Tariffs as leverage: What it means for agriculture

January 30, 2025 | Kriss Nelson

The potential for both new tariffs and the enhancement of existing ones is making headlines globally.

Through all the unknown, one thing is for sure, international trade disputes can be incredibly costly for both consumers and producers.

In 2018, a trade war resulted in over $27 billion in losses for U.S. agriculture, with soybeans facing the most significant setbacks.

According to an Iowa State University (ISU) agricultural policy review, “Waging a Global Trade War Alone: The Cost of Blanket Tariffs on Friend and Foe", a 60% tariff on China and if China retaliates could result in U.S. economic losses of $665.4 billion.

President Trump is using tariffs, or at least the threat of tariffs, as a negotiating tool for several facets within his administration.

“He is looking to not only use them as a tool to deal with unfair concerns about trade but using them as a tool for a wide variety of issues, including national security measures,” says Chad Hart, ISU professor and Extension economist.

A lesson President Trump learned during his first term is how to put tariffs in place quickly. And he can pull them back just as quickly, as seen with Colombia over the weekend.

“Colombia is the perfect case in point,” says Hart. “The idea goes from no chatter over Colombia to a 25% tariff across the board to having that sort of withdrawn again.”

The threat of tariffs has farmers worried, given agriculture’s reliance on trade.

“Most folks may not think Colombia is a major trade partner, yet when it comes to a commodity like corn, they’re a gigantic market, the third largest importer of U.S. corn right now,” he says. Although the latest proposed tariffs on Colombia didn’t pertain to agriculture, the industry is still likely to feel the pinch caused by policy disputes.

“This is what I have spent a lot of time pointing out to farmers – when it comes down to it, it’s not the tariffs we put in place that are hurting us; it’s the idea of how that other country responds,” says Hart. “Depending on which countries, which commodities will get caught up in the trading relationship?”

Tariffs, new and old

While some proposed tariffs are new, such as the case with Colombia, a vast majority of the tariffs put into place during President Trump’s first term are still in effect, including China.

What could change?

“There is a possibility those tariffs could be strengthened as opposed to creating new ones,” says Hart.

The world is waiting to see what could happen in the next few days as the potential for strengthening and adding tariffs on China, Canada and Mexico is looming.

“When it comes to trade partners, those are the big three,” says Hart. “Agriculture hopes those discussions between the U.S. and those countries will be fruitful, and that the tariffs will be delayed further and removed,” says Hart.

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