Trump’s tariff roller coaster is no fun for Colorado’s farm and agriculture industry

At the start of the week, small businesses reluctantly faced new 25% tariffs that kicked in Tuesday morning on anything imported from Canada and Mexico.

A day later, the Trump administration suspended tariffs for automakers abiding by the U.S.-Mexico-Canada Agreement. A day after that, the president paused most of the other new tariffs until April 2, at least on items that also meet USMCA. The administration also lowered tariffs to 10% on energy products and potash for the agriculture industry even if they aren’t qualified under USMCA.

Helpful? Not really, said Brian Kuehl, executive director of Farmers for Free Trade, which sponsored a tariff discussion at the World Trade Center Denver this week.

“The uncertainty is very harmful. It’s hard for businesses to plan when they don’t know, day to day, what the tariff rates will be,” Kuehl said Thursday. “Also challenging is the fact that many goods that could qualify under USMCA haven’t had to claim USMCA coverage because they had no tariffs or low tariffs outside of USMCA. I’m sure shippers of those goods are scrambling to set up compliance processes to ship their goods under USMCA. That in itself is disruptive and an added cost.”

Small businesses statewide scrambled this week to make sense of the impact though with tariff orders changing almost daily, it was difficult to do that. In Colorado, the 25% tariffs for Canada and Mexico plus the newer 20% for Chinese imports would add $1.4 billion to Colorado importers a year, according to a report by economic research firm Trade Partnership Worldwide. The three countries make up nearly half of Colorado’s $17 billion import market.

“As long as the tariff threat remains over the heads of businesses, it’s going to be an almost impossible situation to manage,” said Jeremy Petersen, founder and president of Identity Pet Nutrition in Windsor. “Businesses need certainty and now this fight is transforming not just from a fight against tariffs but a fight for certainty.” Identity Pet Nutrition makes human-grade wet pet food in Canada, which was chosen because of the higher quality pet food manufacturing. But a monthlong pause won’t help since like many companies, orders are made several months in advance. This makes it seem even more like a “political game,” he added because “it’s not like we can get on the production schedule tomorrow.”

Denver economist Ryan Gedney broke down the top 10 imports to Colorado from Canada, Mexico and China.

Source: U.S. Census Bureau (Import and Export Merchandise trade statistics), table and calculations by Ryan Gedney. Note: The category of “goods returned” was excluded from this table. For Canada that share was 1.6%, for Mexico 6.8%, and for China 1.2%.

A big chunk of Canadian imports to Colorado is oil and gas, he noted. At $3.3 billion, oil and gas accounts “for a staggering 62% of import value into Colorado from Canada last year and nearly one-fifth of all imports for the state,” Gedney said in his analysis.

The threat to Colorado’s growing export market

But of great concern, especially among Colorado farmers and the agriculture industry, are retaliatory tariffs.

The state exported a record of $10.5 billion in goods last year, according to the Office of the U.S. Trade Representative. That’s up from $8.3 billion in 2018.

In 2022, 5,722 Colorado companies sent items out of the U.S. and largely to Mexico and Canada. The top manufactured export was “food and kindred products.” Exports also contributed 2% to the state’s gross domestic product.

Tariffs could encourage foreign buyers to look elsewhere for the products they are currently buying from Colorado. And that’s not easy to recover from, said Nick Colglazier, executive director of the Colorado Corn Council. Corn got slapped with a 15% tax in China.

“That hurts us by raising those prices and making us less competitive in those foreign markets,” Colglazier said. “Somebody else can come in and take those. That means we lose that market share. Can we find another market? Possibly, but that takes time, just like rebuilding your infrastructure in the United States.”

The U.S. Grains Council opened its first office in China in 1980 and it took them almost 40 years to get grain flowing into China, Colglazier said. “It takes so long to build those relationships, build that trust and get the policy right inside those countries.”

Canada had matched Trump’s 25% tariffs Tuesday but limited the tax to $30 billion Canadian (US $21 billion). A second round of Canadian tariffs on U.S. goods was paused until April 2 in response to Trump’s change of mind.

President Claudia Sheinbaum of Mexico, meanwhile, planned to announce retaliatory tariff details Sunday. After meeting with Trump on Thursday and getting him to pause tariffs for a month, she said the Sunday event was still scheduled but as “a festival” with “musical groups,” the Wall Street Journal reported.

China said it’ll add another 10%-15% retaliatory tariffs on U.S. agriculture exports, starting Monday, March 10, after the Trump administration levied 10% tariffs on China last month and another 10% on Tuesday.

That increases the tax on beef and pork exported to China by 10%. But added to existing Chinese tariffs, the total export tax will be 22% for beef and 47% for pork for U.S. farmers and ranchers, said Joe Schuele, a spokesperson for the U.S. Meat Export Federation, which is based in Denver.

Brett McMurry walks past the painted hay bales on his ranch along Highway 285 on March 8, 2021, in Nathrop. Brett and his brother Ken, owner and operators of McMurry Land and Livestock, are encouraging people to continue to eat beef and support the livelihood of ranching economies across Colorado. “Without this ranch, this land would be developed into houses,” says Ken McMurry. (Hugh Carey, Special to The Colorado Sun)

Schuele said China has an existing 12% standard tariff on meat and there’s still a 25% retaliatory tariff on pork from Trump’s 2018 tariffs to discourage the Chinese theft of U.S. intellectual property.

International buyers have helped ranchers get more value for their cattle by buying the “underulitized” products like tongues, tails, hearts and livers. That’s helped get the export value of beef to $415 per head. Pork adds $66 per animal in export sales, according to Meat Export Federation data.

“There’s certainly a concern we could lose customers or the price that foreign buyers are able to pay would simply not be as good because they’re going to have to absorb the cost of a tariff or try to pass it along with customers,” Schuele said. “A lot of these markets are price sensitive. Our red meat exports are booming to Latin America but those are price-sensitive markets and not high income.”

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