The Supreme Court on Wednesday heard a challenge to President Donald Trump’s sweeping tariffs. A ruling that goes against the administration could shake global markets, while also carrying implications for agricultural commodities and farm input prices.
What’s happening?
Lower courts have ruled against the Trump administration’s ability to use powers under the International Emergency Economic Powers Act to unilaterally impose duties on a range of trading partners, as well as extra levies on Canada, Mexico and China related to fentanyl flows. But the tariffs have remained in place pending a decision from the Supreme Court, which could come in weeks or months.
The Trump administration contends the 1977 law gives the president wide-ranging power to impose tariffs in response to emergencies. Challengers, including a coalition of small businesses, as well as a handful of states and others, contend the law doesn’t cede Congress’ constitutional authority to set tariffs and that the administration has overstepped its bounds.
What’s at stake?
The Treasury Department collected $195 billion in tariffs in fiscal 2025, an increase of $118 billion, or 150%, from fiscal 2024, according to figures compiled by the Committee for a Responsible Federal Budget, a nonpartisan fiscal watchdog group. If the ruling is upheld by the Supreme Court, around $90 billion of the $195 billion in tariffs collected so far might need to be refunded, CRFB said, citing data from U.S. Customs and Border Protection. Expected future monthly revenue collection could fall by more than half.
How have the tariffs affected the farm sector?
The tariffs stoked global trade tensions, with China shunning purchases of U.S. soybeans. A trade truce between the U.S. and China after Trump and Chinese leader Xi Jinping met in South Korea saw Beijing unwind retaliatory tariffs and, according to the administration, agree to renew substantial soybean purchases, including 12 million metric tons of the commodity by January and 25 million metric tons in the following three years.
The lack of more retaliatory measures on U.S. agricultural products by other trading partners was something of a surprise, said Shawn Arita, associate director and associate research professor at the North Dakota State University Agricultural Risk Policy Center.
Meanwhile, the tariffs have contributed to a rise in input costs, intensifying the pinch faced by producers.
NDSU researchers calculated that direct imports like agricultural machinery, tractors, fertilizers, pesticides, seeds and other farm chemicals see tariffs that are around 11% higher than previously was the case, Arita said.
The impact varies across inputs. Since most potash imports come from Canada and Mexico, they’ve enjoyed an exemption for products that meet U.S.-Mexico-Canada Agreement criteria. Otherwise, fertilizers now see 15% higher tariffs. Some pesticides from China saw tariff rates that were 30% higher, Arita said, though that appears to have been trimmed to around 20% following the Trump-Xi meeting. Tariffs on pesticides from Switzerland remain at an additional 39%, while tractors and ag machinery from the European Union face an additional 15% tariff.
Imports of fertilizer have fallen relative to last year, particularly when it comes to phosphates, Arita said. And trade flows, as would be expected, have shifted, with imports from tariff-affected countries falling sharply and those from exempt countries on the rise.
Farmers have faced a sharp rise in fertilizer costs. The bulk of that isn’t due to tariffs, but the levies aren’t helping, Arita said.
NDSU researchers recently compared prices paid by U.S. farmers in the Northern Plains versus those paid by Canadian farmers across the border and found the relative price gap widened, with some U.S. farmers now paying up to $34 a metric ton more for DAP, $32/MT more for MAP and $11/MT more for urea.
“If you look at how much prices have run up for MAP and DAP alone, $30 is a small piece of that, but it is making things a little bit more expensive,” Arita said.
How will markets and prices react to the ruling?
If the court strikes down the IEEPA tariffs, the Trump administration is seen ready to impose levies under other laws, such as Section 301 and Section 232, though they come with more restrictions.
It’s also possible that the Supreme Court could order the administration to refund money collected under the IEEPA tariffs – a move that could rattle deficit-wary bond investors. A selloff in the U.S. Treasuries could cause a sudden rise in yields, which move opposite to price, potentially stoking volatility across other financial markets.
“Traders aren’t paying due attention to the U.S. Supreme Court possibly overturning President Trump’s tariff authority under the IEEPA. That could raise new concerns about the sustainability of the US’s sovereign debt, drive long-term yields higher, and press down on stock multiples,” said Thierry Wizman, global currency and rates strategist at Macquarie, in a note.
The court striking down tariffs would be unlikely to offer any immediate relief to producers on input costs, Arita said, given the administration’s other options for imposing levies. If the court rules in the administration’s favor, expect a sense of “permanence” around many of the levies and the president’s power to use them, he said.
It’s also possible the court will offer something for both sides, putting limits on what Trump can impose under IEEPA.