With concerns running high that President Donald Trump’s tariff policies will aggravate inflation, a report Wednesday could deliver some mildly encouraging news.

The consumer price index for February is forecast to show an increase of 0.3% for a broad array of goods and services across the largest economy in the world. That projection holds both for the all-items measure and the core index that excludes volatile food and energy prices.

On an annual basis, that would put headline inflation at 2.9% and the core reading at 3.2%, both 0.1 percentage point lower than in January.

The good news is those rates represent a continuation of a steady but quite slow drawdown in the inflation rate over the past year. The bad news is that both also are still well above the Federal Reserve’s 2% goal, likely keeping the central bank on hold again when it meets next week.

“We expect broad-based deceleration, with weaker core goods and services,” Morgan Stanley economist Diego Anzoategui said in a note. “Why still elevated? For three reasons: (1) we expect used car prices rise because of past wildfires, (2) according to our analysis, certain goods and services show residual seasonality in February, and (3) we think supply constraints keep airfares inflation elevated in February.”

The big question now is where things head from here.

Trump’s tariff moves have stirred market worries of both rising inflation and slower economic growth. With Fed officials historically more attuned to the inflation side of the dual mandate for price stability and full employment, a prolonged period of high prices could put the Fed on the sidelines for longer.

However, Federal Reserve Chair Jerome Powell and his colleagues have indicated that in their view, tariffs historically have been one-off price increases and not fundamental inflation drivers. If that’s also the case this time, policymakers might look through any price blips from trade policy and continue to lower rates, as markets are projecting this year.

Goldman Sachs economists expect the Fed to stay on hold until policy comes into clearer view, then likely lower the central bank’s benchmark lending rate by a half percentage point later this year.

“We see further disinflation in the pipeline from rebalancing in the auto, housing rental, and labor markets, though we expect offsets from catch-up inflation in healthcare and a boost from an escalation in tariff policy,” the firm said in a note.

The Bureau of Labor Statistics will release the CPI report at 8:30 a.m. ET.

Caleb Ragland, a soybean farmer in Magnolia, Ky., voted for President Donald Trump in 2016, 2020 and 2024. Now, however, he has to navigate a tariff minefield at a time when the sector is already facing major headwinds.

Ragland works with his wife and three sons and has deep roots in the community. His family has been farming on the land for more than two centuries. But over the past few years, he has seen a double-digit percentage decline in crop prices while production costs rise. Soybean futures have gone down more than 40% over the past three years along with corn futures.

As pressures mount in the industry as a result of tariffs imposed by the second Trump administration — as well as retaliatory levies from other countries — he’s worried about the longevity of his business.

“My sons potentially could be the 10th generation if they’re able to farm,” Ragland, who is also the president of the American Soybean Association, told CNBC. “And when you have policies that are completely out of our control – that they manipulate our prices 20%, 30%, and on the flip side, our costs go up – we won’t be able to stay in business.”

This isn’t the first time farmers have had to deal with new tariffs. Back in Trump’s first term, the trade war with China in 2018 — a time when Ragland said the agricultural economy was “in a much better place than it is right now” — cost the U.S. agriculture industry more than $27 billion, and soybeans made up virtually 71% of annualized losses.

That trade war has caused lasting damage. To this day, the U.S. has yet to fully recover its loss in market share of soybean exports to China, the world’s number one buyer of the commodity, according to the ASA.

“Tariffs break trust,” Ragland said. “It’s a lot harder to find new customers than it is to retain ones that you already have.”

The White House last week imposed a 25% tariff on goods from Canada and Mexico alongside an additional 10% duty on Chinese imports.

While Trump soon reversed course by granting a one-month tariff delay for automakers Wednesday, then pausing tariffs a day later for some Canadian and Mexican goods until April 2, he said in an interview that aired Sunday on Fox News that tariffs “could go up” over time.

Tariffs on China were not included in these exemptions. China retaliated with levies of its own, which mainly target U.S. agricultural goods. Specifically, U.S. soybeans are now subject to an additional 10% tariff, while corn gets hit with an extra 15% charge.

“We’re already at the point that we’re unprofitable,” Ragland said. “Why on earth are we trying to add insult to injury for the ag sector by basically adding a tax?”

Ragland pointed out that he “appreciates the president’s ability to negotiate” and wants Trump to be successful for the sake of the country. However, he emphasized that those in the industry, especially soybean producers, don’t have any “elasticity in our ability to weather a trade war that takes away from our bottom line.”

