Charlie Elrod, Ph.D., NEAFA President
As if agricultural producers don’t already cope with lots of volatility in both their input costs and the markets in which they sell their products. Add to that a chaotic, on-again, off-again, on-again with exemptions, tariff regime and most producers will be forgiven if they can’t quite put their finger on the implications for their businesses. The consensus from national organizations, from the American Feed Industry Association to the American Farm Bureau Federation, seems to point to a rough few years ahead for agriculture.
Canada and Mexico are our two largest trading partners for agricultural products and will have tariff-free entry for those products covered under the USMCA Agreement which will include most ag products. However, the 25% tariffs on automobiles, auto parts, steel and aluminum will certainly add significantly to the cost of farm vehicles, equipment and their maintenance. For those automobiles and auto parts which come from countries other than Canada or Mexico, a 25% tariff will be in effect. Similarly, steel and aluminum products from all other countries will also face a 25% tariff.
Conversely, destinations for the 20% of US ag products which are exported have retaliated with tariffs on US goods. The EU, for instance, is placing tariffs on $30 billion dollars of US products coming into Europe. Of the 99 pages of listed items, the first 3 pages cover meats and meat byproducts, the next 8 pages cover foods of dairy origin and the next 20 pages cover other ag products such as grains, fruits and beverages. China, which is facing a 145% tariff on all goods exported to the US has reciprocated with a 125% tariff on everything from the US. These actions will, of course, price those US goods out of the marketplace. Markets which our ag-related trade groups and government agencies have spent decades cultivating to accept and favor our superior US-grown ag products are now being pushed into the waiting arms of competitor industries from other countries.
Every industry will feel the pain of these tariffs and the retaliatory countermeasures. But all too often agriculture seems to bear the brunt in trade disputes like this. In agriculture, we already cope with price volatility on the input side of our businesses and the prices we get for our products are also at the vagaries of the markets. Add to that having to cope with weather extremes, disease pandemics and regulatory pressure and we can anticipate that our farms and farm-related businesses will definitely feel the squeeze. That is one reason why organizations like NEAFA, NEDPA, NYFB, AFIA exist. We will do everything in our power to help our members and their customers weather these storms and hopefully come out stronger on the other side.