The Trump Administration recently took two actions intended to help U.S. agricultural producers.
On June 1, President Trump announced that tariffs on combines, bulldozers, mobile forklifts, and related equipment will be reduced from 25% to 15%.
His tariff cut is a smart move in recognition of the harm tariffs inflict on American farmers by increasing the cost of agricultural equipment. However, President Trump should go even farther.
To bolster food security, the Administration should, at a minimum, terminate Section 232 “national security” tariffs on agricultural equipment. A cut to 15% is not enough, considering that in 2024 the average U.S. tariff on these products was just 1.4%. Ideally, the Administration should utilize Section 232 to eliminate tariffs on imports used by U.S. agricultural producers entirely.
In addition, the Administration should exempt imports used to produce agricultural equipment in the United States from tariffs, including “national security” tariffs of up to 50% on goods like steel and aluminum.
In Q1 earnings calls, major manufacturers described how tariffs are undermining U.S. production. Georgia-based equipment manufacturer AGCO noted that gains in income were “partially offset by higher cost inputs, including tariffs.” John Deere mentioned the risk imposed by tariffs: “Direct tariff exposure remains essentially unchanged at approximately $1.2 billion.” And according to Caterpillar, “we now anticipate full year 2026 tariff costs in the range of $2.2 billion-$2.4 billion.”
President Trump and Administration officials have repeatedly suggested, “Build it here, there's no tariff.” That’s a wise policy. President Trump should not impose tariffs on inputs used by manufacturers of agricultural equipment that are produced in the United States.
In a separate action intended to help agricultural producers, on May 28, the Department of Agriculture announced its Great American Cotton Plan to help cotton growers. The plan includes subsidies that are intended to encourage families to buy clothing made with cotton instead of with synthetic materials. This would boost U.S. cotton producers at the expense of U.S. petroleum and plastics manufacturers.
Agriculture Secretary Brooke Rollins suggested the Cotton Plan would reduce offshoring and encourage domestic manufacturing. However, President Trump has said his priority is boosting high-tech manufacturing. “I’m not looking to make T-shirts, to be honest. I’m not looking to make socks.”
That’s another wise decision. The Administration should promote the jobs of tomorrow, not try to bring back the jobs of yesterday. Even if T-shirt manufacturing returned to the United States, that production would largely be automated.
Instead of creating new subsidies, the Administration should utilize Section 232 to eliminate tariffs that increase the cost of clothing and erode our industrial base in other sectors. More than 85% of U.S. cotton is exported, and the average U.S. tariff on cotton clothing is 26%. Cutting clothing tariffs would boost cotton exports and provide American families with relief from high prices.
The Administration’s fact sheet explaining the tariff cuts states its goal is to spur investments that will rebuild our industrial base. However, it also says the cuts will expire on December 31. Companies are unlikely to make long-term investments based on short-term tariff cuts. Substantial, long-term tariff cuts are a better way to generate more investment.
The Trump Administration’s recognition of the costs inflicted on Americans by tariffs is great news. As a next step, President Trump should use his authority under Section 232 of the Trade Expansion Act of 1962 to cut tariffs on cotton apparel, eliminate tariffs on agricultural equipment, and make progress toward his stated goal of ending tariffs for manufacturers that produce goods in the United States.