This piece was published on May 12, 2025 and reflects the state of trade policy and tariff impacts as of that date. Given the ongoing negotiations with China and other trading partners, the situation is evolving rapidly. Readers should be aware that some details may change in the coming days and weeks.
Tariffs have emerged as a key tool in the Trump administration's campaign to reshape global trade. Plenty of debate has surrounded this tactic, whether it will work, and what its impacts will ultimately be on the US economy over the long-term. The administration is continually modifying how they apply them and modifying messaging on what their intent actually is—revenue generation, forcing trade deals, making US exports competitive? In the meantime, they’re likely to have immediate impacts on US agriculture.
Just like our previous article on changes at the USDA, this topic is a bit of a new arena for Mad Agriculture. But again, the speed and scale of what’s happening demands our attention. Plus, in looking for information and reporting on how Trump’s tariffs will impact the parts of the agriculture sector we support most directly (organic, regenerative), we didn’t find much. So, we felt compelled to write something.
Current State of Play
Tariffs have been imposed in a few separate waves by the Trump administration since the inauguration, which have often been followed by retaliatory action by counterparties. The biggest announcement, of course, came on April 2, 2025, when the administration announced a schedule of extremely high “reciprocal” tariffs on several countries. It’s been hard to keep track of, and in many cases the administration has made threats it never followed through on or changed course quickly following initial announcements. We originally started by writing out a full timeline of events to date, but it was so long and so complicated that we lost track of the details ourselves. Instead, we’ve compiled a table with details on where tariffs currently stand with major trading partners/blocs. A more complete timeline is included at the end of this article for those interested in seeing how this all played out.
Since the announcement of the administration’s “reciprocal” tariffs schedule on April 2, 2025, the subsequent escalation with China, and the pausing of additional tariffs above the 10% baseline rate until July, not much has changed.
Prior to the first week of April, Mexico, and Canada struck temporary agreements with the US to exempt any imports from tariffs that are compliant with the US-Mexico-Canada Agreement (USMCA) provisions on tariff-free trade. This means goods that are exempt from tariffs must originate or be primarily assembled in one of the three countries. Therefore, US farmers who export to Mexico and Canada and US consumers who buy imported products from those countries are not currently affected by tariffs. This exception was originally set to expire by April 2, 2025, but as of now it has not been revoked but neither has the extension been formally codified.
News continues to filter out that various trading partners are discussing trade agreements in exchange for the US reducing its rates. The EU and US appear to be approaching a deal, and formal trade talks between China and the US will begin soon with Treasury Secretary, Scott Bessent, indicating that the goal is de-escalation. But no deals have been formally announced yet.
Even as the state of play changes, there’s been no indication that the administration will back down from its policy of universal 10% baseline tariff rates on all countries, which in and of itself is a major departure from recent trade policy. Plus, the administration has indicated that the reciprocal tariffs currently on hold will still be reenacted if trade agreements can’t be reached. The impacts of these policies alone layered on top of the overall uncertainty of US trade policy in general is likely to be substantial and will impact US agriculture.
Early Signals
The story of the impacts of tariffs on US agriculture over the long term is uncertain. But key early signals with regard to what will happen this year and this growing season have emerged.
Most significantly, purchases of US soy by China have cratered. According to statistics from the USDA, sales for the week ending May 1, 2025 were less than 1/3 sales from the same week a year prior. China is the single largest purchaser of US soy, but given tariffs, they’ve shifted to purchasing from Brazil. A similar pattern emerged in the first Trump administration when the US engaged in a similar, albeit less intense trade war with China, setting off a multi-year decline in US soy exports. But this time around, the impact looks like it will be much greater and more enduring.
In response, the USDA has signaled that it will provide farmers with financial support to weather the slump in sales, just as it did in the first Trump administration. Many growers planning to grow soy this year have signaled they’ll switch to corn, which for many is their only other option, as decades of policy has strongly incentivized them into such a specialization. Surplus production of corn could reduce sale prices.
Aside from Chinese soy exports, Mexico and Canada are the US’s largest agricultural trade partners. In 2023, agricultural exports to Mexico and Canada from the US totaled $28.4 billion each, and imports totaled $45.4 billion and $40.1 billion, respectively. Agricultural products exchanged between the three countries include nearly every category of goods, and the agricultural economies of all three nations are strongly integrated.
Given that the US, Mexico, and Canada seem to have reached a detente, all USMCA-compliant goods will continue to be duty free for the foreseeable future. But even still, the uncertainty of US trade policy has had a chilling effect on markets. Many producers or brokers are in a holding pattern as they await greater clarity—fearful that if they elect to make large orders or contracts and policies change again, they are at risk of major financial losses.
