Down on the Farm

Commentary by William Alan Reinsch

Published October 6, 2025

Farmers are on the front line of U.S. trade policy. Until the last four years, the United States regularly had a trade surplus in agriculture-not enough to offset the large deficit in manufactured goods, but a bright spot nonetheless. The fact that the surplus has turned into a deficit, and one which is growing, has become a source of consternation for farmers, obviously, but also for economists looking for good news in the economy.

Source: USDA

Farmers are first in line when it comes to trade retaliation. Despite the current deficit, the United States remains a major exporter of corn, wheat, soybeans, sorghum, cotton, pork, beef, poultry, and numerous fruits and vegetables. Those are easy targets for countries seeking to retaliate against U.S. tariffs or other actions they don't like because most of those products can be found elsewhere.

That is a big problem right now, thanks to China, but there are also other reasons farmers are suffering. Some of them, like weather, we can't do much about, but others are self-inflicted wounds. Here are a few data points and examples.

• China bought $12 billion of U.S. soybeans in 2024, more than half of U.S. exports. This year, China has bought China's purchases of U.S. corn, wheat, and sorghum are also down.
• Trump's immigration policy is creating a shortage of farm workers and driving up farm labor costs.
• Net farm income is expected to fall by over $30 billion in 2026 because of the One Big Beautiful Bill Act's cuts to government payments and record-low crop prices due to the season's bumper crop.
• The U.S. Agency for International Development (USAID) historically has been a major buyer of U.S. agricultural products for shipment overseas in the form of food aid. That has essentially stopped with the agency's closure, costing U.S. farmers over $2 billion in sales. Similarly, cuts in federal programs that supply food to communities have reduced their sales.
• Farm bankruptcies in the first quarter of 2025 are almost double those in the first quarter of 2024.
• Thanks to Trump's tariffs, prices for critical farm imports like fertilizers, pesticides, and agricultural machinery (which use a lot of steel and aluminum) are going up.

As I mentioned, some of these are self-inflicted wounds, like the tariffs, the USAID closure, and the deportations, which raises the obvious question: Why not just reverse those policies and give farmers a much-needed boost? The answer, of course, is that these are fundamental elements of Trump's efforts to restructure the U.S. economy and the global trading system and reduce the size of the government, so reversal is not going to happen.

Instead, it appears the administration will do the same thing it did in Trump 1.0-bail out the farmers with federal cash. An announcement is expected this week. In the first term, that meant payments totaling $23 billion from the Commodity Credit Corporation. That fund apparently has only $4 billion left in it, so Secretary of Agriculture Brooke Rollins said she is working with Congress on a new payments plan, initially rumored to be over $40 billion, although later rumors reduced it to $10-14 billion. Trump subsequently said the administration would be using tariff income for that, but he did not provide a specific amount or explain how he would do it. Conventional wisdom is that it would require congressional action, which will be difficult to accomplish while the government is shut down. But the intent is clear-Trump is likely going to spend billions of dollars, most of which will be coming from U.S. consumers despite his statements to the contrary, to compensate farmers for his own mistakes. This is not government at its finest.

Farmers' reaction the last time was to take the money, of course, but to say they preferred to earn it by selling their crops. I expect them to say the same thing this time. Unfortunately for them, they have little leverage to force a change of policy. In farming-dependent counties last year, Trump got 78 percent of the vote. He also did well in 2016 and 2020. Republicans know they have the farm vote locked up, and elections in those states will not be close, regardless of the tariffs and other unforced errors.

The farmers' plight is not new-the deficit grew significantly in the Biden administration-and it is not all Trump's fault. However, his actions are making things worse for them, and in the end, he will bail them out again with the taxpayers picking up the tab. On the brighter side, the Department of Agriculture seems to have rediscovered exporting and is planning a series of trade missions, known, of course, as "Trade Reciprocity for U.S. Manufacturers and Producers" (TRUMP) missions, that will target market access opportunities in countries that have negotiated trade deals. The initial trip to Japan has been postponed due to the shutdown, so we will have to wait to find out if the initiative makes any difference.

William A. Reinsch is senior adviser and Scholl Chair emeritus with the Economics Program and Scholl Chair at the Center for Strategic and International Studies in Washington, D.C.

Trade continues to be the hottest policy topic in Washington, which is why we're bringing back our ⁠ Crash Course: Trade Policy with the Trade Guys⁠ this fall. If you missed our spring course, now is the perfect time to register. The course runs October 8-9 at CSIS or via Zoom. Registration is open until October.

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