Podcast - First 60 Days of the Trump Administration: Food and Agriculture Policy

Peter Tabor: Hello everybody and welcome to another edition of Holland & Knight's Eyes on Washington podcast. Today we're focusing on the agriculture and food policy outlook. My name is Pete Tabor. I'm a senior policy advisor here with Holland & Knight, and I'm joined by Liz Craddock. She and I co-lead our Agriculture & Food [Policy] Team. Liz, welcome.

Liz Craddock: Yeah. Hi Peter. It's great to be doing these. There's a lot that has happened in D.C. since the start of this administration and the new Congress, so we have a lot to try and cover quickly for folks who are interested in agriculture policy in D.C. 

Peter Tabor: Indeed. This has been perhaps the most eventful two-month stretch or beginning to a new Congress and a new presidential administration, definitely in recent memory, and probably for most of us who've been doing this for any length of time, 20, 25 years. The pace and the depth of changes that the Trump Administration has proposed are neck snapping in a quick term. I think what we're going to do — because we want to cover a lot and cover it relatively efficiently — is I think we're going to start off with a focus on USDA. I'll start with that. Then I think we're going to cover the tariffs issue as well. And then I think we're going to close out with looking at the congressional outlook. Liz, you've been on top of that in terms of appropriations, tax and reform, and the Farm Bill. 

So let's get started on USDA. So, as you all know, we have a new Secretary of Agriculture, Brooke Rollins from Texas. She was confirmed and has been in office for pretty much the entire month of March. And she comes to the second Trump Administration having had experience in the first Trump Administration as a prominent figure in the White House as part of the Domestic Policy Council. The things to know about Brooke Rollins: I believe she's got a degree in agricultural development, she's a Texas native, she got her degree from, I believe it was Texas A&M, and in her confirmation hearings and in statements made since she took office, she has indicated she is very much ready to implement President Trump's agenda with respect to issues — really contentious issues perhaps — of labor in the food and agriculture space with respect to trade. And we'll get into some of those in a little bit. Right now, her undersecretary and deputy secretary positions are not yet all filled. The appointees have been named, but they're not yet confirmed. But that hasn't stopped Secretary Rollins from going out and starting to engage with stakeholders around the country. And so I think there's a lot of concerns in the agriculture community that she is poised to listen to and perhaps address. 

One of the prominent ones is something that happened early on in the administration, and that is that Inflation Reduction Act funds, especially those devoted to agriculture, were paused. And that has caused some concern with respect to many programs that either relied in whole or in part on IRA money. We know and have worked on issues related to this over the past several weeks. I think this issue I mentioned earlier of not as many appointees having been confirmed is leading to a little bit of a delay in definitive word from the administration or from USDA as to the impact of the IRA pause on certain programs. So that is something definitely for folks to consider. My experience has been that there might be a little bit of or a lack of clarity for some programs under, for example, EQIP, the Environmental Quality Incentives Program, where some money the Biden Administration had highlighted or emphasized certain programs under EQIP and had devoted IRA money to those programs. That pause in IRA money pending review by the administration has led, in some cases, to the EQIP program itself being paused, and that is a cause for concern for many EQIP participants or those interested in participating in that. 

Liz, you and I have been working a bit or following closely some of the issues with respect to supplemental nutrition assistance. I'm going to mention this but I think you also have some views on this. The Secretary of Agriculture released in February some priorities that she would have. She was confirmed later, but I think the document's dated. It goes back to February. Among those priorities, we see that encouraging state innovation through the approval of waivers and pilot projects, and I think that was a not-so-subtle hint that for SNAP states interested in waivers and seeking waivers might find a favorable pen in the hand of Secretary Rollins because, as you know, for SNAP, which is administered by the states, if they want to administer the program differently, they need to seek a way or secure a waiver from the secretary. But I think this has implications for a lot of nutrition assistance programs, and I think we're going to be watching that closely. 

Liz Craddock: Yeah. Without a doubt, Pete. You know, if each of the 50 states can develop their own sort of program as it relates to SNAP, then that is going to have a major impact on the products that participate in the state SNAP program. So there's a lot to sort of peel back the onion, if you will, on that issue. It's probably not as simple as it may seem on its surface and can potentially really impact, I think, agricultural growers who are growing a lot of the feedstocks or inputs for products that are, you know, on the market in the SNAP program. So definitely more to be seen on that issue as it develops, but does have some cause for concern amongst agriculture growers in the country at the moment. 

