The Growing Pressure on Farmers
The rapidly changing 2025 tariff landscape is driving up costs and uncertainty for farmers.
On April 2, 2025, the U.S. imposed an additional 34% tariffs on Chinese imports (now 54% total), and added “reciprocal” tariffs on a broad list of countries. Retaliation was swift, with China imposing 34% tariffs on all inbound American products. The Dow Industrials index is down approximately 15% (as of close on April 4, 2025) from its peak in December 2024 after Trump’s election. Over 2 days from April 2-4 2025, the U.S. stock market lost approximately $6.4 trillion in value, which was historic. Corn, soybean and wheat prices have also been affected, down between 5% – 9% from their recent levels in February 2025. Farmers will likely experience higher input costs for essentials like machinery and fertilizers. Further retaliatory tariffs from trading partners, currency fluctuations, and shifting global trade policies further complicate market stability.
Strategic financial and operational adjustments are even more essential for farmers to stay competitive in an increasingly volatile environment. This guide tracks factors that are impacting farmers and provides suggestions on how farmers can adapt and stay strong.
Key Impacts of Tariffs on Agriculture
1. Rising Input Costs Driven in Part by Tariffs
- On February 4, 2025, President Trump imposed an additional 10% tariffs on imports from China. Then, on February 10, 2025, the President reinstated 25% tariffs on imported steel and aluminum. These tariffs are expected to increase farm equipment costs due to higher material and component costs.
- On March 4, 2025, President Trump introduced 25% tariffs on imports from Canada and Mexico, and added 10% to the tariffs on China.
- On April 2, 2025, President Trump announced broad based “reciprocal” tariffs on a broad list of countries, including China, the European Union, and India, among others. China, in particular, has already announced retaliatory tariffs on all inbound products from America, and the European Union has stated that retaliation might target U.S. tech and services companies if negotiations fail to bring about lower tariffs.
- Fertilizer prices are climbing. Urea briefly topped $420/ton in early February, and the price is over 40% higher than where it was in June 2024.
- Generic glyphosate prices are approximately 10-15% higher than they were in 2024.
2. Falling Grain Prices
- Row crop commodity prices have fallen back to pandemic or pre-pandemic levels.
- Recent tariff announcements have contributed to a “risk-off” mentality, resulting in lower commodity prices.
- Corn, soybean and wheat prices are down approximately 5% – 9% from their recent February 2025 highs.
- Increasing competition from Brazil due to intensifying land use and higher yields has depressed global soybean prices.
- President Trump’s policies on renewable fuel standards, which impact biofuel demand, have not been clarified, contributing to pricing uncertainty.
At current harvest month prices, typical row crop farmers (assuming they operate similar to their state university enterprise crop budgets) do not expect to make money on most row crops, as the tables below show:
ARKANSAS
| Crop Type | Enterprise Crop Budget ($/acre) | Assumed Cash Rent ($/acre) | State Average Yield (bu/acre) | Break-even Crop Price ($/bu) | CBOT Last Price as of 4/04/25 | Price Gap ($/bu) | Budget |
| Corn | 936.4 | 125 | 215 | 4.94 | 4.46 | -0.48 | Stacked Gene Furrow |
| Soybeans | 609.3 | 125 | 60 | 12.24 | 9.84 | -2.39 | RR2XTendFlex Furrow |
| Rice | 1,132.2 | 125 | 190 | 6.61 | 6.01 | -0.60 | Hybrid |
ILLINOIS
| Crop Type | Enterprise Crop Budget ($/acre) | Assumed Cash Rent ($/acre) | State Average Yield (bu/acre) | Break-even Crop Price ($/bu) | CBOT Last Price as of 4/04/25 | Price Gap ($/bu) | Budget |
| Corn | 747 | 275 | 236 | 4.33 | 4.46 | 0.13 | Central Illinois (High Productivity) Corn after Soybeans |
| Soybeans | 490 | 275 | 75 | 10.20 | 9.84 | -0.36 | Central Illinois (High Productivity) Soybeans after Corn |
| Wheat | 486 | 275 | 86 | 8.85 | 5.43 | -3.42 | Central Illinois (High Productivity) Wheat |
INDIANA
| Crop Type | Enterprise Crop Budget ($/acre) | Assumed Cash Rent ($/acre) | State Average Yield (bu/acre) | Break-even Crop Price ($/bu) | CBOT Last Price as of 4/04/25 | Price Gap ($/bu) | Budget |
| Corn | 850 | 275 | 227 | 4.96 | 4.46 | -0.50 | High Productivity Soil Rotational Corn |
| Soybeans | 551 | 275 | 70 | 11.80 | 9.84 | -1.96 | High Productivity Soil Rotational Soybeans |
| Wheat | 532 | 275 | 98 | 8.23 | 5.43 | -2.80 | High Productivity Soil Wheat |
IOWA
| Crop Type | Enterprise Crop Budget ($/acre) | Assumed Cash Rent ($/acre) | State Average Yield (bu/acre) | Break-even Crop Price ($/bu) | CBOT Last Price as of 4/04/25 | Price Gap ($/bu) | Budget |
| Corn | 595 | 275 | 209 | 4.16 | 4.46 | 0.30 | Corn Following Soybeans |
| Soybeans | 382.9 | 275 | 60 | 10.97 | 9.84 | -1.12 | Herbicide Tolerant Soybeans Following Corn |
OHIO
| Crop Type | Enterprise Crop Budget ($/acre) | Assumed Cash Rent ($/acre) | State Average Yield (bu/acre) | Break-even Crop Price ($/bu) | CBOT Last Price as of 4/04/25 | Price Gap ($/bu) | Budget |
| Corn | 756.4 | 200 | 188 | 5.09 | 4.46 | -0.63 | Non-Irrigated |
| Soybeans | 439.6 | 200 | 57.1 | 11.20 | 9.84 | -1.36 | Non-Irrigated |
| Wheat | 374 | 200 | 79.5 | 7.22 | 5.43 | -1.79 | Non-Irrigated |
Source: AcreHedge Crop Optimizer, using pricing data from the CME Group website, Last Price quotes as of April 4, 2025 for harvest months: Dec Corn, Nov Soybeans, Sep Rice, Jul SRW. State university crop budgets as published.
