Iowa’s agricultural sector has spent “several years in a downturn.” Farmers are struggling with increasing input costs, low commodity prices, especially concerning corn and soybeans, and trade uncertainty. While this news doesn’t come as a shock to many Iowans, these were the official findings based on a report released by Iowa State University, Iowa Farm Bureau, and Iowa Bankers Association.
From 2022 to 2024, farm incomes declined by 53 percent. With the continual slump in the farm economy, many Iowans are stricken with anxiety about a repeat of the 1980s farm crisis. However, Iowa State University economist, Professor Chad Hart believes that the current economic troubles are much different from the 1980s.
With that backdrop in mind, Iowa’s agricultural economy and trade policy took center stage at the Iowa Farm Bureau’s 2026 Economic Summit that was held recently. The summit featured dueling perspectives on trade policy, with much of the debate focusing on President Donald Trump’s tariff policy.
Samuel Gregg, who serves as President and Friedrich Hayek Chair in Economics and Economic History at the American Institute for Economic Research, argued during the summit that the President’s tariff policies have been detrimental. He argues that tariffs are counterproductive, undermine competitiveness, and they raise prices.
Ambassador Robert Lighthizer, who served as United States Trade Representative in President Trump’s first administration, provided a defense of tariffs to summit attendees.
Overall, the Economic Summit provided a unique opportunity for Iowans to hear both sides of this important debate. Agriculture and manufacturing are both important for Iowa’s economy. Although agriculture gets more attention, manufacturing in Iowa accounts for 17% of state GDP and $35 billion to the state economy.
Agriculture in Iowa is confronted by international competitors such as Brazil. In addition, China holds substantial leverage because Iowa soybean farmers depend on them for purchasing vast quantities. In retaliation from the Trump tariffs, China’s immediate response was to target American agriculture, which included not purchasing Iowa soybeans.
With trade having such an important impact on Iowa’s economy it would appear that the policy of protectionism would be detrimental. However, Lighthizer argued that prior to President Trump the trade policy of the United States was a failed system, as there was never truly free trade. He described free trade as a myth because many nations utilize a variety of policies to discriminate against the United States. These policies include in addition to tariffs, currency manipulation, industrial policies, value-added taxes, distortionary tax systems, subsidizing of key industries, among others.
Some Americans assume that adopting a policy of protectionism means that the United States should not engage in trade. As Lighthizer told the Farm Bureau Summit, however, “trade is important.”
In previous remarks to the Intercollegiate Studies Institute, Lighthizer clarified his position, “To be clear, I am not against trade. In fact, I think trade is good and more trade is better, but it must be fair, beneficial to our workers and above all else, it has to be balanced. In the 25 years before Donald Trump, we let trade get wildly unfair and dangerously out of balance. We forgot that the purpose of economic policy is people. Not things.”
Nevertheless, the “system is broken” and the result has been harmful. Lighthizer told the Economic Summit that the purpose of President Trump’s trade policy is to restore balanced trade, “reverse persistent trade deficits, expand long-term export opportunities for U.S. farmers, and strengthen the overall economy.”
In a recent article for Foreign Affairs, Lighthizer noted that “by the early 1970s, the United States had gone from consistent trade surpluses to trade deficits.” The result has been decades of massive trade deficits with the most notable being in the last few years of over $1 trillion.
“As a result of these deficits, the United States has transferred trillions of dollars of wealth overseas,” wrote Lighthizer. Trade deficits also resulted in the decimation of manufacturing and middle-class jobs. Over 5 million jobs and 60,000 factories were sacrificed, along with stagnant wages and many communities were hollowed out.
It is estimated that Iowa alone lost nearly 34,000 jobs to China, the majority of them in the manufacturing. Agriculture is not exempt from the trade deficit. In 2025, the deficit was close to $44 billion.
For Iowa farmers who may oppose the policy of protectionism or who are losing patience with the President’s policy, Lighthizer reminded the attendees that “no group is discriminated against more when it comes to trade than agriculture.” The United States is currently in negotiations over the future of the United States, Mexico, and Canada agreement (USMCA). An issue of concern for the United States is the $170 billion trade deficit with Mexico.
China may be the largest issue of concern even as that nation has stated its intention to purchase more soybeans. During his remarks Lighthizer warned Iowa farmers that although he believes China will honor their commitments, they cannot be trusted for the long term. China is an adversary and Iowa is in a dangerous position of having to rely on them for so much trade.
The debate over trade policy is unlikely to be settled anytime soon, especially as Iowa’s farmers continue to navigate a difficult agricultural economy. Whether one agrees with President Trump’s approach or favors a different path, the questions raised at the Economic Summit underscored how deeply international trade affects Iowa’s farms, manufacturers, and rural communities. As policymakers weigh the future of U.S. trade policy, Iowa’s economic fortunes will remain closely tied to the outcome.
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