Trump tariffs cost Iowa farmers 53% of income, driving bankruptcies higher

Iowa farm incomes have dropped 53% over the past three years and bankruptcies hit a six-year high in April, as President Donald Trump's tariffs and the Iran war squeeze the agricultural sector.

"Farmers are really tightening their belts," Aaron Lehman, president of the Iowa Farmers Union, told CNBC on his Polk City farm. "There's no indication that we're progressing towards healthier family farmers, that our rural communities are thriving under these policies."

The American Farm Bureau Federation projects a $32 billion loss on major crops in 2027, up from $31 billion in 2026. A survey by the trade group found 70% of farmers could not afford all the fertilizer they need. In Iowa, 19% of midsize and large farms were financially vulnerable in December 2025, more than double the 2022 level, according to a joint report by Iowa State University, the Iowa Farm Bureau and the Iowa Bankers Association.

The pain threatens to upend Republican turnout in the 2026 midterms. Trump's approval among rural voters fell to 44% in a July Fox News poll, down 14 points from June, while only 33% of all voters approved of his handling of the economy. A separate Economist/YouGov poll found 47% of respondents said the economy is in a poor state, the highest level since 2023.

Tariffs close export markets as input costs rise

Trump's trade policy has been the primary driver of the downturn. The administration imposed double-digit tariffs on imports from 60 trading partners and a 50% tariff on certain Canadian goods, triggering retaliatory measures that shut off key markets for Iowa's soybeans and other crops. China has committed to purchase 25 million tons of soybeans through 2028, but farmers say the volumes fall short of what was lost.

Dave Muhlbauer, a fifth-generation farmer from Manila, Iowa, and Democratic candidate for lieutenant governor, said farmers are facing a fourth consecutive year of losses. He cited tariffs and high input prices for fuel and fertilizer as a result of the Iran war. "This isn't sustainable to our family farms and it's further driving our state economy into the ditch," he said at an Iowa Farmers Union forum.

The current average U.S. tariff on Chinese goods stands at elevated levels after multiple escalation rounds since Trump's first term. The previous tariff escalation reduced bilateral agricultural trade by billions of dollars, according to Census Bureau data. Marc Short, former chief of staff to Vice President Mike Pence and board chair at Advancing American Freedom, said the trade war has been more damaging this time because farmers lack alternative markets. "The trade war has been so indiscriminate," Short said.

Direct payments offer limited relief

The White House has distributed $12 billion in direct payments to farmers using tariff revenue and included more than $10 billion in farm aid in an $87.6 billion supplemental funding request to Congress. The House approved a $95 billion budget package in July that includes $12 billion in farm aid.

But farmers say the payments do not address the underlying problems. "A lot of farmers would tell you that they would really prefer to get income from the marketplace, as opposed to additional government support," said Chad Hart, an economics professor at Iowa State University. "It's not addressing the underlying problems within the agricultural economy."

Health care costs have added to the pressure. Lehman's insurance premiums more than doubled after federal subsidies for Affordable Care Act plans expired in January, as most congressional Republicans refused to extend them. More than a quarter of farmers, ranchers and agricultural managers rely on individual market health insurance, according to the Kaiser Family Foundation.

Corn growers have been a relative exception. The USDA reported corn production of 17 billion bushels in 2025, up from just under 15 billion the prior year, and export volumes are on a record pace, Hart said. But for most Iowa farmers, the outlook remains bleak. Congress has not passed a farm bill since 2018, leaving crop insurance and commodity support programs in limbo.

"If there's a lack of enthusiasm among a core constituency, I think there's a huge risk to Republicans," Short said, warning that the farm belt's discontent could translate into losses at the ballot box in November.

This article is for informational purposes only and does not constitute investment advice.