A whole new world: The economy remains strong, but a new administration introduces new uncertainty

Farmers and grain co-ops begin 2025 gazing into a cloudy crystal ball; tariffs are in

Marcus Wilhelm

Despite an early January bump in grain prices, farmers and grain cooperatives entered 2025 with many questions and few answers.

The question of tariffs always seemed to be more about when rather than if. Although they did not come on day one as he had promised on the campaign trail, President Trump announced a 25 percent tariff on imports from Mexico and Canada (10% on Canadian energy resources), and an additional 10 percent tariff on Chinese imports. Previously, he ordered a full review of U.S. trade policies, including the United States-Mexico-Canada Agreement.

Shortly afterward, the administration announced that it would delay the imposition of the tariffs on Mexico and Canada for one month. China responded with a series of retaliatory tariffs and actions. The situation is fluid and subject to change.

But there are many more questions gnawing at growers, merchandisers, importers and exporters.

Are the tariffs mostly a negotiation tool to gain cooperation on immigration and fentanyl? How long will they last? Where else could tariffs be imposed-EU, South America,* elsewhere in Asia? How will retaliatory tariffs affect us? How should we position ourselves to weather the storm and the short- or long-term volatility that comes with it?

Tariffs typically equate to uncertainty and volatility. However, tariffs can also equate to opportunities for farmers and operators who are working from a position of financial and operational strength. Those with the staying power and wherewithal to manage through the volatility may be rewarded on the backside. Those without that luxury may find themselves in difficulty faster than normal.

Meanwhile, in early January, a small pop in grain prices—roughly a 50-cent run on beans and 20 cents on corn—was enough to bring more farmers to the market. With many looking at one to two years of losses, the price hop allowed farmers to cash in on some of their large inventories to offset borrowing needs. Year-end grain sales were far above historical averages, in part because farmers do not need the tax shelter from deferred sales because of their ongoing losses.

Despite the early-year sales, farmers continue to store large amounts of grain. Right now, volatility looms and cash is king.

*In late January, President Trump quickly imposed and then rescinded a 25% tariff on Colombian imports in response to a dispute over the repatriation of Colombian immigrants.

DeepSeek frenzy raises questions; Broadcom growth set to spike with efficient ASIC chips

Jeff Johnston

The frenzy around the immense power needs for AI model learning hit a peak in late January when Chinese start-up DeepSeek revealed that it had developed its AI app using a fraction of the computer chips that competing apps, such as ChatGPT, used to develop theirs.

Minds were blown. The market panicked. Shares of Nvidia—the world's leading manufacturer of graphics processing units (GPUs) for AI model learning—lost nearly $600 billion in value, suffering the largest single-day loss in U.S. history.

The market's initial response was to the question of global competitiveness-Is America losing its edge? But investors raised another question: Could it, indeed, take fewer resources—especially GPUs and power—to compete in the AI world?

Maybe so.

As AI applications move from the learning phase to more efficient inference-based applications, new application-specific integrated circuits (ASICs) are emerging that are significantly more power-efficient than GPU-based systems.

Enter Broadcom, another semiconductor manufacturer that took a hit to its shares in response to the DeepSeek news, but which also has a foothold in the ASIC market. Broadcom projects that its ASIC-based AI chip business will grow from $12 billion in 2024 to as much as $90 billion by 2027 driven by just two major customers.

While this increased efficiency is a positive development, the overall impact on energy demand remains uncertain. The explosive growth in new data center construction continues to drive massive increases in power consumption.

Presidential order halts New ERA funding; laws of supply and demand should prevail

Brock Taylor

President Trump's Unleashing American Energy executive order (see Sec. 7) has slammed the brakes on the disbursement of funds under the $9.7 billion Empowering Rural America (New ERA) program for at least 90 days after its January 20 signing date.

Using an action called impoundment—the act of withholding funds appropriated by Congress—the President's order immediately paused the disbursement of all funds awarded under the Inflation Reduction Act of 2022, of which the New ERA program is a part.

Government agencies will use the 90-day pause to evaluate their processes and policies for issuing grants, loans and other disbursements for consistency with the law and policy outlined in Section 2 of the order.

At this point, the outcome of the New ERA review is uncertain. Anything seems possible: the status quo, major or minor changes, or possibly even the dissolution of the New ERA program. Depending on the outcome, certain stakeholders could also file lawsuits challenging President Trump's impoundment power. The National Rural Electric Cooperative Association (NRECA) has made strong statements supporting New ERA and engaged with the incoming administration during its transition.

Over the next few months, the industry will sort through the noise and settle on what fundamentally will or will not change. Meanwhile, companies are prioritizing must-have investments already in late-stage development, while potentially pausing other less-critical projects to fully understand the new environment.

Regardless of any policy changes, the fundamental demand for new power generation and infrastructure will very likely continue.