Tariffs and Trade: Examining Potential Impacts on Agriculture

As President-elect Donald Trump prepares to take office, questions are rising about the potential impact his administration may have on agriculture, especially in the areas of trade and tariffs. Roland Fumasi, head of RaboResearch Food and Agribusiness North America, shared insights into these possible challenges and opportunities during a recent interview.

“The most tangible and likely thing right now is some adjustment to tariffs,” Fumasi explained. He highlighted the potential for increased trade tensions with China, as well as proposed tariffs on Mexico and Canada. According to Fumasi, tariffs and retaliatory tariffs could have a “triple negative” effect on the agricultural sector. First, they could lead to inflation in farm inputs such as chemicals and durable goods. Second, they might drag down U.S. exports due to retaliatory measures. Finally, a stronger U.S. dollar could make American products less competitive in global markets.

These issues could also spill over into consumer behavior. Fumasi noted that tariffs on imports like fresh produce could significantly raise prices, particularly for fruits and vegetables from Mexico and Canada. While higher-income households may weather these increases, lower-income families could struggle to afford nutritious food. “Consumers who already have a hard time paying for healthy fruits and vegetables could find these items even less affordable,” he said.

However, Fumasi also pointed to potential benefits. He suggested that Trump’s focus on reducing regulatory burdens and increasing U.S. energy production could help control inflation and lower production costs for farmers. These steps might provide some relief in an otherwise uncertain environment.

Fumasi urged farmers to stay alert as the new administration’s policies take shape. “Pay attention to how the details unfold… capture some profit when you can,” he advised, emphasizing the need for flexibility in navigating potential market disruptions.

Source: AgNet West