How Tariffs Risk Upending Last-Mile Logistics in U.S. Agriculture

High tariffs and unpredictable policy are starting to take a toll on American agriculture. It goes without saying that as tariff barriers rise, export demand drops. This has played out before, but this time, the stakes are considerably higher with 145% tariffs imposed by the United States and 125% retaliatory levies by China. This kind of triple-digit rate puts enormous pressure on exports to China, effectively shutting down a major market and upending every business on the trade route. Even though U.S.-China tariffs have hit the pause button for 90 days, dialing back tariffs to 10-30%, the specter of triple-digits looms until a formal agreement is worked out. 

One casualty of this trade war is the last-mile logistics infrastructure and services industry that supports the movement of U.S. agricultural products from farms to market. As the traditional flows shift from farms to Western ports for export to China to Eastern ports for export to Europe or domestic consumption, the last-mile logistics is becoming a bottleneck. It’s not just the change in trucks, trains and drivers, but also the silos, warehouses and refrigerated infracture required to support the movement of goods.

It’s important to recognize the gap in reaction time between enacting policy and adjusting supply chains.  While tariffs can be easily passed with the stroke of a pen, it’s hard to rewire the underlying logistics infrastructure and services that underpin U.S. agriculture. Rather, it’s a long and costly process that requires certainty and predictable policy, both sorely lacking in today’s geopolitical landscape, which complicates and exacerbates the financial impact of tariffs on U.S. farming and our ability as a nation to navigate the choppy waters of the current trade wars. 

History of export disruptions and a backlog of supply

For years, China was the largest buyer of U.S. soybeans, accounting for roughly half of all American exports. This dynamic was permanently altered in 2018 when the United States imposed a 25% tariff, and China retaliated with counter-levies targeting soy imports. Chinese buyers looked elsewhere—mainly to Brazil, which stepped in to take market share from U.S. farmers.

This shift created a glut of soybeans across the American Midwest. Large volumes were stuck in storage facilities, waiting for domestic use or alternative markets. This backlog added pressure on limited local storage infrastructure and increased the risk of spoilage, especially during hot or humid weather.

The ripple effects didn’t stop there. The supply chain built to move soybeans efficiently to China through West Coast ports and streamlined shipping routes was underutilized, while eastern lanes were overwhelmed.

New markets bring new challenges

To offset the loss of Chinese demand, U.S. farmers and producers turned to new markets in Europe, the Middle East, and Southeast Asia. While these regions presented growth opportunities, they also required different and often more complex logistics.

Documentation standards, packaging specifications, and product certifications can vary widely from country to country. For example, the EU has strict traceability requirements and labeling rules. Some Southeast Asian countries require additional customs documentation. These new demands complicated the shipping and distribution process, particularly for companies that had grown accustomed to streamlined exports to China. Fulfilling these new requirements took time and investment. Adapting to these changes without external support was challenging for many producers and farms. 

Moreover, collapsing markets and plunging commodity prices left many US farmers in the uncomfortable situation of being forced to sell harvests at a loss. To keep farmers whole, the government stepped in with subsidies to prevent nationwide bankruptcies. Farm subsidies were funded by tariffs collected from the trade war with China.  An astounding 92% of tariff revenue collected from China was redistributed to farmers through direct aid programs. While effective at appeasing angry farmers, this didn’t leave much for the national coffers.  Furthermore, the market share lost to Brazil was never recovered, making the 2018 trade war costly for U.S. agriculture. 

This is a good reminder that tariffs are not free revenue and come at a cost. Often, the larger the tariff, the larger the cost. 

Even bigger this time around

The same dynamics are playing out with 2025 tariffs today, but at a much larger scale. At the time, the 2018 U.S.-China trade war was considered one of the biggest trade conflicts in modern history. The 2025 trade war – with U.S. tariffs of 145% instead of 25%, and China retaliatory tariffs of 125% – makes 2018 look like child’s play.

While today’s temporary relief will hopefully lead to a permanent descalation, many of the dynamics have already started to play out. 

Changing export patterns are once again shifting the role of domestic logistics infrastructure. With exports to China down, West Coast ports – and the underlying logistics infrastructure to support westward trade flows – are operating below capacity. At the same time, East Coast ports – and the logistics infrastructure to support eastward trade flows – are seeing increased demand as exports to Europe rise. While the 2018 trade war helped rewire domestic logistics to better serve the rise in exports from Eastern ports, there is insufficient excess capacity to address the fallout from today’s more aggressive trade war. 

Tariffs are raising input costs too

As a one-two punch, tariffs also affect the cost of imports, especially inputs relied upon by U.S. farmers.

Take potash, for example, a common fertilizer ingredient—the U.S. imports most of its potash from Canada, which is also subject to new tariffs. As a result, the cost of fertilizer has gone up, adding another layer of financial strain to already-tight margins. Meanwhile, new levies on steel and derivative tariffs introduced in 2025 are raising the cost of farm machinery required to plant, harvest, and process crops. Packaging costs are also increasing with aluminum and steel tariffs, making canned goods and other aluminum-based packaging more expensive. Some food companies are switching to plastic packaging, but that isn’t always a viable long-term solution due to environmental concerns, consumer preferences, and recycling regulations.

Even if crop yields are strong, higher input costs and depressed commodity prices from oversupply put farmers at risk. It’s a losing combination. 

Innovation is critical but not enough

To adapt to this new landscape, logistics providers are investing in technology to better understand the impact of tariffs on U.S. agriculture, how this alters demand for domestic logistics infrastructure and services, and build more resilient and agile supply chains. Some companies are also investing in digital traceability tools to meet the requirements of European and Asian buyers. These systems help track products from farm to table, ensuring that goods meet safety and labeling standards. Those that invest in technology are better positioned to navigate trade war turbulence and outperform competitors to gain a competitive advantage. 

While technology is a good start, it’s insufficient to protect the US agriculture industry from a full-on trade war. In 2018, farmers received $28 billion of subsidies to weather the storm created from imposing 25% tariffs on China. Today’s tariff rate is more than five times higher at 145%. Let’s hope the descalation that began today carries the day, and memories of triple-digit levies get relegated to history books long before the summer harvest comes around. Because the longer this trade war – and the uncertainty around it – persists, the more it will cost U.S. agriculture.