Understanding Import and Export Tariffs in Agriculture (and How They Affect Small Farms)
- Joshua Brock
- 1 day ago
- 7 min read
When it comes to running a farm, there’s no shortage of variables that can affect your bottom line: weather, labor, input costs, and markets. But one factor that often goes unnoticed, until it starts to bite, is trade policy, specifically, import and export tariffs.
Tariffs might sound like a distant, political issue confined to international trade talks, but their effects are felt right down to the farm gate. Whether you run a 10,000-acre operation shipping soybeans abroad or a smaller farm selling specialty products locally, tariffs can alter the price you receive, the cost of your inputs, and your long-term planning decisions.
This article breaks down what agricultural tariffs are, how they influence global and local markets, and, most importantly, what they mean for small and mid-sized farms trying to stay competitive. Here's a look at the topics we'll discuss:
Tariff Impact Tracker for Farmers (free download of Excel file)
What Are Tariffs, and Why Do They Exist?
A tariff is essentially a tax on goods that cross a border. When a government places a tariff on imported goods, it raises the price of those goods for domestic buyers. When another country retaliates with tariffs on exported goods, it raises the price of those exports for foreign buyers.
Tariffs are often used for one of two reasons:
To protect domestic industries from cheaper foreign competition (a protective tariff)
As leverage in trade negotiations or to retaliate against another country’s trade policies (a retaliatory tariff)
For example, if the U.S. imposes tariffs on imported steel, other countries might respond by imposing tariffs on U.S. agricultural exports, like soybeans, pork, or dairy. This tit-for-tat dynamic is what many farmers experienced during the 2018–2019 U.S.–China trade dispute, when American soybean exports dropped sharply due to retaliatory tariffs.
The Ripple Effect on Agricultural Prices
Agriculture markets are deeply interconnected. A tariff on one product can send ripples across several related sectors.
Let’s say a major export market imposes a tariff on U.S. corn. That immediately makes American corn more expensive for foreign buyers, who may then turn to suppliers in Brazil or Ukraine. U.S. corn prices would likely fall due to excess supply staying domestic.
Lower corn prices can, in turn, affect livestock producers who use corn for feed, potentially lowering their costs but also hurting crop farmers’ revenues. Conversely, tariffs on imported fertilizer or machinery can increase costs for all farmers, regardless of what they grow. It’s a web of cause and effect that often leaves farmers caught in the middle, particularly smaller producers who have less capacity to absorb financial shocks.
How Tariffs Affect Large vs. Small Farms
Larger farms often have more resources to ride out market fluctuations caused by tariffs. They may have:
Forward contracts and hedging tools to lock in prices.
A forward contract is a customizable agreement between two parties to buy or sell an asset at a predetermined price on a future date, often used for hedging against price fluctuations.
A hedging tool is a financial instrument or strategy used to reduce or offset the risk of adverse price movements in an asset, functioning similarly to insurance for investments.
Greater access to export markets and logistics networks.
Financial reserves or credit lines to cover temporary losses.
Smaller and mid-sized farms, on the other hand, tend to operate with thinner margins and less flexibility. When tariffs disrupt markets or raise costs, small farms feel it almost immediately.
Here are a few specific ways tariffs can hit smaller producers harder:
1. Reduced Export Opportunities
Many small farms don’t export directly, but they still depend on export markets to sustain prices. When tariffs reduce demand for U.S. goods abroad, domestic supply increases, pushing prices down.
For example, during the U.S.-China trade tensions, soybean prices dropped by as much as 25%. Even small farms that sold soybeans locally saw price declines because local buyers adjusted to the lower market value.
2. Higher Input Costs
When tariffs target imported inputs like steel, aluminum, or chemicals, the cost of farm equipment, fertilizer, and infrastructure rises. For instance, tariffs on imported steel can make it more expensive to buy grain bins, irrigation systems, or even replacement parts for tractors.
Large operations may be able to spread these costs over more acres or units of production. Smaller farms cannot — meaning their cost per unit rises faster.
3. Cash Flow Strain
Small farms typically depend on tight seasonal cash flow cycles. Tariff-driven price drops or cost increases can disrupt this cycle, forcing some to take on additional debt or delay essential investments.
4. Market Uncertainty
Tariffs often come and go with political changes, creating uncertainty. Smaller farms planning to expand or invest in new crops might hold back, fearing that shifting trade rules could make their products unprofitable next year.
