Tariffs and Crop Insurance: What Agents Need to Know

With new tariffs rattling global trade and commodity markets, U.S. farmers face an uncertain income outlook heading into 2025. For crop insurance agents, this is a crucial time to understand how trade developments may affect farmer decision-making — and prepare for changes in coverage demand.

Trade War 2.0? What We’ve Learned from 2018–2020

This isn’t the first time U.S. farmers have faced economic disruption from international tariffs.

During the U.S.–China trade war (2018–2020), soybean exports to China dropped by over 50% in a single year. The federal government responded with over $28 billion in aid through the Market Facilitation Program (MFP). But crop insurance still played a vital role — and changed in interesting ways:

• Increased uptake of Revenue Protection (RP) policies at higher coverage levels.

• New options like Supplemental Coverage Option (SCO) and Enhanced Coverage Option (ECO) quickly gained ground. By 2022, over 2.6 million acres were enrolled in ECO alone.

• Farmers facing price risk rather than yield risk shifted toward area-based coverage like SCO, which triggers based on county-level revenue.

What Today’s Data Is Telling Us

Fast forward to 2025: tariffs have returned, and retaliation is already affecting commodity markets:

• China recently imposed a 34% retaliatory tariff on U.S. agricultural goods.

• Futures prices for corn and soybeans dropped by 6–9% in the weeks following the announcement.

• Farmers are facing higher input costs, especially for fertilizers and herbicides, due to import duties on raw materials from Canada, China, and Morocco.

How Might Farmers Respond?

There are two competing forces:

1. Higher Risk → More Coverage

   • Farmers may seek higher RP coverage levels (80–85%).

   • More will likely opt into SCO and ECO, which offer additional protection at the area level. In past shocks, SCO adoption increased 41% year-over-year in corn-producing counties.

   • High-income, high-acreage operators are most likely to stack coverage (RP + SCO + ECO).

2. Cost Squeeze → Lower Coverage on Margins

   1. Smaller operators or those with thin margins may cut back to 70% or 65% RP to reduce premium costs.

   2. In 2019, a USDA report found that 6% of farms reduced RP coverage levels during the second year of the trade war.

   3. Farmers may also leave marginal acres uninsured, especially those with low historical APH.

      
      

Key Questions for Agents to Consider

1. Are your farmers marketing their grain internationally? Export-oriented farms will feel the squeeze first and hardest — especially in soybeans.

2. Do they currently use SCO or ECO? If not, CY 2026 may be the time to reintroduce those options, especially in counties with stable yield histories.

3. Is there a history of ad hoc aid dependency? Some farmers may be holding off, anticipating new government relief — this may suppress short-term insurance upgrades, but increases long-term vulnerability.

   
   

Bottom Line: the Agent's Role is Increasingly Critical

Tariffs and trade risk don’t just shift markets — they reshape farmer psychology around risk. As an agent, your ability to provide data-driven, strategic advice will differentiate you in 2025 and 2026.

Use historical comparisons from 2018–2020 to frame expectations. Run scenarios. Revisit ECO and SCO options for 2026. And most importantly, help your clients understand that crop insurance remains the only guaranteed, forward-looking risk management tool in their toolbox.

If you’re and agent and you’d like us to generate a county-level report on SCO and ECO adoption for your territory, or compare historical premium-to-indemnity ratios during past trade shocks, just reach out — we’re building the tools to help you lead in this moment.