As the US’s three largest agricultural trading partners, China, Mexico, and Canada still only accounted for just less than half of US exports in 2023. The remaining 50% are exported across the world, with key markets for grains, beef, and pork in Southeast Asia and the European Union. Retaliation from these partners has generally been less severe, but a general cooling of trade relations with these countries may open opportunities for other nations to negotiate deals and displace American exports. As was the case with China replacing US soy exports with Brazil under the first Trump administration, initial displacement of American exports can lead to major trade realignment over time, diminishing market opportunities for US farmers.
Last, aside from exports, America imports a substantial number of agricultural products, from nations other than China, Mexico, and Canada, and tariffs on these imports are still in place. Those tariffs will almost certainly raise prices for consumers on key goods, such as fresh produce, and reduce supply with very little immediate opportunity to replace that supply with domestically produced equivalents.
Organic and Regenerative Agriculture
So, what about the organic and regenerative agriculture sector? Impacts of trade policy on these growers are difficult to predict given the crop and geographic diversity, but compared to conventional growers, organic growers are more insulated. The vast majority of US organic production goes to domestic markets and not for export. The two largest markets for organic exports are Canada and Mexico, which as we noted above, are not currently placing tariffs on US agricultural goods. Indeed, during the first Trump administration and during COVID, which temporarily reduced the global flow of trade, organic producers did comparatively well given their focus on domestic consumers, local/regional food economies, and greater diversity of crops and products, both on-farm and in markets.
Despite these reassurances, things could easily be different this time given the sheer extent of the administration’s actions and the application of tariffs across all sectors of the economy. We’ll highlight a few of those key concerns here:
Market uncertainty:
Even though there’s been some resolution with key organic trading partners, policy uncertainty is having a chilling effect on markets. Colleagues at Mad agriculture’s sister company Mad Markets who buy and sell organic commodities every day tell us that even with the suspension of tariffs on Mexico and Canada, buyers and sellers are in a standoff. Neither is willing to put on big sales contracts instead opting to buy small volumes as needed. Buyers are bidding low to hedge against the potential return of tariffs, and sellers are sitting on product as the prices being offered just aren’t enough. Deals that are being made often have tariff “washout” clauses that allow either party to walk away.
Transport costs:
A slow down in trade volume is reducing the number of backhaul opportunities in shipping and return freight in ground transportation. This means that shipping/hauling companies have fewer containers in motion week to week, and in some cases containers are empty. They can’t achieve the same economy of scale and so have to raise their prices. In some cases, rail freight providers aren’t even publishing their rates for the next few months as they don’t have a clear idea of their schedules yet.
Consumer purchasing power:
Tariffs are likely to increase prices on a range of goods, which will impact household budgets in the US, reducing purchasing power by as much as $2600 per household. This could reduce the amount of household spending on organic products, which has been growing in recent years.
Loss of federal funding:
USDA funding has been instrumental in helping to support new organic producers, develop organic markets, and support farmers of all kinds in implementing conservation practices. Tariffs could shift USDA’s spending priorities towards farmer support, as happened in the first Trump administration. Coupled with efforts to reduce federal spending overall and upcoming farm bill and budget negotiations, it’s possible that federal programs to invest in organic producers, relevant scientific research, and conservation practice implementation (e.g. EQIP, CSP) will diminish. Although, OTA recently announced that two key organic programs, TOPP and OMDG, are going to be maintained.
Increasing equipment costs:
Although several tariff policies have been walked back, tariffs on aluminum and steel, which were implemented separately by the Trump administration, will remain. Paired with tariffs on imports of electronics and small parts, often sourced from China or Southeast Asia, costs of new equipment are likely to go up.
Reduced lending:
In response to the uncertainty created by current trade policy, the Federal Reserve has declined to reduce interest rates in recent months. Likewise, agricultural lenders are likely to tighten up lending as projected farm revenues decrease, cost of inputs increase, and collateral (i.e. land and assets) devalues. Again, organic farmers may be partially insulated from these effects if their balance sheets look better, but even a general tightening of the lending environment is likely to impact organic farmers, particularly new ones, who already struggle to secure financing in comparison to conventional counterparts.
What’s Next?
It’s difficult to predict where things go next, but it seems likely that US agriculture will be negatively impacted in the short term. What’s more, all this activity comes as farm margins in the US are tightening. An analysis at the end of last year by agricultural lenders predicted that just over half of all farmers would be profitable in 2025 compared to 78% profitability in 2024, and that was prior to tariffs being implemented. Even if improvements to trade policy come, many farms could already be facing tough decisions this year to close shop or sell/rent to someone else. This will likely accelerate the trend of farm consolidation we’ve been seeing in US ag over the past several decades but that was acutely accelerated during the first Trump administration and COVID. Lagging market signals may start appearing in the next few months giving us a better sense of what the year will look like.
