Could President Trump's new tariffs impact Iowa's budget talks?

DES MOINES, Iowa — Lawmakers have already started state budget conversations and are navigating estimates that show a decrease in Iowa's revenue. That means there's a good chance they'll have to dip into reserve funds.

Potential impacts from President Donald Trump's tariffs are also now a part of Iowa lawmakers' budget conversations.

State Senate President Amy Sinclair said proactive steps aren't necessary right now, but they do need to be mindful of what's going on.

"You're seeing ag products being impacted by it, agriculture is one of Iowa's biggest industries right, so that will impact future budgets," Sen. Sinclair said. "We need to be cautious in our spending based on that. I think we have to be as conservative as possible because those costs are going to be compounding year over year and we have to know that, that impacts what our revenues in the incoming year."

House Speaker Pat Grassley said Iowa's ag industry needs strong trading partners, and he's hopeful the long-term impacts will outweigh short-term bumps in the road.

"I think that, as a state, we've done a good job of making sure that we leave ourselves a cushion with an ending balance with the taxpayer relief fund having a rainy day and surplus full," Rep. Grassley said. "For unforeseen things like, potentially what the short term impacts of this may be, that's why we've budgeted the way we have the last several years. So, I think we are in a position to absorb any uncertainty that may come from that."

However, Democrats worry the tariffs are going to hit Iowa's economy hard and argued Republicans need to be realistic when drafting the budget.

"What can we do to ensure that costs are stopped so can we maybe put a cap on the number of school vouchers that are issued, for example," House Minority Leader Jennifer Konfrst said. "So that we can right size our economy and prepare. Can we make sure that Iowans have jobs, and if they don't that they are able to get the unemployment they need to find a new job."