As President Trump scored his second trade victory in two days, Senate approval of the new NAFTA, he asked farmers on Thursday to remember the billions of dollars they had received in trade war payments. The Senate passed the United States-Mexico-Canada Agreement a day after Trump and Chinese Vice Premier Liu He signed the “phase one” agreement to de-escalate the Sino-U.S. trade war.
The USMCA is expected to generate modest increases in U.S. food and ag exports while preserving duty-free access for most U.S. farm goods to Mexico and Canada, a provision in place since NAFTA took effect in 1994. Mexico ratified the tri-national pact last summer. Canada is expected to act on it soon, which would complete the approval process. Senators passed a USMCA implementation bill 89-10, with Senate Finance chairman Chuck Grassley, a proponent, announcing passage while temporarily presiding over the Senate.
“The farmers are really happy with the new China Trade Deal and the soon to be signed deal with Mexico and Canada, but I hope the thing they will most remember is the fact that I was able to take massive incoming Tariff money and use it to help them get through the tough times!” Trump said on Twitter.
To mitigate the impact of retaliatory tariffs on the agriculture sector, the administration used a Depression-era agency at the USDA, the Commodity Credit Corp., to send $19.4 billion in cash to farmers and ranchers. The so-called Market Facilitation Program payments totaled $8.6 billion for 2018 crops and livestock and, as of Jan. 6, $10.8 billion on 2019 production.
The USDA did not respond immediately to questions about whether it would release the final $3.6 billion that has been earmarked for farmers for 2019 MFP assistance. Agriculture has been the only sector of the U.S. economy to receive trade war aid, in part because there are few limits on USDA spending through the Commodity Credit Corp. and because lawmakers did not challenge the outlays.
Early this week, Grassley said the final tranche of $3.6 billion might depend on the restoration of ag trade with China. The phase one agreement sets a target of $40 billion a year in sales, though China says purchases will depend on its needs and on commodity prices around the world.
Farm groups welcomed final congressional approval of the USMCA, which obligates Canada to eliminate its Class 6 and Class 7 dairy prices and to grade U.S. wheat fairly. Canada and Mexico are the two largest markets for U.S. farm exports and account for one-third of U.S. food and ag trade.