South Dakota farmers face widening financial losses as tariff-driven price drops collide with rising production costs, forcing taxpayers to cover billions in emergency payments that still trail behind the damage.
Why It Matters
The state’s farm economy enters 2026 under pressure. Tariffs have reworked global trade flows, pushed input costs higher, and left major buyers like China on the sidelines. Federal aid will help stabilize balance sheets this winter, but agricultural economists warn the underlying problems—lost markets, high costs, and prolonged volatility—remain unresolved and could reshape the long-term viability of South Dakota’s row-crop sector.
Farm income has dropped across the Plains as commodity prices fall below breakeven levels. Analysts estimate that U.S. growers of major row crops face tens of billions in reduced revenue for 2025, according to industry and government economic models. In South Dakota, farmers report steep losses on corn as prices slide from pandemic-era highs to levels that no longer cover rising production costs.
The state’s soybean sector has taken the largest hit. China, normally a dominant buyer in global soybean markets, sharply reduced purchases for much of 2025, tightening margins across the Upper Midwest. South Dakota typically harvests about 230 million bushels a year, making soybeans a cornerstone of the state’s $11 billion agriculture industry.
Federal Payments Rise as Markets Collapse
South Dakota received an estimated $418 million in federal emergency support through the Emergency Commodity Assistance Program as of September, according to the Dakota Institute. The Trump administration approved an additional $12 billion in aid on Monday, with payments expected by late February.
But federal analysts and budget groups report that the economics do not balance out. Tariff collections generated roughly $195 billion in fiscal year 2025, a sharp increase from the prior year. Yet crop losses combined with federal farm payments consumed an estimated $70 billion to $80 billion nationwide, based on figures from the Committee for a Responsible Federal Budget and historical USDA payment data.
The dynamic mirrors Trump’s first term, when farmer relief programs amounted to nearly the full value of tariffs collected from China, according to research from the Council on Foreign Relations. Agricultural markets suffered long-term damage as former export partners shifted to producers in Brazil and other suppliers, weakening U.S. leverage even after tariff revenues climbed.
Costs Up, Prices Down
South Dakota producers face the double pressure of lower commodity prices and higher operating costs. Tariffs on agricultural inputs such as fertilizer, machinery, and certain chemicals add to expenses already elevated by global supply chain disruptions. Analysts with agricultural lenders report that the per-acre cost of raising corn and soybeans continues to rise faster than market prices, leaving many farms reliant on federal assistance to break even.
Younger farmers bear the greatest financial risk, as tighter credit, smaller land bases, and limited cash reserves reduce their ability to withstand continued price volatility. Industry economists warn that prolonged market disruption could accelerate consolidation in rural communities and weaken the state’s long-term agricultural capacity.
Future Revenue Clouded by Legal Challenges
The Congressional Budget Office projects that current tariff policies could generate up to several trillion dollars through 2035 if maintained. But legal challenges continue to move through federal courts, and a Supreme Court ruling on presidential tariff authority could force the government to refund tens of billions of dollars to importers, shrinking future revenue and limiting the administration’s ability to offset agricultural losses through new aid packages.
