Tariffs and the Farm: How Trade Policy Impacts US Agriculture
- Staff Writer
- Apr 1
- 4 min read
What are Tariffs?
Tariffs are a form of tax that is used on goods that are imported and exported between countries. They are mostly used to help the country financially or politically, either as a way to get political leverage or as a form of retaliation. Typically Tariffs are used on goods that are imported but they can also be used on exported goods, however, this is uncommon.
In the US tariffs can be enacted by two bodies, The first is Congress, and the second is the President of the US who can enact it through legislation, especially in times of national security and to protect the economy of the country.
Are Tariffs good?
Tariffs have both benefits and consequences that can be seen right away or shortly after they are imposed. Benefits that can come from Tariffs which they are used to help with tend to go for domestic business, promoting business within the country and helping to keep the market competitive. This helps businesses within the country to thrive and for the economy to improve. We might see a tariff be used in this type of situation when an outside market is able to supply more and cheaper than our domestic markets, putting pressure on our domestic business the government may impose a tariff on that specific market so consumers are more likely to consume the domestic product over the alternative as it may now be cheaper than it is to import the product into the country.
Although it can greatly benefit the country financially, tariffs can also have negative consequences. One such negative consequence is its possible influence on the countries global relations. When a 25% tariff was presented to the countries of Canada and Mexico, Canada quickly responded saying they would also impose a 25% tariff on the US. These types of situations increase the costs for American citizens and decrease market variety leaving less choice for the consumer.
Tariffs in the past and present of the US
Tariffs have been used since the start of the country to help financially support it. It was first used in 1789, just after the constitution was ratified in order to help fund the new country. Since they have been used during times when the country is in need of finances especially during times of war.
However, now Tariffs do not contribute nearly as much to the country's total finances going from 42% in 1900 to 2% of the government’s total revenue in 2013. We can see them now being used for two primary reasons, the first reason is to help protect the domestic market and keep it competitive. This reason has helped to promote business in the US. The second reason is to have some type of affect globally.
In the image above we can see a large increase in the total revenue from tariffs, this was due to the tariffs that were placed on goods from China, however, in recent years we have seen the number go back down. Currently, the US average tariff rate is 3.4% however it would also depend on other matters such as other countries in the World Trade Organization have certain rules to follow, and the 20 countries that the United States has a free trade agreement with. The World Trade Orginization is a national orginazation that helps to regulate and monitor the trade between participating countries, creating a more fair and competitive world market to benefit the countries that are a part of it.
Tariffs and Agriculture
Tariffs can affect agriculture on many different fronts, from affecting its exports to other countries that impose tariffs, to making it more difficult for farms and operations to get the inputs they need for other countries. The US needs to import certain fertilizers and other chemicals and having a tariff on these can make it difficult for farmers to be able to afford them, this requires farmers to have to look for alternatives or spend more money to get the inputs that are needed..
Agriculture is greatly affected by the tariffs, it can greatly change how a farm is able to function, and the revenue a farm is able to receive in the long run. For example in 2018 a tariff was placed on the US from China, Agriculture in the US lost $27 billion in exports (Tax Foundation, 2022).
Conclusions
Tariffs do have a purpose and use, however, they also have consequences in both the world and domestic markets. It is something that can greatly benefit a country when used wisely and it is important for citizens to understand how tariffs work and how it can affect them. Businesses, and especially farms, should also be aware of current and possible future tariffs so that they can plan ahead and protect their operations. Having an alternative plan is a great way to secure your business.
References
Beckman, J., & Scott, S. (2021, June 7). How the removal of tariffs would impact agricultural trade. How the Removal of Tariffs Would Impact Agricultural Trade | Economic Research Service.
Bitar, D. M., & Moy, V. (2025, February 3). Tariffs 101: What are they, who foots the bill, and who wins (if anyone)?. Wilson Center.
https://www.wilsoncenter.org/article/tariffs-101-what-are-they-who-foots-bill-and-who-wins-if-anyone
Durante, A. (2024, September 4). How tariffs and the Trade War Hurt U.S. agriculture. Tax Foundation.
Joy, D. S. (2025, January 22). Tariffs: What are they, who pays for them and who benefits?. News and Events.
Michigan State University Extension, & LaPorte, J. (2024, December 16). What are tariffs and how could they impact farm prices?. Farm Management. https://www.canr.msu.edu/news/what-are-tariffs-and-how-could-they-impact-farm-prices
USAFacts. (2025, February 4). What are tariffs and how do they work?
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