What a President-Elect Trump May Mean for Agriculture

A president who gained power by popularizing the phrase “drain the swamp” may appear a boon for agriculture, but what lies ahead for the industry will become clearer when President-Elect Trump strikes a more measured tone than he used during his campaign.

If the low profile that agriculture maintained during the election season indicates the attention it will get during his term, farmers should expect little in the way of radical change.

Indeed, what little is known about Trump’s thoughts on the sector, such as his being “totally in favor of ethanol, 100 percent,” suggest that growers won’t have to make too much of a deviation from their current course.

What farmers should be concerned about is the longer-term course of trade. In addition to suggesting the U.S. withdraw from the World Trade Organization, Trump has threatened to scrap free trade deals including the North American Free Trade Agreement with Canada and Mexico, which he says have cost U.S. jobs. He has talked of 35 percent tariffs on goods imported from Mexico and imposing 45 percent tariffs on imports from China.

Such moves would not go unopposed, and the U.S. could find its own exports hit with tariffs.

When China is the top buyer of U.S. agricultural goods, forecast to be $21.5 billion through September 2017, and Mexico third at $18 billion for the same 12-month projection, retaliation would leave the U.S. facing a monumental effort of finding alternative buyers to avoid a back-up of agricultural commodities on the domestic market, and a collapse in prices.

There of course are limits to the extent that China could avoid U.S. crops, at least short-term, with limited alternatives for the likes of soybeans, which is processed into the soymeal fed to China’s huge hog herd. But that market stranglehold would only be likely to last for so long.

Agrimoney.com offers U.S. farmers these tips:

• Lobby hard for agricultural exports not to become a victim of trade battles in this new administration.
• Think about growing food the U.S. imports, and which may, if caught in the crossfire of trade wars, get hit with heavy levies. Agricultural exports of $133 billion would be a lot to lose. But imports of $113.5 billion offer opportunity, too.

Source: Agrimoney.com