DENVER (DTN) -- The threat of tariffs and the risks of a government shutdown appeared to collide Monday for commodity farmers at the Commodity Classic convention.
The Commodity Classic meeting, mainly representing corn, soybeans, wheat and sorghum commodity producers, is on pace to see a record 11,000 farmers at the convention's first event in Denver.
TARIFFS LOOM LARGE
President Donald Trump on Monday reaffirmed that 25% tariffs will go into effect for Canada and Mexico on Tuesday. Trump had said there was "no room left" for Canada and Mexico. Trump also said another 10% tariff could go into effect for China, adding to 10% last month.
Reports from China stated Tuesday that the Chinese Finance Ministry announced 15% tariffs on U.S. chicken, wheat, corn and cotton as well as 10% tariffs on soybeans, pork, beef, sorghum, dairy products, fish, fruits and vegetables.
Trump on Monday had posted on social media, "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!"
The March and May contracts for both corn and soybeans fell more than 13 cents a bushel on Monday.
Pat Clements, a farmer from Springfield, Kentucky, and incoming president of the National Association of Wheat Growers (NAWG), noted nearly half of U.S. wheat is exported. Clements said there is plenty of support for President Trump's initiatives among farmers. But there is a lot to absorb right now, he said.
"We're concerned about the pace and the methods," Clements said.
Clements expressed concern that tariffs and retaliatory tariffs will lead to inflation. He said wheat growers want to advocate for more free trade.
"I don't care what party you are in, or who you favor or don't favor, we're free trade regardless," Clements said. "I understand we need fair trade, but we think there should be ways to do that without imposing a monetary penalty on everything."
Jim Sutter, CEO of the U.S. Soybean Export Council (USSEC) said as much as 60% of soybeans, meal and soy oil produced in the U.S. are exported.
"So international markets are really important for us, soybean farmers and the industry, and have been for many years," Sutter said.
Mexico is a top three market for soy products, while Canada is in the top ten markets for soybeans.
"They (Mexico) have a big crush industry and they get a lot of soybeans from us and they import a lot of meal and a little bit of oil as well," Sutter said.
Mexico has not detailed how it might retaliate against U.S. products, but Sutter said the country's reaction will be closely watched. Sutter noted most of the soybean and meal products help feed Mexico's animal protein industry. Any retaliatory tariffs would raise prices on consumers.
"If they put a tariff on those products, then prices are going to go up," Sutter said. "So, what's that going to do to the value of their poultry or pork meat or those kinds of things? I think they may not want to have those inflationary pressures but who knows?"
Sutter added, "I'm an optimist at heart and I would like to think somewhere, whether they are on Zoom calls or in-person meetings that are going on between people from Mexico and the U.S. to avoid these kinds of situations."
Johan "Kip" Eideberg, senior vice president, government and industry relations, Association of Equipment Manufacturers, spoke following an AEM press conference. Given tight farm margins and lower commodity crop values, AEM is predicting a bearish outlook for 2025. With demand for high horsepower tractors easing after some years of growth, manufacturers reported a drop in production, continued downsizing of the labor force and in capital spending. Tractor inventories are approaching historic heights on dealer lots.
When asked about AEM's take on the tariffs, Eideberg pulled no punches.
"They're a tax. They're a tax on American companies, American farmers, American workers. They will make us less competitive in the global marketplace. And they are inflationary, they will likely drive up inflation. So, they'll again be bad for equipment manufacturers, for farmers, and for customers. We are extremely concerned about the tariffs that are set to take place at midnight."
While President Trump likes to highlight trade deficits, U.S. equipment manufacturers have a trade surplus with Canada. The U.S. exports about $10 billion in farm machinery north of the border while importing about $3.5 billion. Canada is the largest market for equipment manufactures. Tariffs will affect companies' bottom lines, expansion and employment plans for equipment firms, Eideberg said.
"Manufacturers always try to absorb most -- if not all -- of the cost increases, but some will get passed on to our customers, which is not great news for farmers and ranchers either considering the headwinds they've been facing lately," Eideberg said.
Emily Skor, CEO of Growth Energy, is promoting E15 legislation at Classic like others such as the National Corn Growers Association, but she noted the attention right now is on trade and tariffs. Canada purchased more than $1.4 billion from U.S. ethanol plants last year.
"That's our No. 1 trading partner for ethanol with over 600 million gallons we sent last year," Skor said. She added, "We don't want to get caught in the crosshairs."
The White House also has criticized Brazil's 18% tariff on U.S. ethanol and Skor noted that is an example of a tariff disparity the ethanol industry would like to rectify.
"But we have a free-trade relationship with Canada that's working well right now and we'd like to see that continue," Skor said.
Talking about Trump's social media post on farmers selling products domestically, Skor said half-jokingly, "Well, OK, so we want to consume more agriculture in the U.S. Alright, let's sell more E15. That's my answer."
SHUTDOWN COULD TIE UP AID PAYMENTS
Agriculture Secretary Brooke Rollins on Sunday highlighted to producers that $10 billion in economic aid will be coming to producers under the new Emergency Commodity Assistance Program (ECAP). Rollins said she hoped the applications would be out in early March and the program would be ready by March 21.
On Monday, USDA officials warned those aid checks could be caught up in a possible government shutdown. Right now, Congress faces a March 14 deadline to pass a bill that keeps the government operating. Lawmakers have often waited until the last minute to broker a deal for a full year funding deal or a Continuing Resolution, or CR.
Asked about the details of ECAP, Steve Peterson, senior advisor for the Farm Production and Conservation (FPAC) mission area, said he believed the $10 billion would go a long way to help producers, but Peterson also cautioned that those checks could be held up if there is a government shutdown.
"Things that I just want to make sure to be transparent about is, many of you know that our funding only runs through March 14, so the only thing that I see that will be a hiccup with these agencies and USDA if there are delays for extending another CR for funding the government," Peterson said. "We're hopeful they will pass a full budget, but in the event that doesn't occur, and the government shuts down, that will have an adverse -- I just want to be very upfront -- have an adverse impact on our ability to deliver that assistance in time."
Peterson was responding to a question from John McClure, a wheat, corn, soybean and sorghum farmer from Stafford, Kansas. McClure wants to see USDA provide details on the $20.78 billion in disaster aid. McClure said his area of south-central Kansas is in the fourth year of drought. "We're hanging on by a thread right now," McClure said. He added, "Do not delay. Everything matters."
While USDA has yet to detail how the disaster funds will be divvyed up, the law passed by Congress set aside $2 billion specifically for livestock. That will likely leave roughly $18 billion or so to split up for farmers -- including fruit and vegetable producers -- who lost crops during disasters in 2023 and 2024. That means there will likely need to be a payment factor to determine how to balance payments to farmers.
DTN Editor in Chief Greg Horstmeier contributed to this report.
Also see, "Ag Secretary: Applications for $10 Billion in Economic Aid, ECAP, Should Arrive Soon," https://www.dtnpf.com/…
Chris Clayton can be reached at Chris.Clayton@dtn.com
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