The Pinion Global group recently held a webinar discussing the impact of the 2024 election on the food and Agriculture Sector. Pinion’s Government & Public Affairs director, Brian Kuehl, assessed the potential impacts of recent electoral outcomes on farmers and agriculture companies, including expected effects of tariffs and trade, likely tax code changes, the Farm Bill, and changes to immigration/ag labor.
Kuehl outlined the potential impacts of President Trump’s trade policies, including tariffs on China and other countries, and their effects on US agriculture.
Kuehl talked about the 2017 Tax Cuts and Jobs Act and said that while it did include benefits for agriculture, such as the estate tax exemption, it also fell short in some areas. “It had some benefits for lower income. But I think one of the criticisms of it in the mainstream media was that it was skewed more toward the wealthy. It was largely positive for the agriculture sector. We did a lot of analysis for trade organizations at the time.”
Kuehl went on to explain the reconciliation process that sets up these budgetary matters. He said, “In terms of tax cuts this time around if we see a tax package, we will likely see a shorter duration on the tax package. Rather than being a 10-year extension, Congress will probably look at a four-year extension of the tax provisions, and that’s all because they need to keep this budget deficit and national debt in check, both for political reasons and for the reconciliation process.”
Kuehl said one big topic will be the budget, debt, and the deficit. “I think if there is one overarching theme, you’ll see it is going to be the budget, the debt and the deficit. Those are going to be drivers of everything we talk about, and the reason is because the debt has exploded.”
When it comes to Trade Policy and its implications for Agriculture, Kuehl said the recent statement made by President Trump about tariffs on imports from Canada and China is highlighted, with concerns about their effects on US agriculture. “We know that during President Trump’s first term, he aggressively implemented tariffs on adversaries,” he stated. “He, as you may recall, had a trade war with China, putting successive tranches of tariffs on Chinese imports. China retaliated, putting successive tranches of tariffs on US exports, a lot of which fell on us: ag. At the time, China was heavily dependent upon us.”
Today about 17% of Chinese imports in food and Ag are coming from the US, so China is not as dependent on US Ag as they had been in 2018.
Keuhl added that when talking about trade, it’s important to focus on both what will be the short-term impacts and the long-term impacts. For example, President Trump has called for a 60% tariff on all imports from China, and for revocation of its permanent normal trade relation status, which would also increase tariffs on China.
Earlier this year the National Corn Growers Association and American Soybean Association compiled a study of what a trade war would mean for us, “They found that we could see a loss of 25 million tons of exported soybeans to China, and a loss of 90% of corn exports. Their worst-case scenario, which was a 60% tariff and 60% retaliation, found that we could see U.S. soybean prices drop by $1 a bushel, and US corn prices drop by 13 cents a bushel. These are very real impacts in terms of what it means for the bottom line of farmers if we get into a full-blown trade war with China.”
When it comes to the Farm Bill, Kuehl said one of his concerns is that if a trade war becomes real, will farmers be made whole through farm payments? Kuehl has some concerns,. He said, “One of the concerns is that the farm bill actually zeros out the ability of the President to use the commodity credit Corporation for farm payments, which is what President Trump tapped in 2018 for the market facilitation program. So one of the big questions is, will a farm bill pass and zero out that CCC authority?”
Many ag sectors are heavily dependent on immigrant labor, which includes meat processing, dairy, and produce to name three. President Trump has pledged the largest mass deportation in US History and Kuehl says that could be disruptive, “It’s a little bit wait and see, but it’s certainly an issue that we’re tracking closely. We’re also looking at how policies could change with respect to H-2A and H-2B visas. There has been a push on the right to eliminate those visas to boost US labor. I think anyone in ag who relies on H-2A or H-2B knows that we sometimes don’t have workers available to do the work we need and that those visa programs are critically important.”
Read Pinion’s Blog Article –
Pinion’s Ag Outlook: Summarizing Election Impacts for Agriculture
