Department of Agriculture Secretary Brooke Rollins made headlines last week when she called rising fertilizer prices an “overarching economic pending disaster” before the House Appropriations Committee. She is not wrong about the disaster part. She is, however, wrong about the cause of the problem and its supposed solution.
The Trump administration’s answer to soaring input costs for American farmers is to deploy tariff revenue to subsidize domestic fertilizer production. The implication? The government creates problems with trade barriers, collects revenue from Americans hurt by those barriers, and then hands back a portion of the money to a favored industry as a political salve (leaving aside the fact that this new proposal is just another in the administration’s long line of supposed tariff revenue use).[i] To develop the plan, Secretary Rollins convened a meeting at the USDA with Commerce Secretary Howard Lutnick, National Economic Council Director Kevin Hassett, and, notably, US Trade Representative Jamieson Greer, alongside executives from four of the country’s top fertilizer companies.
The Phosphate Problem Washington Made
Tariffs
To understand how we got here, start with a 2021 decision that deserves more public scrutiny than it has received. At the behest of the Mosaic Company—which controls about 75 percent of US phosphate production—the Department of Commerce imposed a roughly 20 percent countervailing duty (CVD) tariff on phosphate imports from Morocco (the CVD was decreased to 2.12 percent in 2023 after an administrative review, then increased to about 17 percent in 2024 after another review). Mosaic argued that Morocco’s OCP Group, the world’s dominant phosphate producer, received unfair government subsidies.
Setting aside the legal merits, the economic consequences for American farmers were severe and entirely predictable. Earlier this year, researchers at Texas A&M’s Agricultural and Food Policy Center released a study on the damage. The paper found that the phosphate CVD increased the price of diammonium phosphate—the most common phosphate fertilizer used by American row-crop farmers—by 28.6 percent while the duty was in effect at its original levels. This finding is basically consistent with that of a peer-reviewed 2023 study in the American Journal of Agricultural Economics, which estimated a 34 percent increase in US phosphate fertilizer prices as a result of the CVDs.
The Texas A&M researchers then calculated what this price spike meant for farmers growing corn, soybeans, wheat, cotton, rice, and sorghum (about 90 percent of domestically applied phosphate fertilizer is applied to the first four of these commodities). Their answer: the CVD increased phosphate fertilizer costs for producers of such crops by an estimated $6.9 billion across the 2021–2025 growing seasons.
Corn farmers absorbed the biggest hit—about $3 billion over that period. Soybean farmers paid an additional $2.5 billion. Wheat growers faced nearly $1 billion in added costs. These are not abstractions. These are real dollars stripped from farm income because Washington decided that protecting a single dominant company’s market share mattered more than keeping input costs manageable for the people who actually grow America’s food.
Prior to the CVD, Morocco supplied roughly 20 percent of US phosphate imports. After the CVD was imposed and imports from Morocco cratered, Peru—not subject to phosphate CVDs—filled the void.
Yet tariffs are not the only cause of this mess.
War in Iran
While the CVDs are bad enough, the Iran war is further exacerbating the problem. According to the United Nations, about 30 percent of all seaborne fertilizer passes through the Strait of Hormuz. As a result, nitrogen fertilizer prices have increased since the escalation of the conflict in the Middle East.
Researchers at the International Food Policy Research Institute have documented the scale of the problem: The Gulf region accounts for 36 percent of global urea exports, 29 percent of global ammonia exports, and 26 percent of global diammonium phosphate (DAP) exports. Urea is the world’s most widely used nitrogen fertilizer (Iran is the largest urea exporter in the Gulf, according to the International Fertilizer Association). Ammonia is the foundational building block from which urea and other nitrogen fertilizers are made, while DAP is a widely used phosphorus fertilizer. Perhaps the most underappreciated link between the Iran war and phosphate is sulfur. The Gulf supplies about 50 percent of the globally traded sulfur—a by-product of oil and gas refining and a critical input for producing sulfuric acid, which in turn is used to process phosphate rock into fertilizer. In other words, the war is squeezing sulfur at both ends of the supply chain: The CVDs cut off Moroccan imports, and now the Hormuz disruption is throttling the sulfur needed to process what phosphate rock remains available as well as DAP.
Fertilizer Tariff Crusader to Lower Fertilizer Prices?
As Reason’s Eric Boehm pointed out earlier this week in an excellent piece, prior to joining the second Trump administration, Jamieson Greer represented Simplot—one of the two firms that control roughly 90 percent of the domestic phosphate market—and lobbied to impose the very fertilizer CVDs now squeezing farmers. His résumé, which was circulated to Congress for his confirmation as USTR, even highlighted his efforts that led, in part, to the current mess. At a 2021 ITC hearing, Greer assured the commission that “there has been no shortage of fertilizer for the American farmer, and there will be no such shortage”—a pledge now measured against a Farm Bureau survey showing 70 percent of farmers cannot buy as much fertilizer as they need this year. As Boehm reported, Simplot and Mosaic have since asked the ITC to raise those tariffs further, while Greer works to “fix” the crisis his private-sector efforts helped create. This is tariff-driven regulatory capture in pure form: A corporate trade lawyer wins protectionist tariffs for his client at the expense of the broader farm economy, then ascends to a government office charged with fixing the resulting damage. The revolving door doesn’t just reward insiders, it locks in bad policy for everyone else.
The fix is not complicated, even if it is politically difficult. The US should revoke the phosphate CVDs—a sunset review is already underway, and over 50 farm and agriculture groups have written to the ITC urging exactly that. Likewise, the Trump administration should reject the impulse to paper over a policy failure with a subsidy program funded by the very revenue that policy created. Recycling protectionist rents back to the industry that lobbied for them is not sound agricultural policy. It is the Washington tariff racket, dressed up in a farmer’s overalls.
[i] It is also worth noting that the “pot” of tariff revenue Rollins cited is a legal fiction: Tariff receipts flow into the Treasury’s general fund and cannot be deployed by the president without congressional appropriation. The claimed windfall also looks considerably thinner after the Supreme Court ruled that the Trump administration must refund over $160 billion in duties collected illegally under the International Emergency Economic Powers Act.