Peter Tabor: Yeah. Indeed. And I think it stretches all the way from the farm to the farmers, but all the way to the makers of processed products, including beverages. So you might see discussion of waivers related to soda or beverages, carbonated beverages, access to those. And so we're going to be keeping an eye on that. And we encourage you to contact us if you've got more questions. 

It's a kind of a good lead-in with respect to those waivers and the relationship to SNAP to talk a little bit about the dietary guidelines for Americans. This is a five-year plan with the food pyramid that everyone's familiar with, and that food pyramid gets a refresh or a review every five years. This time it comes at the beginning of the administration, even though a lot of the work from the Dietary Guidelines Advisory Committee was done under the prior administration. So they're reviewing those recommendations. But now we have the Make America Healthy Again Commission, which I believe is co-led by Secretary Rollins and her counterpart at HHS, Robert F. Kennedy Jr. We can't even begin on this podcast to get into that issue. I think it's a podcast by itself, a podcast topic by itself, the implications of RFK's role in food production, food consumption. He's made some very provocative statements with respect to, you know, pesticides, with respect to fluoride in water. But I think the short summary for this podcast is that that conversation under this Make America Healthy Again Commission is really going to have profound effects on those dietary guidelines for Americans. I don't think it can be overstated that the opportunities to weigh in with the administration, both USDA and HHS, in the coming year are going to be something that food producers are going to want to take advantage of, because these guidelines, they not only provide a north star for many in terms of what they are seeking to achieve from nutrition, but they also impact nutrition programs that USDA, through the Food Nutrition Service, that it implements. So it will have effects not only on consumption but all the way back to production. So we'll be keeping a close eye on that.

The other issues I wanted to raise as well under the USDA umbrella. We cannot understate the effect that the fork in the road effort to reduce the size of the federal government employee base is having at USDA. The Forest Service has been particularly hard hit. But there have been lawsuits that have made their way through the courts, which have resulted in the reinstatement of some USDA officials who were let go into the program, either in terms of employees — I don't mean to mix things, there were definitely retirement offers that were made and accepted by many USDA employees, but there were also some reductions in force and some terminations based on poor performance that lawsuits are indicating may be challengeable or that there were discrepancies with respect to whether the basis of poor performance was the actual basis for the dismissal. So now that we're entering fire season — I hesitate to say that because I think fire season now, as we've seen with California fires only a couple months ago, fire season maybe all year — but the Forest Service was especially hard hit by these reductions in force. We also know that late last week, all department heads, all 17 department heads or cabinet-level positions within the government, owed to the White House a reduction in force plan. And so implementation of that plan, we're waiting to see what that looks like. But this will definitely have profound effects for USDA. 

Liz Craddock: Yeah, Pete, you just laid out so many changes. You know, we're about 60 days into this new administration, and between, you know, potential reduction in force, a sizable reduction in force at USDA, you know, married with a reduction in grant dollars going out the door, another spending going out the door for agriculture programs, there's just a lot happening here in D.C. not only in this space, but, you know, under every agency here. So a lot happening, a lot to digest. I think that many in the administration, a lot of secretaries, have announced that they're just getting started. So that just signaling that while we're seeing a lot happening at the moment, they're not signaling that there's going to be a slowdown in activity for, you know, many months to come. So I think we've all been holding on to our hats, so to speak, and we're going to continue to do so for many months in the future. 

Peter Tabor: Liz, you and I were at a meeting earlier this week. This is the third week of March, and it was an indication from some USDA officials that the pace may change, but the type of changes that the Trump Administration is seeking to impose, we're going to see more of this, not less, over the coming months. 

I'm going to bring it home really quickly on USDA, and then we'll switch topics. Kind of circling back to Secretary Rollins, she was very busy over the past couple of weeks preparing and then rolling out the Emergency Commodity Assistance Program. And that was appropriated by Congress when it extended or imposed a continuing resolution or passed a continuing resolution in December of 2024. They included $10 billion in assistance to farmers, particularly for row crops or principally for row crops. Specialty crops are excluded. But this is for farmers who experienced difficulties with higher input costs and lower commodity prices. So that program was rolled out this week. In fact, the applications are being accepted today, March 19, the date of the recording of this podcast. And those ECAP applications are accepted through August 15. And then there's another emergency relief program for disaster assistance that's going to be rolled out as well pretty soon to the tune of, I think, $20 billion. We'll be keeping an eye on that. But I think that covers the USDA piece. Obviously, very much a summary. 

