when you got a surplus, you got an issue, and that’s going to be a big problem.”
Daryl Lies, president of the North Dakota Farm Bureau, who also farms and raises hogs, sheep and goats, said trade negotiations and tariff threats aim to address trade inequality and the trade deficit, and he said most farmers understand this.
“Obviously, farmers want a price. They want the trade. They know that leveling that trade playing field is important to the price, long-term,” Lies said.
“I think for the most part, many of them are willing to take a little short-term pain in the marketplace if we can get to that point that there’s a negotiation at the end of the day to level the trade playing field,” he said.
Trade corrections needed
Lies said trade barriers, restrictions, quotas and non-tariff trade barriers from trading partners like China and others seriously need to be addressed and corrected.
Trump tariffs in 2018 targeting China also impacted North Dakota’s ag sector, but Watne said the situation is different now.
The U.S. made a commitment to farmers to offset those losses at the time, he said, but because the tariffs were implemented, China was able to diversify its trade arrangements and reduce reliance on U.S. agriculture.
Those 2018 tariffs cost U.S. ag over $27 billion, with large annualized losses for the soybean industry. At the time a lot of North Dakota soybeans were going to Asia.
Lardy said one positive development that will reduce the impact on soybean growers in North Dakota this time is the adding of two soybean crushing plants in the years since those 2018 tariffs.
“We’re not as dependent on that market now,” Lardy said.
Goehring said he hoped trade threats and negotiations could lead to China adhering to its trade agreements with the U.S. and for Canada and Mexico to address non-tariff trade barriers in its agreements, but that tariffs eventually aren’t good for consumers in any of these countries.
“Countries don’t pay tariffs. Consumers pay tariffs. It’s a tax,” Goehring said.
Lies also said that the decline of China’s population should lead U.S. farmers to look for other markets so they are less reliant and impacted by decisions from Beijing.
China’s population decreased in each of the past three years, with a 1.39 million decline just in the past year. Plummeting birth rates in China, as well as South Korea, Japan and Hong Kong, also point to a gradual reduction in agricultural trade volume with East Asia over time.
Don’t go it alone
With the uncertainty over tariffs, markets and potential higher costs, Lardy recommended farmers should be in close contact with their marketing professionals at this time and monitor closely whether markets open up.
Lardy also mentioned that because of the added stress, farmers should be closely managing their own well-being.
“From a mental health standpoint, if they’re feeling financial pressures here, in addition to working with their lenders they really need to be in tune with mental health professionals and the services that are available,” Lardy said.
“Whenever you have the financial stress that’s involved in these things, if you internalize that too long, it’s never good,” he said.
The North Dakota News Cooperative is a nonprofit news organization providing reliable and independent reporting on issues and events that impact the lives of North Dakotans. The organization increases the public’s access to quality journalism and advances news literacy across the state. For more information about NDNC or to make a charitable contribution, please visit newscoopnd.org. Send comments, suggestions or tips to michael@newscoopnd.org. Follow us on Twitter: https://twitter.com/NDNewsCoop.
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