March 21, 2025
As Michigan inches closer to spring, many farmers have already made their plans for the planting season and are getting their equipment ready.
Now, state agriculture leaders are telling them to rethink those plans and add some more flexibility as they face an uncertain year ahead due to tariffs. At the beginning of the year, President Donald Trump announced he would be instating additional 25% tariffs on Canada and Mexico and 10% tariffs on China. While tariffs on Canada and Mexico have been postponed to April 2, the increased tariff remains on China.
China responded with retaliatory tariffs, targeting specific industries including U.S. agriculture. The country implemented 15% tariffs on corn, chicken and wheat and 10% tariffs on soybeans, pork, dairy, beef and other food products.
“They know the importance of their market to our agriculture sector,” said David Ortega, a professor and the Noel W. Stuckman Chair in Food Economics & Policy at Michigan State University.
Canada is Michigan’s largest agriculture trading partner, receiving around 40% of Michigan’s agriculture exports. Other major export destinations for the state are Mexico, China, Japan and South Korea.
One of Trump’s goals with the tariffs is to encourage more domestic sales of agricultural products instead of exports, according to his March 3 Truth Social post: “To the Great Farmers of the United States: Get ready to start making a lot of agricultural product to be sold INSIDE of the United States. Tariffs will go on external product on April 2nd. Have fun!”
However, economics professionals are warning that the U.S. alone simply doesn’t have enough demand to provide a market for all U.S. agriculture products.
“That’s just not the reality of the situation,” Ortega said. “Our farmers and agriculture sector rely on export markets for industry profitability. We export 20% of agricultural production, so export markets are very critical to U.S. farmers and U.S. agriculture.”
Meanwhile, the tariffs implemented by other countries will make U.S. products more expensive for their consumers, which could drive countries like China to purchase their products from other countries, like Brazil.
One of Trump’s goals with the tariffs is to encourage more domestic sales of agricultural products instead of exports, according to his March 3 Truth Social post: “To the Great Farmers of the United States: Get ready to start making a lot of agricultural products to be sold INSIDE of the United States. Tariffs will go on external product on April 2nd. Have fun!”
However, economics professionals are warning that the U.S. alone simply doesn’t have enough demand to provide a market for all U.S. agriculture products.
“That’s just not the reality of the situation,” Ortega said. “Our farmers and agriculture sector rely on export markets for industry profitability. We export 20% of agricultural production, so export markets are very critical to U.S. farmers and U.S. agriculture.”
Meanwhile, the tariffs implemented by other countries will make U.S. products more expensive for their consumers, which could drive countries like China to purchase their products from other countries, like Brazil.
The U.S gets 94% of its potash or potassium - an ingredient in fertilizers - from other countries, and 85% of that comes specifically from Canada. Tariffs will make the cost of that fertilizer higher for U.S. farmers and could ultimately influence the decisions they make about what to grow and how much.
While the U.S. does produce some potash, it does not produce enough fertilizer to meet the demand.
Alternatively, the U.S. could look to other countries for potash, but Canada is the world’s leading producer of it.
“In terms of the quantity, we could look to other countries, but we would have to look at a lot of countries to be able to make up that difference, and it’s not something that you’d be able to do quickly,” said Jon LaPorte, a Farm Business Management educator at MSU Extension. “You’d have to build those relationships over time and establish that supply chain. That’s what makes this difficult, is we don’t have all those people lined up.”
The higher prices for inputs are leading farmers to plan on growing crops that need less fertilizer, like soybeans, even if they aren’t projected to be the most profitable this year.
LaPorte explained that, at least right now, it looks like corn will be more profitable this year, but it requires more inputs, so farmers are leaning towards soybeans, anyway.
“Even though the corn/soybean (profitability) ratio would tell you to plant corn…the concern over tariffs and potential costs like increasing fertilizer prices has people planting soybeans,” LaPorte said.
If the tariffs continue throughout the year and during harvest season, farmers could be faced with even lower commodity market rates than they saw last year.
Particularly, if other countries decide to contract elsewhere for their products and there isn’t enough demand within the U.S., the nation will be facing a surplus of products, and prices will have to be dropped.
“You end up in a situation where the price is really depressed domestically because there is no export market for that product to go to,” Ortega said.
These lower rates could cause farmers to pull from their working capital to make ends meet. They could also end up selling their assets - like crops they had in storage - at a lower price than what they had wanted.
“There are a lot of potential things that could be a problem for farmers depending on how all this plays out, and that’s the concern right now is we don't know,” LaPorte said. “Many of us are hoping that everything gets resolved sooner rather than later.”
It’s important for farmers to create a plan but also to remain flexible, as they watch the market and the tariffs situation play out all year.
“As we’re sitting in the middle of March, you don’t typically see producers having those kinds of conversations,” LaPorte said. “We hit March and usually most producers have their plans pretty set and know what they want to do.
"This is one of those cases where the market is creating enough uncertainty that people are really trying to figure out what is the best route to go.”
MSU Extension encourages farmers, especially this year, to research and implement the Rule of Five Percent. The basic idea would be to increase yields by 5%, increase prices by 5% and decrease costs by 5% this year.
While the concern for tariffs is top of mind for many farmers, they also acknowledge that these things change quickly and they must be patient to see what will happen in a few months.
“Michigan Sugar Company has always and will continue to closely monitor government decisions that could have an impact on our growers, our company, and the sugar market. This includes the rapidly evolving trade situation and other executive actions,” said John Boothroyd, director of Government Relations at Michigan Sugar Company.
“We are pleased that a recent Executive Order from President Trump confirms that sugarbeets grown for Michigan Sugar Company in Ontario, Canada, are exempt from tariffs under the terms of the USMCA (United States Mexico Canada Agreement)," he added.
Boothroyd noted that Michigan Sugar Company is a cooperative owned by about 865 grower-owners from Michigan and Ontario. Each year, those family farmers grow about 140,000 acres of sugarbeets, including about 7,300 acres in Canada. The Canadian beets are harvested and transported by truck across the border to Michigan Sugar's sugarbeet processing facility in Croswell in Sanilac County.
Looking to the future
As those in the industry look back to the challenges they faced in 2018, they also recall the Market Facilitation Program that provided funding for commodities directly impacted by retaliatory tariffs. Many expect that the federal government will provide aid like that again.
One of the main concerns for the future of the industry if these tariffs continue is that the U.S. doesn’t have the capacity or even the ability to produce certain inputs and food products.
“We don’t have the production capacity to be able to meet demand and that’s, in part, why we engage in trade with our trading partners,” Ortega said.
For example, Mexico has better growing conditions year-round and cheaper labor. And Canada has an abundance of natural resources, including potash.
For the U.S. to create conditions to produce these products domestically would be extremely costly.
“It would be far costlier to produce those goods and inputs domestically than it is to source them via trade. In some cases, it may not even be possible,” Ortega said. “We’re not able to grow things like avocados year-round. We’re not able to grow bananas or coffee because we don't have the right growing conditions. Theoretically, you could come up with environmentally controlled facilities, but those costs would be astronomical and it’s not something I see as being feasible.”