American farmers may still back President Donald Trump at the ballot box, but his tariff-heavy trade strategy is testing their financial resilience. New levies, layered atop existing ones, have pushed the average U.S. tariff rate to 15.2%its highest since World War II, according to Bloomberg Economics. The timing couldn’t be worse. Crop prices for corn, soybeans, and wheat are at post-pandemic lows, and the cost of essentials like fertilizer and tractors is heading in the opposite direction. Mosaic says U.S.-bound shipments of phosphate and potash have dropped 20% year-over-year, while CF Industries (NYSE:CF) flagged incredibly low inventory and delayed imports that still need rebuilding. A North American fertilizer price index has surged 35% this year, driven by tight supply and geopolitical pressure.
That strain is bleeding into the farm machinery sector. Tractor maker AGCO (NYSE:AGCO) confirmed it has already raised prices in North America and may adjust pricing in other regions as the tariff impact deepens. We will implement price increases where appropriate and feasible, said CEO Eric Hansotia. Meanwhile, demand-side stress is starting to show. U.S. soybean sales for the upcoming marketing year are at their lowest point in nearly two decades, with Chinathe biggest buyerstill absent. Bunge (NYSE:BG), a major crop trader, said customers are avoiding long-term contracts, sticking to very spot purchases instead. The company just posted its weakest second-quarter EPS since 2018.
While President Trump insists farmers just need to bear with the plan, executives across the ag sector are sounding the alarm. Bert Frost of CF Industries highlighted that crop revenues aren’t keeping up with soaring input costs, echoing broader concerns about farm economics in North America. Trump has doubled down on promises to support the rural base, saying on CNBC he’s making sure farmers have the labor they need despite ongoing immigration crackdowns. But with fertilizer prices rising, crop buyers holding back, and uncertainty clouding the fall harvest, the costs of waiting could be stacking up faster than many can handle.
This article first appeared on GuruFocus.