The Trump administration said on Tuesday that it will spend up to $12 billion on a one-time aid package to offset the impact of the tit-for-tat tariff war on the farm sector. “This is obviously a short-term solution,” said Agriculture Secretary Sonny Perdue, but one that would give the president time to rebalance trade rules worldwide. Farm groups said “thanks,” but that they would prefer to see an end to the trade war and the tariffs that started it.
“This damage is self-inflicted, so the administration is right to take steps to address it, but the next step should be ending the trade war,” said the National Association of Wheat Growers. The American Farm Bureau Federation, the largest U.S. farm group, worried about the long-term loss of export markets, said it “will continue to push for a swift and sure end to the trade war and the tariffs impacting American agriculture.” And the National Corn Growers Association called for the withdrawal of U.S. tariffs and a determined effort by the White House to conclude the new NAFTA and write other trade agreements.
The American Soybean Association wished President Trump success in his campaign against unfair trade practices. “Since the administration has decided to use tariffs to address trade concerns with China, and China has retaliated, farmers don’t have time to wait to see how this trade war turns out,” said the group’s president, John Heisdorffer. China, which normally buys one-third of the U.S. soybean crop, has imposed steep tariffs on the oilseed.
Trump is to be the star attraction at an Iowa community college on Thursday. The announced topic at Northeast Iowa Community College, near Dubuque, is workforce development. But with the setting, in the top corn-, hog-, and egg-producing state in the nation, and with bumper U.S. corn and soybean crops on the horizon, agricultural trade is guaranteed to be an issue as well.
Speaking on Tuesday to a VFW convention in Kansas City, Trump said he was using tariffs to force other countries to reduce their trade surpluses with the United States. “We’re making tremendous progress. They’re all coming. They don’t want to have those tariffs put on them. They’re all coming to see us,” the president said.
“And the farmers will be the greatest beneficiary,” he added, drawing applause. “Watch. We’re opening up markets. You watch what’s going to happen. Just be a little patient.”
Farmers voted in large numbers for Trump in 2016 and have stood by him even as trade disputes have intensified. Still, expressions of anxiety and concern about survival in lean financial times are increasingly being heard.
Iowa Sen. Chuck Grassley said the trade disputes are a constant subject at his town hall meetings. “Progress reports would be very helpful,” he replied when asked what Trump should tell farmers while in Iowa. Midwesterners would appreciate a report on the status of negotiations or a timeline for action, said Grassley. “The president is going to have to say more than ‘I like farmers’ or ‘I support farmers.’ ”
“Trade remains the single best solution to the tough economy in farm country,” said Senate Agriculture chairman Pat Roberts. “I will look closely at the president’s assistance package, but I hope the administration is also working to quickly resolve the tariff situation and restore the export markets our farmers, ranchers, and growers rely on.”
The administration announced its three-part aid package weeks earlier than initially planned. “Since we had a good plan in place, we decided to go ahead and announce the plan,” said Greg Ibach, agriculture undersecretary for marketing. As recently as last week, Perdue said he would decide around Labor Day whether to act to help farmers. During a briefing, USDA officials said plan details would be released in the next couple of weeks.
Signup for payments will probably begin around Labor Day. “To run this program, we need producers to harvest their crops,” said USDA farm program official Brad Karmen, because payments will be based on this year’s crops. Payment rates are yet to be set.
The USDA will write checks to soybean, sorghum, corn, wheat, cotton, dairy, and hog farmers who apply for aid. It will purchase food, which will be donated to charity, to help fruit, nut, rice, legume, beef, pork, and milk producers. It also will provide funds to outside organizations to build overseas markets for U.S. food and ag exports. The money for the aid will come from the Commodity Credit Corp. — sometimes referred to as the “USDA’s bank” — which was created during the Depression era and given broad power to support farm income and commodity prices. The USDA does not need congressional approval to use the money.
“Thump. Thump. Thump. That’s the sound of helicopters approaching the Corn Belt with lots of cash,” tweeted economist Scott Irwin of the University of Illinois. “Important to remember that buying commodities in large enough quantities increases prices, which is equivalent to writing checks to affected farmers. You can do a lot with $12B. Need to see details of course.”
“Irony alert,” tweeted Scott Faber of the Environmental Working Group. “House #farmbill seeks to reduce ‘dependence’ on SNAP while @realDonaldTrump increases farmer dependence on gov’t handouts. #Hypocrisy.”
The National Farmers Union estimated that farmers lost more than $13 billion last month due to trade disruptions. Commodity prices have slumped since late May as the tariff war has taken hold. While Perdue put damage to the farm sector at $11 billion, some analysts say the impact could be three or four times that much when lower prices, smaller demand for U.S. crops and livestock, and long-term shifts in markets are considered. The U.S.-China dispute is expected to allow Brazil to leapfrog over the United States as the world’s largest soybean grower.
When he took office, Trump said he would replace multilateral trade agreements with bilateral trade pacts that would be more advantageous to the United States, the world’s largest economy. The list of successes so far is short.
Meanwhile, China, Canada, Mexico, and the European Union, which cumulatively account for half of U.S. food and ag exports, have imposed tariffs on a variety of U.S. exports in response to U.S. tariffs on imported steel and aluminum. China levied a second round of duties because of U.S. tariffs announced as punishment for China’s theft of intellectual property.