“Folks are upset,” Ragland said about sentiment from other farmers, stressing that they all need relief through deals that reduce barriers to trade and a new five-year comprehensive farm bill – legislation that provides producers with key commodity support programs, among others. “You’re talking about people’s livelihoods,” he remarked.

Agriculture Secretary Brooke Rollins said last week that the Trump administration was reportedly weighing exemptions on some agricultural products from tariffs on Canada and Mexico. Trump’s adjusted measures Thursday included a reduced 10% tariff on potash, which is used for fertilizer.

More than 80% of American farmers’ potash needs are supplied by Canada, said Ken Seitz of Nutrien – a crop inputs and services provider based in Canada – during the BMO Global Metals, Mining & Critical Minerals Conference last month.

“As we look at the implications of tariffs for Nutrien, of course the biggest discussion is around potash, and that’s because in a market that’s kind of 10 million to 11 million tons in any given year, we ourselves supply about 40% of that market,” the company’s chief executive underscored during the conference. “We believe that the cost of tariffs will be passed on to the U.S. farmer.”

Even in the runup to the implementation of Trump’s tariffs, American farmers were sounding the alarm. Despite the latest Purdue University/CME Group Ag Economy Barometer reading showing that farmer sentiment overall improved in February, 44% of survey respondents disclosed that month that trade policy will be most important to their farms in the next five years.

“Usually when you ask a policy question, by far and away the most important policy is crop insurance,” Michael Langemeier, agricultural economist at Purdue University, said. “Crop insurance is right up there with apple pie and baseball. It’s a program that’s very well liked, because it provides a very effective safety net.”

“The fact that crop insurance was a distant second to trade policy speaks volumes,” he also said.

The February survey also showed that almost 50% of farmers said that they think a trade war leading to a significant decrease in U.S. agricultural exports is “likely” or “very likely.” Langemeier estimated that between mid-February and early March, there was a 33% per acre drop in net return for soybeans and corn related to the tariffs. That’s on top of the fact that 2025 was “not ending up to be an extremely profitable year before this,” he revealed.

The economist thinks there may be a bit of a downward adjustment in overall farmer sentiment in the near term. Nevertheless, a constructive consequence of the tariffs could be that they speed up the signing of a new farm bill, he said.

“Well, how in the world can you come up with the amounts for the trade payments if you don’t even know what the amounts for the farm bill are going to be,” Langemeier asserted. He expects that the new farm bill signing will take place at some point this year.

Looking to the upcoming spring season, Bank of America analyst Steve Byrne wrote in a Feb. 25 note that tariffs could lead to “more conservative purchases of crop inputs.” That would mean a risk of lower fertilizer purchases, which could affect not only Nutrien but others like Mosaic and CF Industries, the analyst noted.

Shares of those companies, as well as other farming-related stocks like AGCO and Deere, all sold off on March 3 and March 4 on the heels of Trump’s tariff announcement.

“I think we’ve seen the ag stock sell-off just because of general concerns that the farmer is going to not be as profitable this year,” Morningstar’s Seth Goldstein said in an interview with CNBC.

Over the past month, Mosaic has slid almost 8%, while CF Industries has fallen more than 8%. Nutrien has also lost more than 1%. AGCO and Deere have fared better in that time, gaining around 2% and about 1%, respectively.

When it comes to how this trade war will affect American farmers in the long term, Goldstein doesn’t see that meaningful of an impact. He anticipates that global trade flows will shift and cancel each other out over the next two to three years or so.

“While there may be a near-term impact this year of soybeans sitting in warehouses without really available buyers, I think eventually we would see other countries then start to buy more U.S. soybeans,” the equity strategist said. “Maybe China buys more soybeans from Brazil, but maybe a place like Europe then buys more soybeans from the U.S., and we get … not that much difference.”

As it stands, Brazil is forecast to be the world’s largest soybean producer ahead of the U.S. for the 2024/2025 marketing year, accounting for 40% of global production in the period, per the Department of Agriculture. For corn, on the other hand, the U.S. is forecast to be in the top spot, making up 31% of global production in the marketing year.

Others on Wall Street believe that tariffs will be more consequential on trade dynamics, however.

Kristen Owen, an analyst at Oppenheimer, predicts that the duties will likely solidify Brazil becoming the primary global producer for both corn and soy, whereas the U.S. will become a sort of incremental supplier to the world.

“Brazil specifically has more capacity to grow their acreage, more capacity to grow to increase their share of the global grain trade,” she said to CNBC. “Tariffs and some of the other decisions that the administration is making just accelerate some of that.”