New U.S. administration: Key policy shifts in agriculture

The new U.S. administration’s impact on U.S. agriculture: A business perspective

With every new U.S. administration, changes are expected in the policy landscape. However, the new Trump administration is bringing policy changes at a rapid pace with significant implications for the agricultural sector. During the previous Trump administration (2017-2021), changes to environmental regulations and trade relations with China shaped the industry significantly. His current administration’s policies related to trade, regulation, and labor are shaping business strategies and creating both challenges and opportunities across the sector. Players across the agricultural value chain are paying attention, from crop input providers, equipment manufacturers, commodity traders, farmers, food processors, and final consumers, each navigating a complex evolving environment.

Key areas of impact include tariffs, regulatory approaches, and labor policies, each influencing different segments of the agricultural value chain. Below is a breakdown of how stakeholders across the value chain may be affected:

Crop input providers: Higher costs, mixed opportunities

Crop input suppliers, from seeds to fertilizers and crop protection inputs, are caught in the middle of rising costs and deregulation opportunities. The administration’s push for higher import tariffs—particularly on Chinese goods—will make raw materials more expensive, leading to price hikes on key agricultural inputs. This will affect profit margins and also force players to rethink sourcing strategies.

At the same time, regulatory rollbacks may benefit large corporations by accelerating approval processes for new crop protection products and genetically modified seeds. However, this also raises concerns about sustainability and potential backlash from environmentally conscious consumers.

Agricultural equipment manufacturers: Trade and labor pressures

The agricultural machinery sector is facing significant cost pressures due to trade tensions. Many components used in tractors, harvesters, and irrigation systems come from abroad, and the administration’s tariffs on steel and electronics will make production more expensive.

“The imposed 25% tariff on steel and steel products poses a significant threat to the U.S. Agricultural Equipment industry. This tariff creates an uneven playing field, as foreign manufacturers would not face the same cost increases. Consequently, overseas producers could gain a substantial competitive advantage over domestic manufacturers, potentially undermining the U.S. industry’s market position and long-term viability,” says Dominik Endler, Independent Consultant at a-connect.

At the same time, restrictions on immigration will worsen labor shortages, which will directly impact manufacturing plants.

A main challenge for manufacturers is balancing innovation and cost optimization while preserving profitability. Equally important is determining how much of the rising costs can be passed on to customers without jeopardizing market share. In this disruptive landscape, a structured, data-driven, and strategic approach to pricing is essential.

Agricultural commodity traders: Volatility on the horizon

Trade has always been a critical factor for the agricultural sector, and with Trump’s renewed emphasis on protectionism, commodity traders are bracing for another wave of instability. The U.S. has already seen trade disputes with major agricultural importers such as China, Mexico, and Canada, leading to unpredictable price fluctuations.

While some traders benefit from market swings and arbitrage opportunities, the uncertainty in global trade agreements is a major concern. If key export markets impose retaliatory tariffs, American producers may struggle to remain competitive, creating ripple effects across the industry.

Farmers: The balancing act between policy and profitability

Farmers remain at the center of these policy shifts, facing both headwinds and potential silver linings. Current government subsidies and support programs are expected to continue, providing some financial relief. However, higher costs for inputs and equipment, coupled with reduced market access due to trade disputes, will put significant strain on farm incomes. As mentioned by one of our clients from a leading commodity trading house, “The farmers are the ones taking the biggest hit, unless this results in even more government subsidies and then all taxpayers end up paying the bill”.

One example are the imposed retaliatory tariffs by the European Union, including one on Bourbon whiskey, in response to the U.S. steel and aluminum tariffs. This is particularly relevant for U.S. agriculture since Bourbon production depends heavily on domestic grain farming. With key ingredients sourced from U.S. farmers—Corn (51%), Wheat (22.5%), Barley (19%), and Rye (7.5%)—this tariff will likely impact U.S. grain prices and demand, indirectly affecting the broader agricultural sector.

