Trump tariffs, shipping fees could take a big bite out of Colorado’s wheat and potatoes industry

Colorado farmers and ranchers may have breathed a bit easier when tariffs were delayed. But a new Trump administration plan to slap steep fees on Chinese-made cargo ships used to carry their goods to market is a new sense of worry.

The administration in February announced it planned to charge $1 million or more in fees on Chinese ship companies or Chinese-built vessels, some of which are used to transport Colorado wheat to foreign markets. 

The fees are part of a Trump administration effort to revive shipbuilding in the U.S. and it has strong bipartisan support in the U.S. 

But some grain exporters are concerned that it would take years of work to build more U.S. ships and currently, there are only 14 U.S.-flagged bulk ships for moving corn, soybeans or other commodities.

Brad Erker, executive director of the Colorado Wheat Growers Association, said the plan would impose a fee on “any vessels that are not U.S. built or U.S. flagged docking in U.S. ports,” and that would not only raise the shipping cost of getting Colorado wheat to Japan, Africa and the Philippines, but also make Colorado wheat too expensive for those markets.  

Erker said half of Colorado’s winter wheat crop gets exported. 

So the people who will feel the impact of the new fees the most are farmers, he added. “I mean, usually the costs all get passed on back to the farmer, because it all gets reflected in what the farmers are paid for the grain. And so, you know, usually, if the middlemen don’t absorb the cost, then it gets passed back to the farmer.”

Even though none of these changes have “hit yet,” Erker said farmers are concerned, because the price of wheat has been low for a while. “So it’s already kind of very break even, or small profit margin, or negative profit margin. So any hits to the price would really make it tough. And the crops are already in the ground. You know, we plant our winter wheat in the fall.” 

If places like the Philippines stop buying Colorado wheat, he said, it would create a surplus, making the price of wheat drop even further.

Erker said the wheat growers association is in favor of trying to do something to stimulate the shipbuilding industry in the U.S., because “it’s not good that it’s currently all built in Asia and all goods are transported on Chinese ships.”

But he says they don’t think “this is the right way to do it if it shuts down our exports,” because “we’re really export dependent” with one half of the wheat crop, “and we’re consuming all the wheat in the U.S. that we need to consume already.” 

Potato exports could drop 14% under Mexico tariffs 

Tara Artho, executive director of the Colorado Potato Administrative Committee, sees other challenges for the state’s potato industry if certain Trump administration policies go through or continue. 

Colorado is the second-largest potato-growing region in the United States, and the Colorado Department of Agriculture says the San Luis Valley produces an average of 2 billion pounds annually.

Artho says those growers also export close to 15% of their crop to Mexico – a recent development that southern Colorado potato farmers had been working on for decades. 

“So if that disappeared overnight, 15% of our crops would need a home, and you don’t have enough consumers to eat that many potatoes that quickly,” she said. “All that loss of revenue would roll back on the grower to where they would not get any return on investment on that crop.” 

If that happened for consecutive years, producers would continue to make extra thin margins or start planting fewer acres of potatoes, she added. “And if you continue to make that decision to grow less,” it can affect your ability to make things like land payments. “It’s like building a home with four bedrooms, even if you only use three bedrooms. Your mortgage doesn’t decrease. You still own and have a payment for a four-bedroom home.”

While money lenders understand that farming comes with the possibility of major changes or disruptions from year to year, Artho said they still need their payments “so they are ABLE to lend.”

“But President Trump has used tariffs in the past to bring other countries to the table to negotiate and the American people benefited greatly from that,” she added. “Does it scare us? Yes. Is there potential for it to backfire? Yes. Does he have our best outcome at heart? I would say yes. He is a tough negotiator and business man and he uses those skills so Americans can prosper.”

Deportation of ag workers would “100%” be “an issue”

If enough agriculture workers are impacted by immigration policies, however, Artho said in the long run it could hurt production.

“You would have a negative food security issue. There are crops across the U.S. that would 100% rot in the fields. You would not have the labor to keep the supply chain going as it is today. And that 100% would be an issue,” she said.

It’s not only the crops that would get hurt, either, Artho added. 

It could be workers born and raised in the San Luis Valley or who are “a transplant that has thrived there,” she said. “They make our community better, and lend their talents not only to our businesses, but our schools and churches. The longer you have good employees stay with your business, the more valuable they become. The last thing you want is to lose a quality employee.”

But if workers are lost in all 50 states, “you’re going to have a problem,” she said. “There are not enough hands out there for what we need in agriculture.” 

Artho said so far, she hasn’t seen any deportations.

Your 93% lean beef is safe 

Zach Riley, CEO of the Colorado Livestock Association, said although egg prices and availability remain a problem in Colorado, beef and ranchers are largely safe. 

“I would say localized prices have gone up, and price on beef continues to go up, because market supply during the winter tends to go down,” he said. 

He also said buyers on the global market need Colorado beef more than Colorado needs to sell it, “because there is a complete disparity in what they can supply globally versus what we can supply to the global market in the meat world.” 

And, he said, “there aren’t many countries that compete with us for selling beef” — mainly Brazil, some other South American countries, and Australia. 

“So we’re pretty solid when it comes to supply within the U.S. I mean, we definitely have to import lean trimmings for burger, because Coloradans love their lean ground beef. But as far as prices go, that won’t vary much, and with the high-end cuts, like your steaks and that type, the price seems to stay where it’s supposed to, and usually stays very stable, because people that are buying steak and higher-end cuts are always going to pay whatever the market will bear because they love it so much.” 

As for retaliatory tariffs from Mexico, Riley says he’s not too worried. 

“I mean, sure there’s a threat, but it’s really just a knee-jerk reaction to the demands being made,” he said. 

“But Mexico is going to have to come to the table and say, ‘All right, you’re right. We need to slow the influx of illegal immigration. We need to slow the influx of contraband. And we need your products more than you need ours.’”