As tensions mount in the ongoing U.S.-China trade war, Kentucky farmers are bracing for the ripple effects, warning that the agricultural economy — already under strain — could suffer deeper setbacks if disputes continue.
Background: A second front in a long-running war
The U.S.-China trade war first erupted in 2018 when former President Donald Trump imposed tariffs on Chinese goods, seeking to address intellectual property theft and trade imbalances. China retaliated, heavily targeting U.S. agricultural products.
Clint Hardy, Daviess County’s extension agent for agriculture and natural resources, said a Phase One agreement in 2020 promised renewed Chinese purchases of American farm goods, but those commitments largely fell short, likely complicated by the COVID-19 pandemic and broader diplomatic tensions.
According to the Associated Press, the U.S. Trade Representative’s office completed a review of Section 301 tariffs on China, recommending both keeping current tariffs and increasing some — including agricultural goods. China responded with threats of new retaliatory tariffs on American imports like soybeans, pork, and vehicles.
The trade war has intensified in recent weeks, with the Trump administration maintaining and in some cases increasing tariffs on Chinese goods, according to the Associated Press. Some rates on strategic products have risen sharply, and China has responded with retaliatory tariffs on American agricultural products. The standoff has disrupted supply chains and fueled concerns about a broader economic slowdown, the AP reports.
As of Thursday, the American Soybean Association, the National Corn Growers Association, and other groups had issued cautious statements urging the administration to avoid using farmers as bargaining chips in trade disputes.
In a state where agriculture plays a critical role in the economy, farmers say the impact could be severe.
Kentucky farmers, officials react
Caleb Ragland, a LaRue County farmer and president of the American Soybean Association, said soybeans are Kentucky’s top agricultural product by gross sales, and any disruption in global markets has far-reaching consequences.
“Soybeans were the largest grossing ag product produced in Kentucky last year,” Ragland said. “About 50% of U.S. soybeans are exported, and until the first trade war in 2018, China purchased more than half of those exports.”
Though exports rebounded somewhat in recent years, Ragland said the U.S. has never fully recovered its market share lost to Brazil and Argentina.
“At the worst of the trade war, U.S. soybean exports to China dropped to about 11%,” he said. “Even today, we’ve only regained about 25% — and we’ve lost a lot of ground we may never fully recover.”
Ripple effects beyond the farm
The consequences, Ragland said, stretch far beyond farms.
“A dollar earned in agriculture usually circulates six to eight times in a local economy,” he said. “It affects local businesses, restaurants, hardware stores, schools, churches — it touches everything.”
Hardy echoed those concerns. Hardy said tariffs don’t just affect commodities like soybeans and corn, but also raise the cost of critical supplies such as fertilizer, herbicides, and machinery parts, many of which are imported.
“When tariffs are placed on imported products farmers need, those extra costs are passed down,” Hardy said. “It raises the cost of production at the same time prices for their crops are falling.”
Farmers are already operating on razor-thin margins. According to Hardy, many made little to no profit in 2023, and expectations for 2025 remain bleak.
“There’s an underlying optimism about growing a good crop,” Hardy said. “But economically, there’s very little optimism about turning a profit.”
Stability in question
Agriculture Commissioner Jonathan Shell said that while the short-term situation is challenging, the current negotiations could ultimately lead to stronger and fairer global trade policies.
“There’s definitely opportunity for short-term pain,” Shell said, “but if we can realign ourselves with strong allies like India, Vietnam, and Australia, we’ll build more stable, long-term markets for our farmers.”
Shell said discussions are ongoing at the federal level about potential support for farmers, but no new subsidy programs tied directly to the China tariffs have been announced. He predicted that more market stability could emerge by this summer if new deals come together.
Still, Ragland urged caution about banking on distant promises.
“The farm economy isn’t strong right now,” he said. “Soybean prices are down about 40% from three years ago, while the cost of production continues to rise. We can’t wait two or three years for a solution — we need action now.”
Farmers are already seeing signs of strain, Ragland added, with some in the state either exiting the business or significantly downsizing.
“We’ve had folks auction off equipment or semi-retire because they can’t cash flow anymore,” he said. “Higher input costs, lower revenue — it’s a bad combination.”
Challenges ahead
While some officials hope to expand domestic consumption through biofuels like ethanol and sustainable aviation fuel, Ragland said those initiatives will take years — and billions of dollars of investment — to materialize.
“You don’t just snap your fingers and double the demand for corn and soybeans domestically,” he said.
Hardy agreed, noting that while domestic demand programs are essential, they can’t fully replace lost export markets overnight.
“We’ve got to figure out how to use more of what we grow here, but it will take time,” Hardy said.
Meanwhile, the immediate threat of widespread asset liquidation looms. Shell said losing more farmland at a faster rate is a real risk if prices don’t improve soon.
“If we don’t stabilize markets, farmers will be forced to sell land or go out of business,” Shell said. “And once farmland is sold, it’s hard to get back.”
He added that it’s a two-pronged strategy at work: rebalancing trade partnerships abroad while investing heavily to grow domestic consumption of agricultural products.
“We have to start consuming more here domestically, whether that be in biofuels, feeding more livestock, or increasing what we do with soybeans and canolas,” Shell said. “The Trump administration is trying to ignite that American consumption spirit, and that’s happening through new programs and investments.”
Hardy said farmers must continue adapting as best they can, but volatility is likely to remain.
“It’s really difficult to make decisions right now,” he said. “Commodity prices, input costs, interest rates—they’re all moving targets.”
Ragland said he remains hopeful — but realistic.
“We need a trade deal, and we need it soon,” he said. “Otherwise, there won’t be many farmers left to benefit from it.”
