Fact Check: Is Nebraska on the verge of bankruptcy from tariffs and labor shortages?
LINCOLN, NEBRASKA: Since Donald Trump took office for his second term as president, he has made some major decisions that have raised eyebrows. Two of those decisions were the implementation of tariffs and the immigration raids across the US.
Recently, a rumor circulated online claiming that Nebraska was on the verge of bankruptcy because of tariffs and labor shortages following the immigration raids. But is there any truth to this? Let us find out below.
Claim: Nebraska is on the verge of bankruptcy due to tariffs, labor shortages
In August, a rumor circulated online claiming that the state of Nebraska was on the verge of bankruptcy, $500 million short of its budget, because of economic damage from tariffs and labor shortages caused by immigration raids.
A video that went viral on Instagram and Facebook alleged that Nebraska farmers had lost $2 billion worth of soybean export contracts to China following the imposition of tariffs.
Notably, the video originated from TikTok user @joeclark207, who identified himself as an elected official from Georgia.
Fact Check: False, no credible evidence to back the claim
The claims made in the viral rumor are false, as there is no credible evidence to support the claim that Nebraska was seeking help to avoid bankruptcy.
Moreover, the state is constitutionally mandated to balance its budget and not incur debt, Snopes reported.
"No appropriations shall be made in excess of the recommendation contained in such budget including any amendment the Governor may make thereto unless by three-fifths vote of the Legislature, and such excess so approved shall be subject to veto by the Governor," Article IV-7 of the Nebraska State Constitution reads.
Moreover, Article XIII-1 of the Constitution reads, "The state may, to meet casual deficits, or failures in the revenue, contract debts never to exceed in the aggregate one hundred thousand dollars, and no greater indebtedness shall be incurred except for the purpose of repelling invasion, suppressing insurrection, or defending the state in war, and provision shall be made for the payment of the interest annually, as it shall accrue, by a tax levied for the purpose, or from other sources of revenue, which law providing for the payment of such interest by such tax shall be irrepealable until such debt is paid."
Therefore, Nebraska must not spend more money than it takes in, the fact-checking outlet noted. However, in April 2025, Nebraska's economic forecasting board announced a $190 million shortfall in revenue for the 2025 fiscal year.
It also projected that the state would collect $90 million less than expected in 2026 and $100 million less in 2027. An April report by The Nebraska Examiner stated that the 2025 budget deficit would be closed using state reserves.
Nebraska faces economic uncertainty
In July 2025, Nebraska announced that it had ended its fiscal year with $86 million less in tax revenue than projected, due in part to tax cuts.
Moreover, farmers in Nebraska were facing uncertainty following President Donald Trump's decision to implement tariffs on China, Snopes reported. The US Bureau of Economic Analysis reported on June 27, 2025, that the state's gross domestic product had shrunk by 6.1 percent in the first quarter of 2025.
The report stated, "Agriculture, forestry, fishing, and hunting, which decreased in 39 states, was the leading contributor to the decreases in 11 states, including Nebraska, Iowa, Montana, and Kansas."
Meanwhile, KLKN reported that this was due to higher costs and lower corn and soybean prices.
