Trust as a reliable supplier is the currency being spent in the US-China tariff fight. Lessons for American farmers are worth watching here

When the world’s two biggest economies square off, the tremors are felt far beyond their borders. The trade stand-off between the United States and China may seem like a distant political contest, yet for anyone involved in food production it highlights the fragility of global markets that New Zealand depends on just as heavily.

In a recent interview, US market analyst Brian Grady from Comstock Investments described how the ongoing trade disputes and government uncertainty were distorting commodity prices, production decisions and ultimately farmer confidence. His words could just as easily apply to New Zealand as to Iowa or Kansas.

“The Chinese situation is somewhat of a wet blanket on prices,” Grady said, reflecting on the collapse of US soybean exports to China. “They have bought no bushels for the 2025–26 marketing year, and that’s really the critical one.” What America’s farmers are experiencing is a sharp reminder of how quickly a key trading partner can diversify its supply. China, he noted, has been investing heavily in Brazil’s port and road infrastructure and buying more from Argentina and Canada. “I think that China is much more prepared this time around than they were in the first Trump presidency,” he explained. “They were caught flat-footed back then. Now they are much more diversified in terms of getting their supplies.”

It’s a scenario New Zealand farmers would recognise. When one large buyer shifts its priorities, the ripple effect reaches our shores almost immediately - whether it’s Chinese dairy demand, tariffs on red meat, or changes in wool and forestry imports. The global food trade is built on reliability and reputation. Grady warned that by making supply unpredictable, the US risks teaching China to “do without us soybeans for the long haul.” He drew a comparison with Argentina’s 2008 port shutdown. “Basically what Argentina did is tell the world, we’re not a reliable supplier,” he said. “I’m concerned that maybe the United States is doing that now.” The lesson for any export nation, New Zealand included is that trust once lost is hard to rebuild.

Closer to home, the same patterns of uncertainty play out whenever political decisions, trade barriers, or policy shifts disrupt the confidence of primary producers. We may not be waging tariff wars, but market volatility, fluctuating currencies and shifting consumer preferences have the same effect - they make long-term planning almost impossible. Farmers end up reacting instead of investing, waiting for the next announcement rather than moving forward with clarity.

Grady also spoke of the mental and financial strain that accompanies these swings. “A lot of stress right now,” he said. “I’ve seen some headlines recently, panic in farm country and I don’t think it’s panic mode, but there is elevated concern. Bankers are tightening the belt, requiring more collateral for loans. The situation is getting worse and that’s a concern of mine.” He went on to note that while commodity markets are cyclical, what matters most is “where we end up before we come out of it, and how deep the cuts will be.” It’s a familiar sentiment in New Zealand, where rising costs and uncertain returns have pushed many family farms to their limits.

On the input side, the American story mirrors our own. Fuel, fertiliser and seed prices have remained “very sticky,” as Grady described it. “Historically, they rise really quickly and come down very slowly. I don’t see prices falling aggressively across any of them, whether it’s fuel or fertiliser or seed.” That stubborn inflation is something New Zealand growers and contractors understand all too well. Every litre of diesel, every tonne of urea and every piece of machinery comes at a higher cost, yet commodity prices rarely follow in step.

Even the livestock trends in the US sound familiar. Grady described the current cattle market as “the most dynamic I’ve seen in thirty years,” driven by low supply and strong domestic demand. “It just doesn’t break, and when it does break, there are new buyers underneath the market.” He pointed to hedge funds adding momentum, saying, “Hedge funds will add to winning positions, farmers will not.” It’s an insight into how speculative money can amplify market highs and lows, a reminder that agricultural prices today are shaped as much by financial markets as by paddocks and rainfall.

The challenge for both countries lies in balancing optimism with realism. Grady noted that eventually prices reach a point where consumers “wave the white flag.” As he put it, “When prices get too high, it turns into what we call a hamburger economy. You go out and buy a pound of hamburger because you can stretch it out more than you can a steak.” The same could happen here, as New Zealand households respond to food inflation by trading down from prime cuts to mince and sausages. It’s a pattern that affects not only beef producers but every link in the supply chain.

For all the political rhetoric and market analysis, the message that runs through Grady’s interview is simple - global agriculture is interconnected, fragile, and cyclical. Farmers, whether in the American Midwest or rural New Zealand, live at the sharp end of policies made in distant capitals. The pressures may differ in detail, but the fundamentals are the same: high costs, thin margins, growing regulation and the constant need to adapt.

As Grady summed up, “Commodities are cyclical. The farm sector is cyclical, and we will come out of this. It’s a matter of where we’re at when we come out of it.” That is as true for New Zealand as it is for the United States. The real test for governments on both sides of the Pacific is whether they help farmers through the cycle or make it harder for them to keep producing the food the world depends on. Listen to the podcast below:

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Angus Kebbell is a producer at The Weekly Hotwire. You can contact him here.