How Farm Tariffs are Impacting U.S. Agricultural Trade  

Farm tariffs are creating a precarious global trade market for U.S. agriculture. 

The Trump administration has been imposing new tariffs on many U.S. trading partners to rebalance trade relationships and protect domestic industries. Each day seems to bring a new farm tariff update, making it difficult to keep track of its impact on the U.S. farm community as a whole. In the long term, farm tariffs could protect U.S. farm commodities and level the playing field for domestic producers. In the short term, they are creating a challenging agricultural trade market to navigate, helping some producers and hurting others.  

In this article, we cover the USDA’s third quarter trade outlook report and provide an overview of how these farm tariffs are impacting relationships with key farm trading partners—for better or worse.  

How Farm Tariffs Have Impacted the U.S. Agricultural Trade Deficit 

The U.S. agricultural trade deficit reached $28.6 billion in the first half of 2025, with the June deficit alone at $4.1 billion, a 14 percent increase from the previous year. The good news is that this farm trade deficit may soon decline. 

The USDA now expects the trade deficit to reach $47 billion, down from the earlier estimate of $49.5 billion, thanks to increased U.S. exports. In 2026, the deficit is expected to fall further to $41.5 billion. 

Farm Tariffs Impact on U.S. Agriculture 

Tariffs might sound like something that only matters in politics or trade talks, but they can hit farmers close to home. Here’s how: 

1. Higher Prices for Everyone 

 Tariffs raise the cost of goods. In 2025, they’re expected to push consumer prices up about 1.8 percent, which means the average household is predicted to lose around $2,400 in buying power this year. 

2. Higher Input Costs 

 Tariffs have raised costs of some fertilizers by $100 per ton. Steel and parts tariffs make tractors, combines, and repair parts more expensive. That means higher input costs. 

3. Not All Commodities Are Equally Affected 

 Not all farm products are equally affected. Crops that can shift acreage, like corn or beans, are more flexible. But more permanent operations like orchards and dairies can’t as easily adapt, leaving them more vulnerable to lost markets. 

4. Government Payments 

 The government may roll out subsidy programs to help farmers weather the storm. 

Farm Tariffs Impact on Key Trading Partners 

China 

In the first half of this year, exports to China dropped by more than half, falling from nearly $12 billion last year to just $5.5 billion. Rising tariffs from both the U.S. and China have made American products less competitive.  

Soybeans are taking the hardest hit. China hasn’t bought a single cargo of new-crop soybeans yet for the 2025/26 season, something that hasn’t happened in two decades. Instead of buying from the U.S., China signed a deal with Argentina, who agreed to supply soybeans, corn, and vegetable oil. Economists agree China is unlikely to lower tariffs with the U.S. and will likely continue to lean on South America for ag imports. 

For U.S. farmers, this means continued uncertainty and potential long-term international market share loss if an agreement is not reached. With fall harvest approaching, demand from one of America’s biggest buyers is shaky, and that puts added pressure on grain prices here at home. 

Brazil 

The U.S. began enforcing a new 50 percent tariff on many of Brazil’s exports on August 6, though some agricultural products were spared. Items like orange juice, certain fertilizers, Brazil nuts, and cellulose were exempted, which together make up nearly half of Brazil’s export volume to the U.S. Even so, several major agricultural goods—including coffee, beef, tropical fruits, seafood, cocoa, and sugarcane—are still facing the steep tariff. 

Brazil is preparing for these tariffs to have a majorly impact on its economy. Brazil’s beef industry alone predicts losing at least $1 billion in the second half of 2025, and overall, the country could see a nearly 50 percent drop in exports to the U.S. 

In response, Brazil is working to diversify its markets, particularly by deepening ties with China. China has already approved more than 180 Brazilian coffee exporters, signaling a shift in where Brazilian goods may go if U.S. demand falls. Brazil has also taken the tariff issue to the World Trade Organization, but so far, no decision has been made.  

Canada and Mexico 

The U.S. has recently shifted its trade stance toward both Canada and Mexico, and while the changes aren’t as severe as those with China or Brazil, they still carry weight for agricultural trade. 

For Canada, tariffs on many goods have gone up to 35 percent from 25 percent, officially tied to U.S. concerns over drug trafficking. Still, products covered under the USMCA remain exempt, which offers some stability for key farm and food items. Even so, the higher tariffs are expected to strain the broader trade relationship between the two countries. 

