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(Bloomberg) — President Donald Trump has repeatedly said he loves farmers. His actions, though, are rippling across the agriculture industry as tariffs raise the cost of everything from tractors to fertilizers and squeeze profits for US growers already contending with low crop prices.
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The sweeping effects of the president’s trade war are coming into sharper focus as agricultural giants including Mosaic Co., AGCO Corp. and Bunge Global SA report their latest results: deliveries of key nutrients to the US have plunged, machinery prices are climbing and crop buyers are limiting purchases amid mounting uncertainty.
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The levy-inflicted costs come at a time when American farmers — who by and large strongly support Trump — have little buffer to absorb the impact. A benchmark for corn, soybean and wheat prices has fallen to its lowest levels since the height of pandemic lockdowns amid ample supplies globally, cutting into farm revenues.
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“Farmer economics in North America has been an industry concern as the price of corn has not kept up with the price of inputs,” Bert Frost, executive vice president of sales, market development and supply chain at fertilizer maker CF Industries Holdings Inc., said in a Thursday earnings call.
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Frost added that tariffs delayed or even cut much needed fertilizer imports into the US in the second quarter, leaving the company with “incredibly low inventory that needs to be rebuilt in the United States and Canada.”
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Trump has asked farmers to give his tariff policies time to play out, promising better results than the trade deal he struck with China in his first term. Speaking on CNBC earlier this week, Trump again touted his support for farmers, calling them a “very important part of this country” and saying he wanted to work to make sure they have the labor they need — even as many workers are deported via his immigration crackdown.
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“We’re not going to do anything to hurt the farmers,” Trump said. “We’re taking care of our farmers. We can’t let our farmers not have anybody.”
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Potentially making matters worse, Trump’s new tariffs officially took hold Thursday, adding to baseline rates imposed in April and continuing his push to reshape global trade. Taken together, the president’s actions will drive up the average US tariff rate to 15.2%, well above 2.3% last year and the highest level since the World War II era, according to Bloomberg Economics estimates.
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“All of our competitors and us have certain products that are going to be more expensive,” said Eric Hansotia, chief executive officer of tractor maker AGCO, which has recently announced some price hikes in North America. The company may also raise prices in other regions to offset the tariff impact, he added. “We will implement price increases where appropriate and feasible.”
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US-bound shipments of phosphate and potash, two key fertilizers, are down 20% from a year ago and are expected to “remain subdued,” Jenny Wang, Mosaic commercial vice president, said in a call with analysts Wednesday.
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