President-elect Donald Trump's tough talk about China's trade policies during the campaign has rankled the communist nation and now raises the possibility of a backlash to the U.S. agricultural industry.
Candidate Trump called China a "currency manipulator" and threatened to put into place 45 percent tariffs on Chinese imports. He also threatened trade with Mexico, including getting rid of the North American Free Trade Agreement, or NAFTA deal, which would have serious implications for agriculture and other industries.
"The current uncertainty diminishes the appetite foreign businesses have to investment in U.S. businesses," said Rabobank Food & Agribusiness Research and Advisory in a report released this week. According to Rabobank, the U.S. food and agriculture industries are "one of the main drivers of global agriculture and trade."
Ag exports from the U.S. approached $127 billion in the latest year, and besides being the world's top corn exporter, the U.S. is a major seller of soybeans globally with about half of the crop going overseas to customers such as China. Ag exports to China have grown more than 200 percent in the past decade and last year topped $20 billion.
U.S. soybean exports to China have been strong this year, but the sharp rhetoric on trade from Trump during the campaign now is translating into tough talk from the communist nation about possible retaliation if the new administration imposes tariffs.
"If Trump imposes a 45 percent tariff on Chinese imports, China-U.S. trade will be paralyzed," Global Times, a Chinese state-run news agency, wrote Sunday. "China will take a tit-for-tat approach then," it added, mentioning everything from Boeing orders to agricultural imports such as U.S. soybeans and corn.
Meantime, candidate Trump called NAFTA the "worst trade deal in history" and may push to renegotiate the 22-year-old agreement between the U.S., Mexico and Canada.
Overall, Mexico and Canada represent nearly one-third of the total U.S. agricultural exports.
"Any change to U.S. agricultural trade agreements will not only affect global prices and trade dynamics but also U.S. farmer margins," according to the Rabobank report.
At the same time, Rabobank said there are NAFTA implications in terms of currency fluctuations such as the Mexican peso. It expects Mexico's exports to the U.S. might benefit from the depreciation of the peso, and Brazil, a major agricultural competitor on the global market, could become more attractive than the U.S.
Then again, others suggest the weak peso and strong dollar is making some U.S. ag products more expensive for Mexico.
"There is concern that corn shipments to Mexico will fall off a little bit due to it costing more for Mexico to buy corn," said Terry Reilly, senior commodity analyst for Futures International in Chicago.
Nearly one-fifth of total U.S. food and agriculture exports go to Mexico.
Elsewhere, President-elect Trump's plans to crackdown on undocumented immigrants may complicate efforts to attract domestic migrant farm workers. Trump has said he will deport millions of undocumented immigrants and build a "big beautiful wall" at the U.S.-Mexico border.
The ag and food sectors, whether fresh produce, livestock or food service companies, are "highly dependent on migrant labor," according to Rabobank. There's also been a trend of rising labor costs, which the bank's report blames on the stricter immigrant laws and increased opportunities in other sectors.
The ag industry has been asking for immigration reform to deal with undocumented workers and to help alleviate the farm labor shortage. The labor shortage has been widely recognized in fruit and vegetable production but it is increasingly being found in other ag areas such as dairies and poultry operations.
Some farmers rely on the foreign guest farmworker visa program to hire help during harvest time. However, there have been delays in the paperwork processing reported in California and at least a dozen other states.
"The current process has so many limitations on it that a lot of folks end up with their crops literally rotting in the field because they don't have anybody to pick the crop," said Dale Moore, executive director of public policy for the American Farm Bureau Federation in Washington, D.C.
The Farm Bureau official added, "We know it will be necessarily tied into the broader process of immigration reform."
Meantime, the agricultural industry also is looking to the incoming Trump administration for regulatory relief. Specifically, the ag industry wants policy changes with regard to water and environmental reforms, including federal land grazing permit reforms.
One area sought is a rollback of the controversial Waters of the U.S. rule, known as WOTUS, which was outlined by the U.S. Environmental Protection Agency and the U.S. Army Corps of Engineers.
Several states have challenged the WOTUS rules, which broadened the definition of such things as "tributary" and also toughens controls over "adjacent waters." In some cases, farmers could lose ranch or farmland, which some have called a regulatory overreach.
"This water regulation is not just affecting farmers and ranchers but it affects a lot of different industry sectors," said Moore.