First, tariffs. Then, bailouts. We’ve seen this show before and a rerun is now airing.
As everybody knows by now, President Trump is rolling out protectionist tariffs much more aggressively than during his first term. Trump has so far imposed new tariffs on imported steel, aluminum, automobiles, and many other goods. A slew of additional tariffs is coming this month. On the whole, Goldman Sachs estimates that the average tax on imports will rise from about 2.5% at the start of the year to around 15% by the time all of Trump’s tariffs are in place.
Many nations facing new taxes on the goods they ship to the United States will retaliate by raising their own tariffs on US products or shifting to suppliers in other countries. That’s what happened during Trump’s first trade war in 2018 and 2019, and it’s happening again in 2025.
American farmers bore much of the pain from retaliatory trade actions during Trump Trade War I, and they’re in the crosshairs again during Trump Trade War II. So Trump is likely to do what he did the first time around: offer bailouts to farmers to counteract the damage caused by his policies.
Agriculture Secretary Brooke Rollins is already telling farm communities that the Trump administration “will work around the clock to ensure that we have the programs in place to do what we did the last time.” She’s referring to a bailout program that ultimately paid farmers $23 billion in 2018 and 2019 to compensate for losses they endured from declining sales in foreign markets.
Trump is nonchalant about farmers’ predicament. On March 3, he 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 … Have fun!”
His exhortation was unconvincing. “Farmers are frustrated,” Caleb Ragland, a Kentucky farmer and president of the American Soybean Association, answered in a statement. “Tariffs are not something to take lightly and ‘have fun’ with. Soybean farmers still have not fully recovered market volumes from the damaging impacts of the 2018 trade war, and this will further exacerbate economic hardship on our farmers.”
Trump’s logic of replacing foreign demand with higher domestic sales doesn’t apply to many agricultural products. The United States is a net exporter of soybeans, sorghum, and pork, for instance. Those were the three agricultural product categories hurt most by the first Trump trade war. Since those farmers produce more than America consumes, Trump would somehow have to convince Americans to eat a lot more bacon, tofu, and baked goods for his concept to pan out.
Since that’s not likely to happen, farmers are bracing for a replay of Trump Trade War I, and possibly worse. In response to Trump’s tariffs in 2018 and 2019, six trading partners — Canada, China, the European Union, India, Mexico, and Turkey — retaliated in some way with tariffs or other punitive measures on American exports. Chinese retaliation caused the most damage. Soybeans accounted for 71% of total lost agricultural trade, according to a 2022 analysis by the Dept. of Agriculture. Sorghum accounted for 6% of lost trade, and pork 5%. The hardest-hit farm states were Iowa, Illinois, Indiana, Kansas, and Minnesota.
Altogether, that trade war slashed agricultural exports by $27 billion, according to the USDA study. Trump tapped a USDA lending arm to dole out $23 billion in farm aid, which did not require congressional approval. But many farmers found the aid program to be convoluted and slow to deliver. Farm bankruptcies jumped 20% from 2018 to 2019. And lost markets didn’t automatically return once Trump lost his 2020 reelection bid and Joe Biden undid many of Trump’s tariffs.
The damage could be greater in 2025. Trump’s tariffs are already more sweeping than during his first term. Trade partner retaliation has been modest so far, but that’s only because many nations are waiting to see the full extent of Trump’s actions before responding. Trade wars are usually tit-for-tat battles of attrition, and punitive measures against the United States will likely end up proportional to whatever Trump imposes.
FILE PHOTO: U.S. President Donald Trump waves as he walks before departing for Florida from the South Lawn at the White House in Washington, D.C., U.S., March 28, 2025. REUTERS/Evelyn Hockstein/File Photo ·Reuters / Reuters
Competing exporters are also eager to capitalize on Trump’s protectionism. One big beneficiary of Trump’s first trade war was Brazil, which stepped in to sell China and other nations many of the food products they no longer got from the United States. China’s trade relationships with South American nations have steadily improved since then, and China helped build a new “megaport” in Peru to accommodate higher trade volumes.
Outside of agriculture, Trump can’t offer cash aid to businesses the way he can by tapping the USDA lending arm. But he can tweak tariffs and other measures in almost limitless ways to help favored companies or punish the unlucky. This, too, he did during his first trade war.
Since Trump has the power to impose tariffs unilaterally, he can change them at any time in nearly any way he wants. One way this happens is through the exemption process, which allows anybody to ask for relief from a particular trade policy.
During Trump’s first term, businesses and other applicants applied for roughly 125,000 tariff exemptions. The Trump administration granted about one-third of them. Those weren’t bailouts, exactly. But there were doubtless instances in which businesses gained an edge on the competition by virtue of these “opaque handouts,” as the Peterson Institute for International Economics described the exemptions.
Nobody is sure how far Trump’s tariffs will go. Maybe not even Trump himself. Some trade partners will make concessions that lead Trump to back down from tariff threats. But others will dig in their heels, convinced that Trump is imposing more pain at home than he is anywhere else. Bailouts will dull some of the pain, but most of the recipients will wish they were unnecessary.
Rick Newman is a senior columnist for Yahoo Finance. Follow him on Bluesky and X: @rickjnewman.
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