State university budgets tend to be conservative and may not reflect your actual operating costs. To calculate your own, more accurate crop breakevens please sign up for AcreHedge.
3. Supply Chain and Export Challenges
- Farmers relying on imports for machinery parts and fertilizers face possible extended delivery times and higher costs.
- Tariffs are contributing to the strengthening of the U.S. dollar, making American agricultural exports less competitive in global markets. As Dave Whitcomb, Head of Research at Peak Trading Research, explains, “the dollar’s strength has been a persistent headwind for commodity markets.”
Risk Management Strategies for Farmers to Mitigate Tariff Impacts
A mix of government support and private financial strategies is needed to manage risks effectively.
1. Traditional Crop Insurance
To safeguard against price volatility, farmers can utilize traditional USDA crop insurance. Crop insurance is a complex subject; the University of Arkansas has assembled a comprehensive primer that we recommend.
2. Financial Protection Methods
If you need to borrow from a bank or other financial institution to run your farm, then you need a solid plan that takes into account increased volatility and uncertainty in today’s markets.
Farmers are strongly encouraged to find opportunities to reduce risk. This can be achieved using market-based solutions like forward sales, futures, options, and hedging to create a well-rounded risk management plan:
- Forward contracts to secure pricing prior to harvest
- Put options for price protection in case of downturns
- Other hedging strategies to reduce risk and maximize crop revenue
In addition, software companies like AcreHedge provide apps that help farmers manage risks through better revenue planning and crop budget optimization.
3. Cost Control Measures
- Diversifying Suppliers: Sourcing equipment and fertilizers from alternative suppliers to secure better pricing.
- Optimizing Input Usage: Using precision agriculture technologies to reduce waste and improve efficiency.
- Adjusting Inventory Levels: Stockpiling essential inputs to absorb future supply chain disruptions.
- Joining Local Cooperatives: Pooling resources and negotiating better seed, fertilizer, chemical, and freight prices.
- AcreHedge: Using a budgeting tool like AcreHedge to track costs and calculate break-evens, making it easier to identify where cost savings can be achieved.
Market Signals to Watch in 2025
Keeping an eye on market signals is crucial for adapting to rapid policy changes. Tools like the USDA Foreign Agricultural Service’s Global Agricultural Trade System offer valuable trade data, while the U.S. Trade Representative’s annual report on China’s WTO compliance sheds light on key policy issues. Farmers should also track:
- USDA World Agricultural Supply and Demand Estimate (WASDE) Reports, published monthly.
- USDA National Agricultural Statistics Service (NASS) Crop Progress Reports, published monthly.
- Currency exchange rates
- Commodity futures prices
- U.S. agricultural export volumes, especially to China, as they are a key customer for American agricultural products.
Farmers should also regularly consult USDA Economic Research Service reports for in-depth analysis of these dynamics and their potential effects on agricultural trade.
Navigating the 2025 Tariff Landscape
The 2025 tariffs are reshaping agricultural supply chains, increasing costs, and adding financial uncertainty for farmers. To remain resilient, farmers must adopt a multifaceted strategy that includes:
- Active crop revenue management, including forward sales, and market-driven hedging strategies to reduce risk and maximize revenue.
- Reducing costs through supplier diversification, optimized input use, and joining local cooperatives.
- Get better at farming by using crop budgeting and optimization software to identify where additional operating efficiencies can be found.
As Arlan Suderman, Chief Commodities Economist at StoneX commented, “Know your breakevens. Be ready to sell into price rallies. Understand your risk exposure.”
By staying informed and proactive, farmers can navigate these challenges and position themselves for long-term stability despite an uncertain trade environment.