For American farmers, tariffs are rarely an abstract debate about international trade. Eventually, they show up somewhere much closer to home—in the price of fertilizer, machinery and replacement parts, in export demand for grain, or in the basis offered at the local elevator. That has made the 2026 season particularly complicated.
Farmers have been dealing with relatively tight crop margins while the United States has continued using tariffs as a central part of its trade policy. At the same time, trading partners have responded with tariffs and other measures of their own. The result is a situation where agriculture can potentially benefit from protection of American industry over the long term, while individual farmers can absorb very real costs in the short term. And that distinction matters.
Farmers Buy Retail and Sell Wholesale
There may be no better way to explain the problem facing agriculture. A corn or soybean producer buys fertilizer, chemicals, machinery, fuel, tires, steel, replacement parts and technology in markets where the farmer has relatively little control over price. Then he produces a commodity and sells it into a global market where he has almost no control over the selling price. That’s a difficult business model even under normal circumstances. Add tariffs and international retaliation to the equation, and both sides of that calculation can become more volatile.
USDA currently forecasts total U.S. farm production expenses at approximately $477.7 billion in 2026, about $4.6 billion higher than in 2025 in nominal dollars. (Economic Research Service) That doesn’t mean tariffs caused every increase in farm expenses. Far from it. Energy markets, interest rates, labor, weather, global fertilizer production and dozens of other factors influence production costs. But tariffs can add another layer of cost and uncertainty to an already expensive production system.
Farm Machinery Is a Good Example
Modern agriculture is enormously dependent upon machinery. A combine isn’t just an American-built machine made entirely from American materials. Neither is a tractor, sprayer or planter. Agricultural equipment manufacturing depends upon complicated international supply chains involving steel, aluminum, electronics, sensors, semiconductors and other components. Tariffs therefore don’t necessarily stop at the border.
Some of those additional costs eventually work their way through manufacturers and dealers and into the price farmers pay. We can see the magnitude of the issue in the equipment industry itself. Deere recently estimated that tariffs will represent approximately $750 million in net costs during 2026, with the company currently anticipating roughly $1 billion in 2027. (Reuters) That’s significant.
Farmers don’t necessarily receive a bill saying “tariff charge” every time they buy a tractor part. Instead, those costs can become embedded throughout the supply chain. For a producer trying to keep an older combine running rather than spending hundreds of thousands of dollars replacing it, higher parts and repair costs matter.
Fertilizer Is an Even Bigger Concern
Fertilizer demonstrates just how interconnected American agriculture has become with international trade. The United States depends heavily on imported potash, and Canada is particularly important. Reuters recently noted that approximately 85% of U.S. potash supplies come from Canada. (Reuters) That’s important considering the deterioration in U.S.-Canadian trade relations.
Canada announced this week that it will impose retaliatory tariffs on approximately $20 billion of American products beginning September 8 after the United States imposed new 50% tariffs on roughly $20 billion of Canadian imports. (Reuters) Canada has so far avoided using fertilizer supplies as a major weapon in the dispute. Farmers should hope it stays that way. When you’re talking about something as fundamental to corn production as potash, disrupting a major supplier can have consequences that reach far beyond the political argument that started the dispute.
Then There’s the Other Side of the Equation: Exports
Higher input costs are only half of farmers’ tariff concerns. The other half may be even more important:
Who buys what we grow?
The United States produces considerably more corn, soybeans and other agricultural commodities than Americans consume domestically. Agricultural exports aren’t some optional bonus for farmers. They are a fundamental component of commodity demand. Soybeans are perhaps the clearest example.
China is an enormous soybean consumer. When trade relations deteriorate and agricultural commodities become bargaining chips, American soybean producers are directly exposed. The danger isn’t simply losing a sale this month. It’s encouraging your customer to find another supplier.
Brazil Is More Than Happy to Sell the Beans
This is one of the lessons American agriculture learned from earlier U.S.-China trade disputes. If China cannot—or doesn’t want to—buy American soybeans, it doesn’t stop feeding livestock. It buys beans somewhere else.
Brazil has spent years expanding soybean acreage, production and export infrastructure. Every trade disruption that encourages China to strengthen its relationship with South American suppliers potentially creates a longer-term competitive problem for U.S. farmers. Once supply chains move, they aren’t always easy to move back.
Reuters recently pointed to soybeans as an example of that problem, noting that after U.S. beans became leverage in previous trade disputes with China, Chinese purchases declined substantially. (Reuters) That’s the part of tariff policy that worries me most from an agricultural perspective. Markets that take decades to build can disappear considerably faster.
There Has Been Some Encouraging News From China
Fortunately, the soybean story isn’t entirely negative. Earlier this month, Chinese state buyers made their most aggressive purchases of the upcoming American soybean harvest in several years. USDA confirmed nearly 500,000 metric tons of Chinese purchases, while traders told Reuters that total transactions in the buying spree were closer to one million tons.
China previously agreed to purchase 25 million metric tons of U.S. soybeans annually through 2028. (Reuters) That’s welcome news for growers. But it also illustrates just how dependent agricultural markets have become on international politics. A meeting between presidents, a tariff announcement or a breakdown in negotiations can suddenly become almost as important to a soybean farmer as rainfall. That’s not exactly a comfortable position for a business owner.
Retaliatory Tariffs May Be the Biggest Agricultural Risk
When the United States places tariffs on another country, that country has an incentive to retaliate. And agriculture makes an attractive political target. Why? Because agricultural exports tend to come from politically important rural states.