The labor situation as well is particularly worrisome. Many American farms depend on immigrant workers, and stricter immigration policies mean fewer hands in the fields, leading to unharvested crops and increasing labor costs. Many in the industry are asking a key question: Can efficiency gains from new technologies compensate for these challenges?

Another major concern is the Trump administration’s move to eliminate USAID (United States Agency for International Development), an independent U.S. government agency responsible for international development and humanitarian aid. The abrupt dismantling of USAID presents significant risks to the U.S. agriculture sector. Historically, programs like Food for Peace have been major buyers of American-grown commodities, directly supporting U.S. farmers and agribusinesses.

Food processors: Inflation and supply chain shifts

Food processors will also feel the impact of higher input costs. With commodity prices fluctuating and trade restrictions disrupting supply chains, many companies are adjusting pricing models. This could lead to higher consumer prices, potentially slowing demand and forcing processors to optimize operations.

One interesting development is the push for localized supply chains. With global trade uncertainties, some processors are investing more in domestic sourcing and vertical integration to mitigate risks. While this may reduce exposure to international instability, it also comes with higher operational costs that must be carefully managed.

Final consumers: Higher prices and changing availability

At the end of the chain, final consumers will be directly affected by these agricultural policy shifts. The combination of increased production costs, supply chain disruptions, and labor shortages will push food prices higher. Staples such as meat, dairy, grains, and fresh produce will also become more expensive, impacting household grocery budgets.

Beyond price increases, availability and variety may also be affected. If trade restrictions limit imports of certain food products, consumers may see fewer options on store shelves or shifts toward locally sourced alternatives. In the long term, food affordability could become a pressing issue for low-income households, making food security an even greater concern.

Beneficiaries of U.S. tariffs: Which countries stand to gain?

While Trump’s tariffs create challenges for American agricultural players, they open opportunities for other agricultural powerhouses. Countries such as Brazil, Argentina, Canada, and Australia are well-positioned to capitalize on reduced U.S. export competitiveness.

• Brazil and Argentina: Both countries are already major exporters of soybeans, beef, and corn. If China, for example, reduces its reliance on U.S. agricultural imports due to tariffs, Brazil and Argentina will likely see increased demand for their products.
• Canada: With its well-established trade networks and agricultural infrastructure, Canada could absorb some of the lost U.S. market share in grains and livestock, particularly in Europe and Asia.
• Australia: With its strong beef and grain exports, Australia stands to benefit in markets that seek alternative suppliers to avoid U.S. tariffs.

As global trade shifts, agricultural businesses outside the U.S. must be agile in seizing these new opportunities, forging stronger relationships with importers that might move away from American suppliers.

Navigating an uncertain future

The agricultural industry is entering a new era of trade conflict, where policy shifts are no longer isolated measures but part of an escalating cycle of tariffs and counter-tariffs between global trading partners. While some segments see opportunities—such as deregulation and localized supply chains—others face mounting challenges, particularly in trade, labor, and costs.

The key takeaway? Uncertainty is the new normal, and businesses that proactively adjust their strategies—whether through cost management, technological innovation, or market diversification—will be better positioned to thrive. Business continuity will be a determining factor in who emerges stronger in this ever-evolving landscape.

Political shifts are inevitable, but resilient business models and strategic adaptability remain the foundation of success in agriculture.

As the industry navigates complex challenges—from trade volatility to supply chain disruptions—having the right expertise is more critical than ever. At a-connect, we help agribusinesses build resilience, optimize operations, structure price setting and management and mitigate risks in uncertain times. In that respect, we have developed a proprietary approach called Profit Upside Mapping which brings together all the needed expertise of a client´s organization in order to define key actions and responses to tariffs disruption in a very short time frame. Whether you’re a crop input provider, equipment manufacturer, commodity trader, or food processor, our experienced consultants can support you in adapting and seizing new opportunities.

About the author

Emeric Chevalier is a Client Service Partner with more than 20 years of experience supporting Ag and food multinationals by designing and implementing strategies in uncertain and complex environments.