BOF Update: 04/07/2025

U.S. farmers are sounding the alarm over new trade tensions with China that could cripple agricultural exports. On April 10, 2025, China responded to President Trump’s tariff hike on Chinese goods by imposing a 34% tariff on all U.S. imports. This escalation directly threatens key exports like soybeans and sorghum—crops for which China has long been a major buyer.

The fallout is already visible, with falling crop prices compounding pressure on farmers operating on tight margins. Tim Dufault, a retired Minnesota farmer, warned that young farmers are especially at risk of going out of business. There is growing concern that China may permanently shift its sourcing to countries like Brazil, creating lasting damage to U.S. export markets.

During Trump’s earlier term, $68 billion in aid was deployed to offset trade losses. While current Agriculture Secretary Brooke Rollins signaled readiness to offer support again, many farmers are wary of relying on bailouts. Instead, they’re urging the U.S. government to prioritize stable trade agreements and reopen dialogue with China.

Trade groups and farmers alike stress that without swift action to de-escalate the conflict, the viability of many small and mid-sized farms could be in serious jeopardy.

Source: Associated Press. (2025, April 5). Farmers fear tariffs could cost them one of their biggest markets in China. https://apnews.com/article/d5674c21e240acdc72cde76e474f172a

International markets are a big part of the commodity markets. We are still in the very early days of these policies. Interestingly, the TikTok deal will also play a role in the tariff rates. President Trump has hinted at a willingness to adjust tariffs if China’s leadership is willing to approve the sale to a U.S. owned entity. Also, while the situation with China is certainly concerning, there are also opportunities with other countries (India, UK, Australia, among others) that we should be watching as well and could have an impact on the markets.

Recent changes in USDA funding have alarmed small farm advocates, who say the Biden administration is sidelining local food systems in favor of large commodity producers. As reported by the Washington State Standard on April 6, 2025, funding has been significantly reduced for programs that helped schools and food banks source produce from nearby farms—programs that historically supported small and diversified growers.

At the same time, the USDA is set to distribute $10 billion in aid through the Commodity Credit Corporation, with most funds expected to benefit producers of corn, soybeans, and wheat—industries dominated by large-scale farms. Critics argue this shift deepens the imbalance in federal farm support.

Ricardo Salvador of the Union of Concerned Scientists emphasized that the defunded programs were vital for helping small farms survive economic and climate stress. Without them, many may struggle to stay afloat.

The USDA cites efficiency and broader reach as reasons for the change, but small farm advocates see it as a growing disconnect between federal policy and community-based agriculture. They’re calling for a more equitable approach that supports farms of all sizes and production types.

Source: Washington State Standard. (2025, April 6). USDA cuts hit small farms as Trump showers billions on big farms. https://washingtonstatestandard.com/2025/04/06/usda-cuts-hit-small-farms-as-trump-showers-billions-on-big-farms

This story is still unfolding, but the shift in USDA funding priorities raises serious concerns. While supporting large commodity farmers has its place, cutting programs that help small farms connect with schools and food banks seems counterproductive—especially when over 80% of U.S. farmers are small-scale. These programs support two key administration goals: healthier, locally grown food and reduced reliance on processed foods. Redirecting $10 billion toward large-scale commodity producers risks deepening the divide between industrial and community-based farming. It threatens the viability of small farms and weakens local food systems that benefit both growers and consumers. Without fair funding, consolidation will likely accelerate, putting rural communities and food access at risk.

President Donald Trump’s April 2, 2025 announcement of new tariffs—including a baseline 10% on all trading partners—has triggered mixed reactions among U.S. small business owners. While the tariffs aim to correct trade imbalances, many entrepreneurs fear the financial fallout, especially amid existing challenges.

Wendy Brugh of Dry Ridge Farm in North Carolina voiced concern about rising costs for essentials like animal feed, especially as her farm is still recovering from Hurricane Helene. In the brewing industry, Leah Ashburn of Highland Brewing highlighted the lack of domestic aluminum production and warned that consumers are unlikely to tolerate further price hikes.

Retailer Hendrick Svendsen in Kansas closed his furniture store, citing the unavailability of American-made products, which make up only 10% of his inventory. He believes U.S. furniture manufacturing is unlikely to return.

However, not all outlooks are bleak. Duane Paddock, a car dealer in New York, reported strong sales and remains hopeful about long-term benefits.

Meanwhile, broader economic indicators signal trouble. The Russell 2000 index has entered bear market territory, and economists warn that the tariffs could fuel stagflation—hurting small businesses with tight margins and limited adaptability. Overall, the policy shift is sparking uncertainty and mixed expectations.

Source: ABC News. (2025, April 3). Small businesses reacting to Trump’s tariffs announcement. https://abcnews.go.com/US/small-businesses-reacting-trumps-tariffs-announcement/story?id=120463296

Additional Source: Politico. (2025, April 3). Small business stocks buckle under Trump tariffs. https://www.politico.com/news/2025/04/03/tariffs-small-business-trade-inflation-economy-00266777

This is a very uncertain time. I still think we should be cautiously optimistic, but at the same time we need to be paying very close attention to our input costs (fuel, fertilizer, equipment, etc.).