By Scout Nelson
South Dakota’s economy faces growing concerns as trade tensions with key partners like Canada, Mexico, and China could affect its agricultural exports. In 2024, the state exported $2.1 billion worth of goods, with 45% directed to Canada and 20% to Mexico. President Trump recently announced a 25% tariff on goods from these countries, which is now delayed for a month. This tariff move could bring uncertainty for industries like soybean, corn, and livestock farming.
South Dakota’s farmers and ranchers have experienced trade wars before, particularly with China in 2018, which resulted in a drop in agricultural exports and rising farm debt. While federal assistance helped offset some of these losses, concerns over tariffs and retaliatory measures persist. Local agricultural leaders, such as Doug Sombke from the South Dakota Farmer’s Union, worry about the uncertain impact of the ongoing trade war. He stressed the need for clarity on when the tariffs might end.
“I think if you’re in the soybean business, the corn business, any cattle, livestock business, you should be concerned. Most people are. I think it’s the uncertainty we’re all concerned with," said Doug Sombke, president of the South Dakota Farmer’s Union. "If there’s some end game that we knew, if there’s light at the end of the tunnel, but we don’t know what that is."
The tariffs’ impact on farm incomes is compounded by high-interest rates and rising demand for loans, as farmers struggle with weaker cashflows. This financial strain is also affecting state sales tax collections, as agricultural equipment sales decline. “I’ll just say we’ve got to watch these things real close," said State Senator Ernie Otten.
With lawmakers preparing for the upcoming fiscal year, they must carefully monitor revenues and federal spending. Senator Otten warned that balancing the budget will be a challenge, given the complexities of the current trade situation. Lawmakers have until Thursday to finalize the state budget, and it is expected to be a busy session ahead.
Photo Credit: gettyimages-fotokostic
Categories: South Dakota, Business