Organic and regenerative producers may be better shielded from these macroeconomic conditions that are all but certain to impact conventional growers. But even still, they could easily create strong headwinds for producers by reducing demand, increasing input and shipping prices, and tightening capital markets.
Over the next weeks and months, we’ll be watching to see what new trade agreements are made with various countries, if the current detente with Mexico and Canada is formalized, and how negotiations with China, in particular, proceed. Because despite the fact that tariffs have been applied universally, China is the administration’s real primary opponent in this trade war and the counterparty with whom negotiations are most important and most fraught.
Tariff Timeline
Tariff policies have come out in various waves of activity, each followed by a series of retaliatory actions by other countries and ensuing adjustments to policy. This is a timeline of all major activities through mid-April.
February 2025:
Trump signs an EO placing 10% universal tariffs on China, and 25% tariffs on Mexico and Canada - all on the premise that they were in response to insufficient effort by each country to curtail drug trafficking and illegal immigration.
Tariffs on Mexico and Canada are paused for 30 days as leaders of either nation met with the administration and agreed to cooperate on border security and drug trafficking measures.
Tariffs on China are not paused and are enacted by February 4, 2025. China retaliates with a 15% tariff on US coal and liquefied natural gas and a 10% tariff on crude oil and agricultural machinery starting on February 10, 2025.
Also on February 10, 2025, Trump invoked Section 232 of the Trade Expansion Act of 1962 to reinstate tariffs on all steel imports at 25% and to increase tariffs on aluminum from 10% to 25%. These went into effect on March 12, 2025.
March 2025:
The 30 day delay on Canada and Mexico tariffs expires and the 25% tariffs on either country go into effect, but over the next few days several adjustments are made that limit their effect.
Tariffs on Canadian energy imports are reduced to 10%.
Tariffs impacting goods from either country that would impact US automakers are given a one month exemption.
On March 6, 2025, the Trump administration delays tariffs on Canada and Mexico on goods that are deemed compliant with the US-Mexico-Canada Agreement (USMCA) provisions on tariff-free trade, meaning goods that are exempt from tariffs must originate or be primarily assembled in one of the three countries. Importantly, this exception means that agricultural products are largely exempt from the tariffs. This exception was originally set to expire by April 2, 2025, but as of now it has not been revoked and appears it may remain indefinitely.
No such agreements are made with China, and China announces retaliatory tariffs on March 10, 2025 of 15% on key agricultural goods, including chicken, pork, soy, and beef.
On March 26, 2025 Trump announced a 25% tariff on all auto imports and certain applicable auto parts. The tariffs will be rolled out over the following weeks.
April 2025:
On April 2, 2025, the Trump administration detailed their long-awaited program of “reciprocal” tariffs against most other nations with a few key exceptions.
All countries are subject to a 10% baseline tariff rate.
In addition to the 10%, an additional “reciprocal tariff” adjustment is applied to nations that run a trade surplus with the US (i.e. they export more to the US than the US does to them).
These adjustments are ostensibly to “correct” trade imbalances that are the result of unfair trade practices by other nations, but critics highlight that trade imbalances are often simply the result of economic specialization by different countries and the relative purchasing strength of the US dollar given its position as the global reserve currency.
Total combined rates (10% baseline plus reciprocal) range from 11-50% and include several emerging economies and the EU.
The only countries exempt from the additional reciprocal tariffs made in this announcement were China, Mexico, and Canada, given that the administration had previously enacted tariffs on them, as well as Russia, North Korea, Cuba, and Belarus, given that current sanctions limit trade activity with those nations. But they were subject to the baseline 10% rate.
In addition to the rates announced on April 2, 2025, the administration announces that it will levy on China an additional 34% tariff on top of the 20% rate it was already planning on charging, raising the rate on China to 54%.
Canada announces that it will match US tariffs on auto imports with its own 25% tariff on US vehicles that are not compliant with the USMCA.
On April 5, 2025, the 10% minimum tariffs went into effect, and on April 9, 2025, the full “reciprocal” rates went into effect, but only briefly as the administration then walked back the higher rates for 90 days. The 10% baseline rate remained in effect.
The exception to this walkback was China. In a series of escalating announcements and counter-announcements, the US reached an effective rate of 145% on Chinese imports and China a rate of 125% on all US imports. Rates are effective immediately on both sides.
The US makes an exception to tariff policy on key consumer electronics after pressure from US tech firms, such as Apple.