I think I will get us started talking a little bit about tariffs because any discussion of agriculture and food right now has to include tariffs. And so if anything typifies the pace of Trump Administration executive orders, memoranda, proclamations, etc., I think the tariff space does that. We've had many tariffs announced. We've had quite a few actually imposed. We've had retaliatory tariffs by our trading partners announced and imposed. And then we have the reciprocal tariffs piece expected on April 2 where we should see, or the Trump administration has committed, that reciprocal tariffs will go into effect perhaps as soon as that day or that week. 

So really quickly in a minute, if I can do this, where we are now. We have 25 percent tariffs on imported steel and aluminum, which obviously is affecting food and ag producers, many of whom rely on steel and aluminum either for packaging or for their equipment purchases. Those became effective March 12. The important thing here is that the exemptions that had existed — the country-specific exemptions that had existed in the past, or the product-specific exclusions that existed — those were done away with by the executive order reimposing or raising these tariffs. They used to be 25 percent steel and 10 percent aluminum. Now it's 25 percent across the board. In addition, the EO, the executive order, proposes an inclusion process, meaning there is a process for stakeholders to ask the government to add items — derivative steel products and derivative aluminum products — to the tariff list. So that is something that we're watching very closely. The Department of Commerce Bureau of Industry and Security is heading that up. And so there is an exemption for steel that's melted and poured here in the United States. So for products coming in made with U.S. steel or aluminum, there are provisions to avoid the tariffs. 

You all know about the 25 percent tariffs on USMCA non-compliant goods. I won't go into the gory details of the back and forth, just to say that at least until April 2, products from Canada and Mexico that qualify for the USMCA preference can enter tariff-free. And so we'll be watching all of this very closely. Again, without getting into too much detail, I think this invites USMCA review and renegotiation much sooner than July of 2026. I think come April, with reciprocal tariff announcements — some of which could include goods from Canada and Mexico — we're going to see the groundwork laid for review or renegotiation this year instead of next year. 

China figures prominently in this whole tariff scheme. Tariffs on Chinese goods were imposed at 10 percent in February, raised another 10 percent to 20 percent this month, and China has retaliated effective March 10 with retaliatory tariffs against principally U.S. agricultural exports. The average Chinese tariff right now I believe is 39 percent, and that is for a product coming into the United States if you factor in all the tariffs that have been imposed. So we have a very complicated tariff landscape. We're tracking it very closely here, and the impacts on food and agriculture can't be understated, especially when we talk about retaliation.

Liz, you're going to bring us home because you've got a lot to cover in terms of budget reconciliation, the 119th Congress, FY25, which I think we can put to bed, FY26 appropriation. So I'm going to hand it off to you because you've got a lot to cover. 

Liz Craddock: Thanks, Pete. And that might have been a world record for getting through all of what's happening in D.C. on the tariff space in about a minute and 30 seconds. So congrats to you. You have been dealing with these issues so intimately that you can comprehensively relay it to folks so quickly. So again, congrats to you on that. 

But you're right, you know, as we're just about 60 days into the new administration, we're only three months into the 119th Congress, and we thought we'd spend some time just sort of laying out what we're seeing on the agenda for this Congress and what we could expect to see as far as agriculture policy this year. As you just stated, FY25 appropriations has been wrapped up as of last week with a continuing resolution. Not too many changes we're sort of diving into. For the most part, it's just a continuation of FY24 spending. And just to go back to what happened in FY24 for agriculture appropriations, you know, it's a $26.2 billion budget. It wasn't increased a lot from FY23 to 24. It was only a $750 million increase above FY23 funding. That was primarily due to the budget caps that were put in place under the Fiscal Responsibility Act. Each of the appropriations bills had to factor into that cap, and there just wasn't a lot of wiggle room to increase funding for programs and for appropriations bills. If you combine that with some additional spending that needed to happen for the Supplemental Nutrition Assistance Program or for WIC, then the FY24 bill really cut into every program at USDA. Every program suffered a decrease in their budget except for two. Primarily, rural development was hit pretty hard. It had a decrease in about 12 percent of its budget, and the NRCS was hit with an eight percent reduction in its budget. So just laying all that out because, you know, we didn't really see a lot of increases in the FY24 bill. So as that carries over to spending for FY25, I think a lot of programs are still running below where they had hoped to be. All that's to say, you know, the Appropriations Committee will now start work on its FY26 spending. So we will see what those budget caps look like moving forward and if there are any opportunities to potentially plus up some programs that are really critical for our farmers and our agriculture sector. 

