Trump's tariffs raise alarms for Illinois farm industry

Tariffs announced by President Donald Trump and the possibility of a trade war have raised alarms for agriculture industries in Illinois and across the U.S.

The state is the nation's second leading exporter of both soybeans and feed grains and related products, said the Illinois Department of Agriculture. About 44% of grain produced in Illinois is sold for export.

The U.S. is the world’s largest food exporter. Illinois ranks fifth in the country for agricultural product exports worth $10.6 billion, according to the Illinois Agriculture Department. Overall, marketing of the state’s agricultural products generates more than $51.1 billion annually. Crops account for 40% of that total.

The Illinois Farm Bureau is concerned about harm to the state’s farmers from potential tariffs on the United States’ top three agricultural trading partners: Mexico, Canada and China. The three countries, as well as others, have warned they will impose retaliatory tariffs on the U.S. in response to Trump’s orders.

“Our farmers simply cannot afford the uncertainty of a potential trade war. Farm income has declined for a second straight year,” Brian Duncan, Illinois Farm Bureau president, said in a statement last week. “Uncertainty surrounding tariffs and the potential for retaliation makes it difficult to plan for the future.”

Zippy Duvall, president of the American Farm Bureau in Washington, D.C., said, “Tariffs and tariff retaliation often hit farmers and ranchers hard, which make it more difficult for them to pay their bills and grow the food America’s families rely on.”

Consistency is key

Evan Hultine is a sixth-generation farmer near Princeton, more than two hours west of Chicago. He grows corn, soybeans and seed corn with his parents on a 1,300-acre farm.

“Farmers always face a lot of uncertainty. We expect it from the weather, but we really need consistent trade approaches. Consistency is really key,” Hultine said.

Farmers can spend decades building up trade partners and agreements that are threatened by tariffs and trade wars. “It’s hard to get new partners to work with you if you have constantly fluctuating trade positions,” he said.

Hultine isn’t certain of the exact destination of his crops because he sells to grain merchandisers who distribute to various markets. But he said much of it is exported, such as soybeans to Europe and corn that's turned into ethanol and ends up in Canada.

Rural economies would be hit hard by retaliatory tariffs, Hultine said. “The stress to the whole system is something we’re hoping to avoid.”

Trump’s tariffs

Last week, Trump ordered an additional 10% tariff on Chinese imports. In addition, he has readied tariffs on Canada and Mexico that could take effect in early March, after being suspended for 30 days. On Monday, he also removed the exemptions from his 2018 steel and aluminum tariffs, meaning all steel imports will be taxed at a minimum of 25%. Trump also hiked his 2018 aluminum tariffs to 25% from 10%.

Canada and Mexico have both announced they would impose retaliatory measures. Other countries would likely follow. On Friday, the European Union’s executive branch vowed to “take firm and immediate action” against Trump’s tariffs on steel and aluminum.

Between 2018 and 2019, tariffs resulted in approximately $27 billion in lost exports for U.S. agricultural producers, according to a U.S. Department of Agriculture report. Soy and pork producers suffered the most significant economic damage.

In 2018, the U.S. imposed tariffs on steel and aluminum imports from major trading partners, as well as on a broad range of imports from China. In response, Canada, China, the European Union, India, Mexico and Turkey responded with retaliatory tariffs on a range of U.S. agricultural exports, said the USDA.

Duvall, of the American Farm Bureau, said in February, “We know from experience that farmers and rural communities will bear the brunt of retaliation. Harmful effects of retaliation to farmers ripple through the rest of the rural economy.”

In addition to crops, agricultural inputs and equipment are affected by tariffs. More than 80% of the United States’ supply of potash — a key fertilizer ingredient — comes from Canada, the AFB said. “Tariffs that increase fertilizer prices threaten to deliver another blow to the finances of farm families already grappling with inflation and high supply costs,” Duvall said.

Contributing: AP