Large vs. Small Farm Impacts
Factor | Larger Farms | Smaller Farms |
|---|---|---|
Market Access | May export directly or have contracts overseas | Rely on local markets, but are still affected by export prices |
Financial Cushion | Can hedge prices and absorb temporary losses | Operate on thinner margins with less cash reserve |
Input Purchasing Power | Can buy in bulk or negotiate supplier rates | Face higher per-unit costs when tariffs raise prices |
Adaptability | Easier to pivot to alternative crops or buyers | Fewer resources to diversify quickly |
Case Example: The 2018–2019 Tariff Impact on U.S. Soybeans
Few examples illustrate tariff effects better than the 2018–2019 trade conflict between the U.S. and China. When China, then the top buyer of U.S. soybeans, imposed retaliatory tariffs, U.S. soybean exports fell dramatically.
Prices dropped from over $10 per bushel to under $8.50 at one point. Larger agribusinesses managed to reroute some shipments to other countries, like Argentina and the EU. Smaller producers, however, saw few options. With storage full and prices low, some farmers delayed sales or took losses at harvest.
The federal government introduced Market Facilitation Program (MFP) payments to offset losses, but not all producers qualified or received sufficient aid. The result was uneven relief that highlighted the vulnerability of smaller farms during global trade disputes.
Tariffs on Farm Inputs: The Hidden Cost
While much attention goes to export tariffs, import tariffs on agricultural inputs can be equally damaging. Farmers rely heavily on imported materials, from fertilizer and pesticides to machinery components and packaging. A tariff on imported fertilizer, for example, raises costs across the board.
In 2022, the U.S. imposed duties on certain nitrogen and phosphate fertilizers from Russia and Trinidad and Tobago, which contributed to price spikes. For large farms, that meant higher expenses but manageable adjustments. For smaller farms, especially those already struggling with tight margins and limited bulk purchasing power, the result was severe financial pressure.
How Farmers Can Respond to Tariff Volatility
While farmers can’t control trade policy, there are strategies to reduce exposure to tariff-related risks:
Diversify Markets:Â Explore selling through local cooperatives, CSAs, or regional food systems less exposed to international trade shifts.
Value-Added Production:Â Processing or branding products locally (e.g., cheese, jams, specialty grains) can reduce reliance on raw commodity prices.
Risk Management Tools:Â Crop insurance, forward contracts, and futures markets can help stabilize revenue in volatile times.
Monitor Trade Policy Developments:Â Stay informed through USDA, Farm Bureau, and local extension offices. Understanding potential policy changes can guide marketing and planting decisions.
Collaborate and Advocate:Â Join trade associations or farm organizations that advocate for fair trade policies and small farm interests.
The Bigger Picture: Why Tariffs Matter to All Farmers
Even if your farm doesn’t export, tariffs shape the prices you receive and the costs you pay. They influence everything from the fertilizer that nourishes your crops to the steel that builds your barns.
For policymakers, tariffs might be a tool for negotiation or protection. But for farmers — especially those with fewer acres or less market leverage — they often represent another unpredictable force in an already uncertain business.
Understanding how tariffs work and where their effects show up allows you to anticipate challenges and make better financial decisions. Tariffs may seem abstract, but their impact is anything but theoretical when it comes to your bottom line.
Navigating Tariffs in an Interconnected World
Agriculture doesn’t operate in isolation. Every seed planted in rural America is connected to markets, consumers, and policies around the globe. Import and export tariffs remind us of that connection — and of the importance of resilience and adaptability.
For small and mid-sized farms, the key lies in awareness and strategy: knowing how global trade shifts can affect your local operation, and planning accordingly. Whether it’s by diversifying income streams, improving cost tracking, or joining collective advocacy efforts, there are steps farmers can take to stay competitive — no matter what trade winds blow next.
Tariff Impact Tracker for Farmers
To help farmers evaluate how tariffs may be influencing their financial performance, we’ve created a simple Tariff Impact Tracker template.
Purpose:
To help farmers identify, quantify, and respond to the ways tariffs affect their operation, both through export markets and increased input costs.
How to Use It:
Update quarterly or annually.
Enter estimated % changes in prices or costs related to tariffs.
Record mitigation actions taken (e.g., cost-cutting, diversification).
Use results to inform business or planting decisions.
Interpreting Results
If revenues fall more than costs rise, focus on market diversification and value-added strategies.
If costs rise faster than revenues fall, consider input substitutions or collective purchasing.
If both shift unpredictably, strengthen liquidity reserves and review financial risk exposure.
Tracking these changes gives farmers clarity, not just about what’s happening, but why.
Joshua, his wife Jenn, and their dog Rooster live in PA. Joshua is the owner and operator of Hoffman Appalachian Farm, where they grow Certified Naturally Grown hops. Joshua has over twelve years of experience in growing crops, including growing in an organic system. In his spare time, he enjoys trail running, backpacking, and cycling.