Trade disputes, funding cuts, and delays in tax reform and the farm bill are negatively impacting U.S. agriculture. Each area will have both short- and long-term ramifications for agricultural operations and food producers.

Below, Pinion advisors provide an overview of current disruptors for agriculture, as well as potential timelines for tax and farm bill changes.

Ag Trade Impacts: Where It Stands Today & What Could Change

Over the past month, President Trump has levied 25% tariffs on imported steel, aluminum, autos, and auto parts, placed 10% across-the-board tariffs on all imports except those from Canada and Mexico, and placed 154% tariffs on all goods imported from China except electronics.

More Change Ahead?

In 90-days, President Trump may implement significant “reciprocal” tariffs on many countries, and he has suggested tariffs are coming on imported electronics, lumber, and pharmaceuticals.

In response, China, the EU, and Canada have each enacted or announced retaliatory tariffs on a range of U.S. agricultural goods.

Ag’s Global Dependencies

U.S. agriculture is dependent on global markets. In 2024, U.S. agricultural exports totaled $176 billion and produced about 20% of U.S. farm revenue. American farmers also rely heavily on inputs from other countries. Ongoing trade disruptions threaten to reduce the price of U.S. commodities, increase input costs, and allow U.S. competitors like Brazil to increase market share.

Depleted Commodity Credit Corporation Funds

During the first Trump administration, trade disruptions cost American farmers $27 billion in lost exports and led USDA to allocate Commodity Credit Corporation (CCC) funds to support impacted farmers. The CCC is now largely depleted, suggesting that additional funds will need to be appropriated by Congress.

Disruption from USDA Funding and Staffing Cuts

In addition to the disruption from the trade wars, the Trump administration has cancelled, frozen, or rescinded billions in federal funding, including USDA funding.

How the USAID Cuts Impact U.S. Producers

One of the initial targets of funding cuts was the U.S. Agency for International Development (USAID). Foreign aid programs are a lifeline for malnourished people and are a critical market for American agricultural products. USAID spent roughly $2 billion in fiscal year 2023/24 to purchase commodities from U.S. producers. Domestically, USDA has also cut programs that provide funding to schools and food banks to buy food directly from local producers.

Producers Reel from Cut in NRCS Project Funding

Funding cuts have also negatively impacted producers who are implementing projects through Natural Resources Conservation Service (NRCS) cost-share programs. Many producers are now facing a significant financial burden as the government’s share of the funding has been cancelled.

USDA Resources Dwindle, Could Spell Disaster for Relief Programs

Further, tens of thousands of USDA employees have been fired or will soon be leaving USDA. USDA’s Farm Service Agency (FSA) and NRCS, already plagued with staffing shortages, face even fewer resources, reducing assistance to farmers with disaster relief, conservation, loan, and commodity price guarantee programs.

The Forecast for Tax Legislation: More Delays Likely

Major portions of the 2017 Tax Cuts and Jobs Act (TCJA) are set to expire. The TCJA was largely viewed as positive for the agricultural sector. Republicans are using the budget reconciliation process to bundle their policy priorities together, including tax legislation.

The Republican’s slim House majority, however, makes tax reform a heavier lift and there are significant disagreements between the House and Senate on how to proceed. We forecast that tax reform will be delayed until the third or fourth quarters of 2025.

Farm Bill Reality Check

The farm bill has not been updated since 2018, largely due to partisan disagreements over climate and nutrition provisions. This inaction has left farmers with outdated policies as they face trade disruptions and funding cuts.

There is substantial uncertainty whether Congress will be able to pass a farm bill this year or whether it will settle for another one-year extension.

U.S. food and agriculture is being significantly impacted by the on-going trade wars, funding cuts, and delays in passing tax reform and the farm bill. If you have questions about these matters, please do not hesitate to reach out to a Pinion advisor for more information.