I think the big elephant in the room that everybody knows about at this point is that this is the year that the Tax Cuts and Jobs Act expires. And so Congress is really focused on extending that legislation and potentially trying to make it permanent. They plan on doing that via a process called budget reconciliation that only requires a majority vote in both chambers. Budget reconciliation is primarily done to get around the Senate filibuster where you need 60 votes usually in the Senate to get a bill passed. So by going through budget reconciliation, you only need a majority vote. Currently, the Senate has 53 Republican senators. The House is controlled by the Republicans by two seats. And so budget reconciliation is a good tool for the Republicans to use in trying to advance their agenda. What we have seen so far is sort of inconsistency on how the Republicans plan to move on budget reconciliation. Will it be a one-bill or will it be a two-bill process? Right now the House trying to move forward with one bill has signaled about $230 billion in cuts to the agriculture sector and programs. Mainly, this would come from the nutrition title, but obviously $230 billion is a lot of money. On the Senate side, in their budget resolution, they had a billion-dollar cuts, only a billion. So obviously there's a big gulf between $230 billion and $1 billion, and there's a lot of work yet to be done on where the final number will land as it relates to budget instructions for the Agriculture Committee in making reductions in agriculture programs. But that will be the bill that Congress will be focused on for the rest of the spring, maybe even the summer. 

Tax reform will be included in that legislation. And, you know, tax reform as it relates to farmers, I think the number one issue that farmers would like to see is the permanent repeal of the state tax. I've heard members of Congress already talking about it, so we could potentially expect to see that. There are some IRA provisions for tax credit for clean fuels that I know the biofuels community really cares about. Those could potentially be on the chopping block when it comes to budget reconciliation. So it's yet to be seen how all of that will shake out. But those are some of the top issues for the agriculture community as it relates to budget reconciliation and tax reform. 

That all sort of leads into whether or not we will have a Farm Bill. I think that if the budget reconciliation process takes a lot of the mandatory spending or baseline out of the Farm Bill that it could be potentially very difficult to get a Farm Bill done this year. Again, I know there are members of Congress sort of watching that carefully, but what happens in budget reconciliation, I think at the end of the day, will make or break whether or not we have a Farm Bill this year, even though I know we all desperately need one. 

So tried to do that pretty quickly. But those are some of the top, big issues that we're looking at. I know, Pete, you've had a lot of conversations on the Hill about the Farm Bill, too. So let me turn it over to you to see if you have any extra comments. We probably should stop droning on and turn the podcast off. 

Peter Tabor: No. Liz, you covered a ton of stuff there expertly in terms of breaking down what we saw for FY25, what we're likely to see for FY26. And I don't think this is a controversial statement: It's not pretty. There's a lot of difficult choices that need to be made. I think you hit on one, which is the implications of reconciliation on the Farm Bill. I think there's a huge gap between what the House and the Senate Agriculture, Appropriations or, you know, what numbers they need to pare down. And that, like you said, it does have significant implications for the Farm Bill and who votes for the Farm Bill. 

But I do think in the conversations I've had, and I'm sure that you've had, there is a lot of frustration. And I think that frustration could turn into something — I'm ever the optimist — could turn into something by the end of this year with respect to the Farm Bill. You know that reference prices and other aspects that really directly impact farmers' ability to operate, those really can't be updated outside the Farm Bill context and so that needs to happen. Whether it's crop insurance or reference prices, these are factors that farmers have been bringing to legislators' attention saying these things need to be updated. So I think there's definitely the will. We're going to have to see if both logistically and procedurally there's a path forward, perhaps this spring or, if not, hopefully in the fall. 

But I think that about covers it for us. I love doing these with you, Liz, because we cover a lot. And I think we're getting better at these. So hopefully, we'll get to do one again in a few weeks. And there's no doubt that the landscape will have changed somewhat. And we'll be discussing a lot of developments, especially on the trade front. I think we're likely, in April, May, to see some significant changes there.

Liz Craddock: Yeah. I definitely think that there'll be a lot more happening in D.C. that we'll need to cover. So look forward to doing more of these with you in the near future. 

Peter Tabor: Yeah. And for all of you listening, please reach out to us. It's not just the two of us. There are, you know, as you know, Holland & Knight is a powerful resource here in the United States from a legal and policy standpoint. So lots of resources at your disposal. We look forward to having you contact us.