Proposed Tariffs Have Iowa Leaders Guessing (Again)

March 20, 2025

A suite of newly enacted and proposed tariffs is forcing Iowa business leaders to rethink their strategies. Unsure how the taxes are likely to impact their operations, decisionmakers are weighing the pros and cons of reacting to the pendulum swing of international relations. 

Fortunately, this is a hardy group. They’ve faced down the strain of uncertainty before. Indeed, any business that survived the chaotic climate of the last five years has been through the financial-planning wringer. Most leaders emerged stronger and more confident in their ability to manage operations while juggling multiple unknowns. 

Iowa Manufacturing Communities Impacted

New tariffs have Iowa manufacturers in a tricky spot. The 25% tariff on imported steel and aluminum enacted on March 12th, 2025, threatens vital inputs that are hard to substitute. These companies will essentially be forced to foot the bill to keep production going. 

For example, in Pella, at least three of the community’s major companies will be impacted. Vermeer Manufacturing makes heavy farm and industrial equipment; Pella Corporation uses metal parts on the doors and window frames it manufactures; Precision Pulley and Idler (PPI) does the same in the manufacture of its pulleys, conveyor equipment and bearings. 

This is just one mid-sized Iowa town. When you multiply the expected impact on other communities across the country, the scope and breadth of the issue becomes significant.

Farmers Likely to Feel the Pinch of Foreign Tariffs

For their part, Iowa farmers are no strangers to the political winds reshaping their operations. Any farmer with some age will recall the impact of the U.S. grain embargo against the Soviet Union in 1980. 

While a tariff is not an embargo, it does pose the risk of foreign purchasers of American farm products looking elsewhere for goods. This could be great for South American producers of soybeans and beef; but not so great for Iowa farmers. 

Unlike steel and aluminum, agricultural products are more likely to be taxed by foreign governments in retaliation for U.S. tariffs on other goods from their said country. Rather than pass higher food costs onto their citizens, foreign buyers will often find new sources. 

Long-term Outcomes Can Go Either Way

The short-term risks of tariffs for manufacturers and farmers are much clearer than the potential long-term outcomes. For example, the move may lead to a boost in American manufacturing in response to less importing of foreign-made goods. Conversely, companies unable to absorb the extra costs may file for bankruptcy or close shop altogether. 

Because the present tariff situation came on fast and furious—and seems to be changing frequently—many decisionmakers across industries are taking a “wait and see approach.” In that waiting period, however, there are still some strategies business leaders and farmers can consider deploying.

Wait and See, But Take Calculated Action

Naturally, manufacturers that produce high-margin products have a sizable advantage. They can absorb short-term increases in costs from tariffs, avoiding the need to pass the pain on to customers. Tighter-margin manufacturers will need to make some adjustments. 

Options include reducing overhead costs, raising prices or reallocating resources to more profitable products. For example, a soda manufacturer might invest more in advertising a plastic-bottled product made in the U.S. while cutting back on promotions for canned soda that relies on imported aluminum. 

As for the farming community, lower commodity prices from tariffs can be handled much the same as other routine, cyclical risks, like high interest rates, lower production due to weather-related events or high input costs due to out-of-control fertilizer prices. Farmers may want to consider government-offered crop and livestock insurance products, which will guarantee a revenue floor. 

Obviously, it is smart to refrain from any new purchases while the future of tariffs and their impact remains in the air. Avoiding debt during uncertain times is always a good strategy. 

Farmers should track production costs and price points needed to pay off debt while also staying profitable. Every farm operation would also do well to sharpen their pencils when it comes to knowing the costs of production and the price point required to retire debt and make a profit. This will make it easier to lock in optimal prices when they occur so the farm’s financial obligations can be satisfied. 

Iowans Turn Threats into Opportunity

While the uncertainty surrounding tariffs presents obstacles, Iowa’s business leaders and farmers have proven their resilience time and again. The operations that navigate this temporary ambiguity with patience, agility and financial discipline will be well-positioned for sustainability through multiple different futures. If history is any guide, Iowans may even find ways to turn the threat of tariffs into an opportunity for growth. 

If our team can help you weigh the pros and cons of different strategies, certainly get in touch.