Trade Policies and Economic Realities Reshape U.S. Agriculture

As Congress kicks off what is sure to be an impactful 2025 for agriculture, the challenges facing the farm economy are shaping the contours of key legislative debates, from the farm bill to broader trade and infrastructure policy. Declining net farm income, tightening margins and evolving global trade dynamics are putting increased pressure on lawmakers to address the needs of rural America. These pressures are already evident in the fight over continuing resolutions and farm bill extensions — and will only intensify in the year ahead.

Economic Realities Shaping the Farm Bill

The U.S. Department of Agriculture projects that net farm income will decline another 4.1% in 2024, following a steep drop from its record highs in 2022. Crop cash receipts are forecast to fall by 9.2%, driven largely by lower prices for corn, soybeans and wheat. This financial strain is underscoring the need for a robust safety net, as well as strong farm support programs, crop insurance and disaster programs.

Tariffs and Trade: A Growing Challenge for Agriculture

The farm economy is also deeply intertwined with trade policy, and ongoing shifts in U.S. tariff strategy could have significant ripple effects. With speculation that the Trump administration may reintroduce sweeping tariffs on imports — including a proposed 60% tariff on goods from China — American agriculture could face serious challenges.

These economic and trade pressures will weigh heavily on Congress as it tackles the farm bill and related policies next year.

Higher tariffs on machinery and inputs critical to farming operations, such as fertilizers and equipment, would increase production costs. At the same time, retaliatory tariffs from trade partners could jeopardize U.S. agricultural exports, which remain a cornerstone of the farm economy. In 2023, China alone accounted for nearly 20% of U.S. soybean exports. A return to heightened trade tensions could dampen demand for U.S. commodities, further squeezing producers already grappling with lower prices and rising debt.

Moreover, disruptions to global supply chains would likely raise costs for irrigation manufacturers and other ag-related businesses, further complicating efforts to support innovation and growth in the sector.

Looking Ahead to 2025

These economic and trade pressures will weigh heavily on Congress as it tackles the farm bill and related policies next year. The stakes are high: lawmakers must navigate competing interests, from bolstering domestic production to preserving export markets, all while ensuring that rural communities have the tools they need to thrive.

At the same time, we are entering a period of intense focus on the federal budget deficit and efforts by the incoming administration and the new Congress to slash federal spending. The Elon Musk and Vivek Ramaswamy-led Department of Government Efficiency effort, while poised to provide important regulatory relief for the agriculture sector, poses risks at reducing or eliminating spending on federal programs that are important for agriculture producers.

These competing priorities—providing a safety net for producers who are facing economic headwinds and uncertainties, while reducing federal spending—will animate much of the debate on Capitol Hill this year.

For the irrigation industry, these debates present both challenges and opportunities. We must continue to advocate for policies that promote smart water use, reduce input costs and expand access to new markets.

The Irrigation Association will be at the forefront of these efforts, working to ensure that our members’ voices are heard in Washington. Planning is underway for the IA’s 2025 Advocacy Summit, where we’ll discuss these critical issues with policymakers and push for solutions that strengthen agriculture and rural America.

Nathan Bowen is the vice president of advocacy and public affairs for the Irrigation Association.