Tariffs Impact on Farmland Values, Exploring the Empirical Evidence

March 24, 2025

We have received a lot of investor questions around the potential impact of tariffs. Fortunately, we have recent history to serve as a guide. Specifically, in 2021 the United States Congress directed the USDA’s Economic Research Service (ERS) to assess the impact of foreign tariffs on U.S. agricultural products. The study found that U.S. agricultural export losses due to retaliatory tariffs totaled more than $27 billion during 2018 through the end of 2019. The entire report is available here.

The states of Iowa and Illinois were the two states that were most negatively impacted and experienced the largest level of losses according to the study. This begs the question, what happened to land values in these two states that were most impacted during this period? As shown in Figure 1 below, cropland values in Illinois were flat 2018-2020 and down (4%) in Iowa.

More importantly, farmland is not a short term trading vehicle. Farmland is a long-term real asset. Since 2018, cropland values in Illinois and Iowa have increased by 31% and 34% respectively. Those investors who took advantage of the softer land market during the tariff years of 2018 - 2019, even in the states that saw the greatest negative impact, have seen strong subsequent appreciation in cropland values.

Figure 1 - USDA Cropland Values in Iowa and Illinois

Source: USDA Cropland Returns Statistical Report (USDA NASS) (2024).

"Be fearful when others are greedy and greedy when others are fearful." - Warren Buffett

Farmland is scarce. It rarely trades hands. When it does, it is highly desired. While past performance is no guarantee of future returns, these factors have historically led to farmland generating strong returns relative to other asset classes with lower volatility.

History has shown that policy decisions, including tariffs, have not had a material impact on longer-term farmland value trends. As previously discussed, farmer's income actually improved from 2017 through 2020. This is likely the reason that farmer sentiment hit its highest level in 4 years recently.

Disclosures

Securities are offered through North Capital Private Securities Corporation (“NCPS”), a SEC registered Broker-Dealer and member of FINRA|SIPC. NCPS is not an affiliate of the AcreTrader Platform. Their form CRS can be viewed here.

Alternative Investments are considered speculative, involve a high degree of risk, including complete loss of principal and are not suitable for all investors. Learn more about the risks of investing in farmland and the nature of the asset class by looking at our general risk factors. There is no assurance any offering will meet its objectives. Investments are illiquid, not listed on an exchange, and not a short-term investment. Distributions are not guaranteed. Changes in tax law may adversely affect offerings.

Past performance does not guarantee future results. Investment decisions should be made based on an investor’s objectives and circumstances and in consultation with your financial or tax professional. This email is not intended to be a recommendation or investment advice and is not an offer to buy or sell any specific security.

Drew Lipke

Managing Director

Drew grew up in Little Rock and has owned farmland in Arkansas since 2014. Prior to joining AcreTrader in 2021, Drew spent 14 years in both debt and equity capital markets. Drew served as Managing Director of corporate credit analysis for a fixed-income broker-dealer and 12 years at Stephens Inc. with roles in equity research covering building materials and construction services, aerospace and defense, and energy, as well as institutional equity sales. He holds Series 7, 63, 65, 86, 87, 24 and 79 licenses with the Financial Industry Regulatory Authority (FINRA). Drew earned his degree from the University of Georgia’s Terry College of Business and was voted to Institutional Investor’s All-America Research Team Rising Stars for his Aerospace & Defense sector coverage.