A foreign government doesn’t necessarily have to retaliate against the same product the United States targeted. It can choose American products that create maximum political pressure. That means farmers can become collateral damage in a dispute that didn’t originally involve agriculture at all.
Canada’s latest retaliation demonstrates the broader danger. Its new tariffs cover hundreds of American products, while additional measures announced in recent days have included agricultural equipment among the targeted categories. (Reuters) And once countries begin trading tariffs back and forth, predicting where the escalation ends becomes difficult.
The Timing Couldn’t Be Much Worse for Grain Farmers
All of this would be easier to absorb if corn and soybean producers were sitting on enormous profit margins. Most aren’t.
The farm economy looks considerably different depending upon what a farmer produces. Livestock producers have experienced a different market than many row-crop farmers. USDA forecasts 2026 U.S. net farm income at approximately $153.4 billion, down 0.7% nominally from 2025 and down about 2.6% after adjusting for inflation. (Economic Research Service)
Government payments are also playing a substantial role in those numbers. USDA forecasts direct government farm payments of approximately $44.3 billion in 2026, an increase of $13.8 billion from 2025. (Economic Research Service) That’s worth thinking about. The aggregate farm-income number can look relatively healthy while individual grain producers are struggling to make their own balance sheets work.
Tariffs Aren’t the Only Thing Driving Costs
It’s also important to be fair about what tariffs are—and aren’t—responsible for. Not every expensive input is expensive because of tariffs. This season farmers are simultaneously dealing with international conflicts, energy-market disruptions, fertilizer-market problems and other supply issues.
Diesel is a particularly good example. Farmers are entering harvest with elevated diesel costs, with fuel representing roughly 3% to 5% of production expenses for major crops such as corn, soybeans and wheat. Recent geopolitical disruptions have contributed significantly to those higher fuel prices. (Axios) So blaming every economic problem in agriculture on tariffs would be inaccurate. But tariffs are one more pressure point being added to an already stressed system.
Could Tariffs Ultimately Help American Agriculture?
Potentially. That’s the other side of this debate, and it shouldn’t be ignored. If tariffs encourage companies to manufacture more fertilizer, machinery, chemicals, steel, electronics and other agricultural inputs in the United States, farmers could eventually benefit from more secure domestic supply chains.
There’s also a legitimate national-security argument for reducing America’s dependence on foreign countries for strategically important products. COVID exposed just how fragile global supply chains could be. Farmers understand that lesson better than most. A cheap foreign supplier isn’t necessarily cheap anymore if you suddenly can’t get the product.
The problem is the transition. Building domestic manufacturing capacity takes years and enormous amounts of capital. A farmer has to plant a crop next spring.
Farmers Need Trade, Not Just Protection
That’s why agricultural trade policy requires a different kind of balance. Protecting American manufacturing and confronting unfair foreign trade practices may be legitimate national objectives. But American agriculture also needs access to foreign markets. We can’t simultaneously encourage farmers to become the most productive agricultural producers in the world and then pretend it doesn’t matter whether the rest of the world buys the surplus.
We need customers.
Corn needs customers. Soybeans need customers. Rice needs customers. Cotton needs customers. Pork, poultry, beef and dairy need customers. And once another country develops an alternative supplier, winning that customer back can be extraordinarily difficult.
The Farmer Is Caught in the Middle
That’s ultimately the frustrating part of the tariff debate for agriculture. The farmer isn’t negotiating the trade agreement. He isn’t setting the tariff. He isn’t sitting across the table from China, Canada, Mexico, Brazil or the European Union. He’s sitting in a tractor. Yet the decisions being made thousands of miles away can determine what his fertilizer costs, what his equipment costs and what somebody on the other side of the world is willing to pay for his crop.
Farmers already assume enormous risks involving weather, commodity markets, interest rates, disease and production. Trade policy adds another risk that they have virtually no ability to manage themselves.
What I Would Watch From Here
The next several months could be more important than what has happened so far. The biggest question is whether current trade disputes escalate or begin moving toward negotiated agreements. For soybean producers, China remains critical. The recent buying is encouraging, but growers need sustained purchases rather than occasional politically driven transactions. For corn and other commodities, maintaining and expanding export markets will be equally important.
And on the input side, I would pay particularly close attention to Canada and fertilizer. Given America’s dependence on Canadian potash, agriculture has a tremendous interest in keeping fertilizer from becoming another weapon in the current U.S.-Canadian trade dispute.
Agriculture Can Handle Competition. Uncertainty Is Harder.
American farmers are remarkably good at producing commodities. Give them reasonable weather, access to technology and a market, and they’ll figure out how to grow a crop. The harder problem is planning a business when the rules keep changing.
A farmer makes decisions months—or sometimes years—in advance. Equipment purchases, land leases, fertilizer contracts, seed purchases and marketing decisions aren’t things that can always be changed because another tariff was announced Tuesday afternoon. That’s why consistency matters.
Tariffs may ultimately accomplish some of their intended objectives. They may encourage domestic manufacturing, strengthen certain American industries and give the United States negotiating leverage with trading partners. But agriculture also bears some of the immediate cost.
For farmers already operating on narrow margins, “eventually” can be an awfully long time to wait. The measure of a successful trade policy shouldn’t simply be how much tariff revenue it collects or how tough it appears at the negotiating table.
For rural America, the better measure will be whether American farmers emerge with lower dependence on vulnerable foreign supply chains, competitive production costs, and more—not fewer—customers around the world.
This article reflects conditions as of August 26, 2026. Trade measures are changing rapidly, and the economic effect varies substantially by commodity, region and individual farm operation.
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