An analysis by five economists says the Sino-U.S. trade war cut far deeper into U.S. farm exports to China than it appears in a simple tallying of sales before and after the tariffs were announced.
As President Trump scored his second trade victory in two days, Senate approval of the United States-Mexico-Canada Agreement, he asked farmers on Thursday to remember the billions of dollars they had received in trade war payments.
Agricultural lending declined during the second half of 2019, and while that reflected lower production costs, it “likely also was due to an increase in revenue from government payments (Market Facilitation Program) connected to trade disputes that lingered through the year,” said the Federal Reserve on Thursday.
On the same day that China and the United States tentatively reached a “phase one” agreement on a trade deal, Agriculture Secretary Sonny Perdue said that he expects producers will still receive the final $3.6 billion in trade war payments President Trump authorized last spring.
The Trump administration has sent $10.5 billion in cash to producers since mid-August to mitigate the impact of the Sino-U.S. trade war, aid that comes on top of $8.6 billion paid for 2018 crops and livestock. “Yes, [the payments] are helpful,” said a Kansas banker on Wednesday — and the government should keep writing the checks.
If there is no near-term resolution of the Sino-U.S. trade war, the Trump administration will need to spend billions of dollars in additional trade war payments to farmers and ranchers or watch farm income sink, said two economists on Monday. Either way, there would be painful restructuring in the sector, which has collected more than $10 billion in Trump tariff payments this year.
Fueled by $14.5 billion in Trump tariff payments, U.S. net farm income will climb to its highest total since the commodity boom crested in 2013 and a dramatic rebound from the plunge that accompanied its collapse, the USDA estimated. When crop insurance indemnities are added to "direct farm program payments," a category that includes trade war aid, land stewardship payments and traditional crop supports, the government will provide an unusually high 31 percent of farm income this year.
Producers in Iowa and Illinois reaped 20 percent of the trade war payments from the Trump administration, as cash disbursements leaped to nearly $10.2 billion nationwide for this year's crops and livestock. Iowa collected $1.15 billion and Illinois $1.06 billion, according to the USDA.
The United States could tarnish its leadership for fair trade in agriculture because of its multibillion-dollar trade-war payments to farmers, said a report issued by the free market American Enterprise Institute on Tuesday. Author Joe Glauber, former USDA chief economist, said the Market …