BY STU WHITNEY
South Dakota News Watch
During his March 4 address to a joint session of Congress at the U.S. Capitol, President Donald Trump defended his use of tariffs as a core economic and political strategy, adding a message to the agricultural community.
“Our farmers are going to have a field day right now,” Trump said during the speech. “So to our farmers, have a lot of fun. I love you too.”
In South Dakota, a state whose reliance on agricultural trade makes it more susceptible to the risks of tariffs and trade wars, the president’s words were viewed as hopeful but not entirely reassuring.
Farmers have sturdy memories. They recall the volatility of commodity prices and exports during Trump’s first White House stint, when much of the state’s soybean flow to China was halted due to tariff retaliation and has struggled to recover.
“(Tariffs) will hurt our pocketbooks, obviously,” said Rodney Koch, who grows soybeans and other crops north of Garretson, about 20 miles northeast of Sioux Falls. “But will we come out of it better in the long run? That’s the hope.”
U.S. Sen. Mike Rounds echoed that sentiment in a statement to News Watch, saying that “there needs to be an end game, and I believe the president is working with that same goal in mind.”
So far, the only certainty is uncertainty.
On March 4, Trump slapped 25% tariffs on almost all imports from Canada and Mexico and an additional 10% on imports from China, rattling stock markets and triggering retaliatory actions from the countries involved.
Two days later, the president announced that he was postponing 25% tariffs on many imports from Mexico and some imports from Canada for a month amid widespread fears of the economic fallout.
Corn, wheat and soybean prices dropped in the days following the trade shakeup, and farmers weighed the impact of more expensive machinery and fertilizer coming down from Canada.
“One thing the market doesn’t like is uncertainty because uncertainty means risk,” said Jared McEntaffer, CEO of the Dakota Institute, an economic research and analysis organization in Sioux Falls. “If farmers are concerned that they’re going to see lower commodity prices in the future, then naturally, they’re going to start pulling back on their spending. And it becomes a ripple effect.”
News Watch talked to farmers, business leaders, economists and politicians to try to clear up some misconceptions about tariffs and examine how South Dakota’s farm economy could be impacted in the coming months and years.
What are tariffs exactly?
Tariffs are a tax on imports, in which the buyer pays a foreign seller an established tax rate based on what is being sold. Percentages are generally lower for countries with which the United States has a favorable trade agreement.
The money is collected by Customs and Border Protection agents at 328 ports of entry across the country. Because companies are paying more for the goods, that extra cost frequently gets passed on to consumers in the form of higher prices.
“There’s a narrative out there that we’re going to be imposing these taxes on Canada and Mexico,” said McEntaffer. “That’s not the case. The tax will be paid by American companies and consumers.”
How do tariff policies impact South Dakota?
Farming helps drive the state economy, with agricultural production and processing accounting for about 14% of South Dakota’s gross domestic product (the total value of all goods and services produced).
The wholesaling of corn, wheat and soybeans brought in $10 billion in overall revenue in 2024, second among South Dakota industries to credit card issuing ($18 billion).
Though many of these farm goods are sold domestically, a large percentage (including 60% of soybeans) are sold to international buyers.
South Dakota is the country’s 12th largest agricultural exporting state, shipping $5.4 billion in farm goods abroad in 2022, led by soybeans, corn, feed grains, beef, veal and wheat.
Don’t tariffs impact U.S. imports, not exports?
The thing about tariffs is that there is almost always retaliation, as we’ve seen with Canada, Mexico and China. That’s what is meant by trade wars.
In 2018, when Trump slapped a 25% tariff on goods from China, the Chinese government responded in kind. That greatly reduced the exporting of soybeans into China as that country looked to Brazil to fill the void.
As of November 2024, China accounted for only 44% of total U.S. soybean sales, down from 62% in 2016. From 2019-2023, an average of 73% of Brazil’s exported soybeans went to China.
What are South Dakota politicians saying?
Tariffs present a political quandary for South Dakota’s congressional delegation, which is caught between Trump’s enduring popularity (he carried the state with 63% of the vote in 2024) and the economic needs of their ag-based constituents.
So far, Thune, Rounds and U.S. Rep. Dusty Johnson have publicly backed Trump’s aggressive trade strategy while also calling for reasonable time limits and parameters.
Kristi Noem, former South Dakota governor and U.S. representative who’s now secretary of the Department of Homeland Security, has ardently supported the trade measures as a means of securing the border.
Those statements illustrate a much different political climate than South Dakota Republican leaders operated under in 2018, when Trump levied tariffs against China during his first term in office.
At that time, Thune, Rounds and Noem sent a public letter to the president expressing “serious concern” over the tariffs and other trade policies that they said could push “an alarming number” of South Dakota farmers and ranchers “to the brink of economic collapse.”
Will there be a farm bailout coming this time?
The “temporary pain” of U.S. farmers during the first go-round of Trump tariffs in 2018-19 was addressed by authorizing payments to U.S. farmers of $28 billion to offset their losses from Chinese trade retaliation.
Given the state of the federal deficit and the administration’s focus on cutting government spending, it seems unlikely that a similar round of farm bailouts will be offered this time around.
The Associated Press contributed to this story, which was produced by South Dakota News Watch, an independent, nonprofit organization. Read more stories and donate at sdnewswatch.org and sign up for an email every few days to get stories as soon as they’re published. Contact Stu Whitney at [email protected].