Artem Milinchuk, Founder and Head of Strategy of FarmTogether.
In the wake of recently enacted tariff escalations—most notably on imports from China and Mexico—the spotlight has returned to the global trade policies shaping U.S. agriculture. While the long-term impact remains uncertain, early signals suggest these policy shifts could affect production inputs and export competitiveness. For investors, especially those watching commodities or real assets, understanding how tariffs intersect with agriculture is essential for making informed portfolio decisions.
A Quick Recap: What Are The 2025 Tariffs?
As of Q2 2025, the political discourse has been dominated by tariff plans introduced by the Trump administration, including a 10% blanket tariff on all imports and up to 145% tariffs on specific Chinese goods. The administration has also implemented 25% tariffs on certain Mexican and Canadian agricultural products in response to ongoing disputes over immigration and trade imbalances.
These measures, enacted in early 2025, have already begun shaping sentiment in global markets, prompting speculation about how American producers and exporters might respond.
Export Exposure: Why Tariffs Matter For U.S. Agriculture
The U.S. agricultural economy is deeply integrated into global markets. According to the USDA, more than 20% of all U.S. agricultural products are exported annually, with China, Mexico and Canada among the top destinations.
The enactment of tariffs on Chinese and Mexican imports has led to retaliatory measures targeting U.S. agricultural exports. We’ve seen this before. In 2018, a similar round of tariffs triggered a trade war with China, slashing U.S. soybean exports by 75% year over year at the peak of tensions.
In 2025, trade tensions will have contributed to short-term disruptions in U.S. agricultural exports. According to the USDA’s April 2025 report, soybean sales fell 50% week over week and are now 25% below the four-week average, with analysts citing tariff escalation between the U.S. and China as a key driver. Pork exports to China have also contracted. These effects have been more pronounced in row crops and livestock, sectors tightly linked to U.S.-China trade flows.
By contrast, permanent crops—such as tree nuts, apples and citrus—have shown greater stability. These crops serve diversified markets, and their longer production cycles limit rapid supply adjustments, helping reduce price volatility. As a result, permanent crop markets have been less affected by current tariff changes, though input costs and water availability remain ongoing variables to watch.
For many investors, these dynamics highlight the importance of understanding the specific crops and regions they’re exposed to, given that not all parts of the agricultural sector respond equally to global policy shifts. While it’s too early to gauge the full impact of the 2025 tariffs, early signs suggest some sectors are more exposed to short-term volatility than others.
Input Costs: Tariffs Affecting More Than Exports
Tariffs are a two-way street. While much of the media attention centers on what the U.S. sells abroad, just as critical is what it buys. U.S. farmers are reliant on imported inputs, particularly fertilizers, pesticides and machinery components.
For example, over 80% of potash used in the U.S. is imported, primarily from Canada. While Canadian potash compliant with the United States-Mexico-Canada Agreement (USMCA) continues to enjoy zero import tariffs, the current presidential administration has imposed a 10% tariff on noncompliant Canadian potash imports. This tariff is expected to raise corn and soybean production costs by $12 to $30 per acre, according to the University of Illinois’s Department of Agricultural and Consumer Economics.
Machinery is another point of concern. Many tractors, harvesters and irrigation systems use precision components manufactured abroad. If these remain subject to blanket tariffs, equipment costs could rise, potentially slowing the adoption of new technologies.
That said, farmers have historically adapted to input pressures through alternative sourcing, longer asset cycles or crop adjustments—demonstrating operational flexibility and resilience over time.
Regional Impacts: Not All Farms Are Affected Equally
Geography matters. In California, where high-value specialty crops like almonds, wine grapes and citrus dominate, producers are more attuned to retaliatory tariffs from Asia and Europe, key destinations for premium U.S. exports. California shipped over $20 billion abroad in 2024, underscoring its agricultural scale and reach. While exposed to trade fluctuations, many of these crops benefit from diversified end markets and relatively inelastic demand, contributing to a more stable price environment over time.
In the Midwest, where row crops like corn and soybeans are concentrated, the conversation centers on scale and exposure. Large commodity growers remain heavily dependent on international buyers and imported inputs like fertilizer and machinery. In response, some are exploring acreage shifts toward crops with more domestic demand, such as wheat or sorghum.
In southern states like Georgia and Florida, tariff uncertainty has compounded ongoing climate risks, creating a double bind for producers navigating both economic and environmental volatility.
Farmland Investment: A Longer-Term View
Amid recent short-term disruptions, it’s important to step back and view farmland through a longer-term lens. Historically, farmland has demonstrated remarkable resilience during periods of economic and political volatility.
The NCREIF Farmland Index, the leading benchmark for U.S. farmland investment performance, has delivered positive annual returns in 33 of the past 35 years, including during major stress periods like the 2008 financial crisis and the 2018-2019 U.S.-China trade war.
While 2024 saw a modest pullback, with the index posting a negative 1.03% total return, driven by a tempering of land appreciation and higher input costs, this modest pullback remains an outlier in a decades-long track record of stability and income. Importantly, farmland’s underlying value remains rooted in biological fundamentals: Crops continue to grow, and land productivity endures regardless of broader market cycles.
For investors, farmland remains a historically resilient asset class, offering the opportunity for diversification, inflation protection and long-term value stability even in the face of short-term policy-driven market noise.
A Measured Outlook For Agricultural Investors
The 2025 tariff landscape marks a meaningful—but not unprecedented—development for U.S. agriculture. While uncertainty brings risks tied to trade, input costs and market volatility, these impacts underscore agriculture’s role in global food security and economic stability.
For investors, this is a moment for vigilance. Diversification and a long-term, fundamentals-based approach remain essential. Those who stay disciplined may find that agriculture, particularly farmland, serves as a resilient force in portfolios, capable of weathering policy shifts and delivering long-term value.
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
Forbes Finance Council is an invitation-only organization for executives in successful accounting, financial planning and wealth management firms. Do I qualify?