 With Mexico, the picture is a bit different. A 30 percent tariff on most goods has been put on hold for 90 days while trade negotiations continue. For agriculture, the delay offers some breathing room, but there’s still uncertainty hanging over future trade terms. 

Both Mexico and Canada are already moving to adapt. The two countries are working together to expand exports, open new markets, and strengthen existing ones. If they succeed, U.S. growers could see more competition in global markets, especially if Canadian and Mexican producers gain stronger footholds abroad. 

European Union 

The U.S. and the European Union (EU) recently struck a trade deal that eased some tensions but left many details still unclear. The U.S. agreed to cap tariffs on most EU exports at 15 percent instead of the 30 percent that had been threatened.  In return, the EU promised to invest heavily in American energy. 

For agriculture, the agreement opens new doors. About $8.7 billion worth of U.S. farm products will get improved access to Europe through tariff-rate quotas, including soybean oil, seeds, grains, nuts, processed foods, and seafood. This could mean steadier demand for some U.S. crops and food products that have struggled to get into EU markets in the past. 

However, there’s still confusion about what exactly was promised. Early talk of “zero-for-zero” deals—where certain agricultural goods would face no tariffs on either side—was not included in the official documents, with negotiations ongoing for items like wine and spirits. 

India 

The U.S. has sharply raised tariffs on India, starting at 25 percent on August 1 and doubling to 50 percent just a week later. The move was tied not only to complaints about India’s high tariffs and tough trade barriers but also to its continued energy and military dealings with Russia. 

For U.S. agriculture, the situation complicates efforts to open India’s market. India’s rural farmers have been strongly opposed to letting in more American ag goods, and the higher tariffs make any potential trade deal even less likely in the near term. 

Rice is one of the biggest sticking points. U.S. officials have accused India of unfairly subsidizing its rice industry, which gives Indian growers an advantage on the global market. 

Japan 

The U.S. and Japan have reached a new trade deal that’s being called a win for American agriculture, especially rice. Under the agreement, the U.S. will lower its reciprocal tariff rate, while Japan has agreed to open its market wider to U.S. farm goods. 

Industry leaders say this is the first real chance since the 1990s to expand access to Japan’s rice market, which is highly valued for its demand for premium, high-quality grain. The deal could strengthen U.S. rice exports and provide new momentum for broader agricultural sales into Japan. 

Indonesia 

The U.S. has secured a major trade deal with Indonesia that opens the door wide for American agriculture. Indonesia has agreed to buy $4.5 billion worth of U.S. products like soybeans, wheat, and cotton. Additionally, Indonesia will drop nearly all of its tariffs on U.S. farm goods. That means American products will now enter Indonesia at a 0 percent tariff rate, while Indonesian exports to the U.S. will still face a 19 percent tariff. 

The agreement also tackles long-standing non-tariff barriers. Indonesia will recognize U.S. oversight of meat, poultry, and dairy facilities and ease restrictions tied to geographical indications, making it easier for U.S. ag exports to flow without extra red tape. 

The U.S. dairy sector is especially optimistic. Indonesia is already the seventh-largest market for American dairy, and industry groups believe this deal will create even more room for growth. 

Australia 

For the first time in more than 20 years, Australia is reopening its market to fresh and frozen U.S. beef. Australia’s decision shows confidence in the safety and quality of American beef, which could give the U.S. an edge when competing for sales in key markets across Asia. It also helps address a long-standing imbalance. Since a 2005 trade agreement, Australia has shipped nearly $29 billion worth of beef to the U.S., while American producers haven’t been able to send any in return.  

Even if exports to Australia remain modest, the larger impact lies in strengthening U.S. credibility and competitiveness in the global beef trade. 

Staying Resilient Means Staying Informed 

The global market is changing fast, and knowing where tariffs, trade deals, and government programs stand can make the difference between profit and loss. 

At AgAmerica, we’re here to help farmers and ranchers like you stay informed and prepared. Our trade and legislative resource page gives you up-to-date insights, practical tips, and financial tools designed specifically for agriculture. Don’t wait until markets shift—get the information you need to protect your farm, plan ahead, and make smarter business decisions.