Farm & Food File: Farm markets hate uncertainty — and tariffs

One of the first marketing lessons offered to me, a wet-behind-the-ears ag editor, by a steely and successful ag futures trader was as simple and useful as a feed bucket.

“Markets hate uncertainty,” Paul W. explained back when Ronald Reagan was president, “because uncertainty fuels panic, panic fuels selling and selling brings lower prices.”

Paul’s straight-line logic came to mind after the Trump White House again said it would impose hefty tariffs on U.S. imports from Canada and Mexico, double current tariffs on Chinese imports and consider new tariffs on other decades-long allies such as the 27-member European Union.

The EU, however, sniffed out the Trump plan weeks ago and prepared for any trade punch the American president might throw.

According to the Feb. 16 Financial Times, the EU is ready “to block imports of certain foodstuffs” that “could include U.S. crops such as soybeans which are grown using pesticides EU farmers are not allowed to use.”

It’s not an empty threat. Right now, some EU farm groups are ready to fight an unwelcome, pending EU-Mercosur trade deal that opens their farm markets to South American ag powerhouses Argentina and Brazil and their fast-rising neighbors Uruguay and Paraguay.

Given current EU anger, the smart move by the United States would be to develop new, innovative programs to encourage increased European purchases of American ag goods, not the imposition of expensive, counterproductive tariffs that will shove Europe’s food buyers into the open arms of hard-nosed South American competitors.

The reason — like that feed bucket — is simple: In 2024, the EU purchased $12.8 billion of U.S. farm goods, including $2.3 billion of soybeans, $428 million of ethanol and $387 million of corn. The latter two are recent records.

But the Trump White House seems unbothered by facts when tariff talk starts. If all the tariffs it has proposed are put in place, American farmers will face a global market that features U.S. tariffs on four of their top five, by 2023 data, ag customers: China, $33.7 billion; Mexico, $28.2 billion; Canada, $27.9 billion; and the EU, $12.3 billion.

Only Japan, with $12.2 billion in U.S. ag purchases in 2023, has avoided the American tariff net this year.

But it’s only March, so there’s still time for it — and others — to be pushed into the anti-trade calamity that the White House believes American farmers will embrace.

U.S. Secretary of Agriculture Brooke Rollins assured farmers in early March that she, according to Politico, will “bail out farmers who are targets for any retaliation as a result of Trump tariff threats, as former USDA chief Sonny Perdue did during the first Trump administration.”

There are just two problems with Rollins’s assurances. First, the money promised in any tariff bailout isn’t hers; it belongs to U.S. taxpayers. As such, Congress will have a say on any “farm tariff bailout.”

Second, the fact that a second Trump tariff bailout will be necessary only proves that tariffs, contrary to what the White House continues to claim, don’t pay; they cost.

Somehow the White House, Secretary Rollins and other Trump-supporting public officials never mention that basic economic reality when talking about who paid for earlier Trump tariffs.

It wasn’t China, as she herself confirmed. U.S. taxpayers paid that $23 billion.

If the second Trump tariff fight costs taxpayers another $23 billion — and Rollins sends the promised $31 billion to American farmers because of today’s already sagging ag exports — U.S. farmers will receive more than $50 billion in taxpayer money in the first year of the second Trump administration.

That’s not a feed bucket. That’s a fire hose.