The Trump Administration on Tuesday announced plans to dump $12 billion into the agricultural industry in order to mitigate the damages caused by retaliatory trade tariffs.
“This is a short-term solution that will give President Trump and his Administration time to work on long-term trade deals,” said Agriculture Sec. Sonny Perdue. “America’s hard-working agricultural producers have been treated unfairly by China’s illegal trading practices and have taken a disproportionate hit when it comes to illegal retaliatory tariffs.”
The move will also help pacify Trump’s voter base ahead of midterm elections in November.
Trump’s tariffs on Chinese imports have resulted in retaliatory taxes on $34 billion worth of US goods including grain, produce, and meat. Mexico, Canada, and the EU have also imposed retaliatory tariffs on US products following Trump’s controversial tariffs on aluminum and steel.
The retaliatory tariffs are disproportionately affecting farmers, who are losing business to cheaper foreign competitors. Canceled sales have led to the expiration of billions of pounds of American crops and meat.
Meanwhile, hog farmers and pork processors are struggling with a 62% tariff on exports to China and a 20% tax on exports to Mexico. The price of soybeans has dropped 16% since May.
To help farmers recover, the USDA will give direct payments to the producers of soybeans, sorghum, corn, wheat, pork, cotton, and dairy.
The department will also purchase surpluses of certain products “for distribution to food banks and other nutrition programs” and develop new export markets.
The plan takes advantage of a Depression-era program that allows the USDA to obtain money from the US Treasury without approval from Congress.
Lawmakers largely oppose the plan, which they insist is not sustainable and will do nothing to help farmers.
“What’s the strategy, what’s the end game here? At what point do we start seeing things move out of the chaotic state they are in now and to where we actually see new trade agreements?” asks South Dakota Senator Mike Rounds (R).
And while $12 billion might not seem like a lot, it won’t make up for the “hundreds of millions of dollars” being lost in every state thanks to Trump’s trade disputes, adds North Dakota Democrat Heidi Heitkamp.
“This trade war is cutting the legs out from under farmers and the White House’s ‘plan’ is to spend $12 billion on gold crutches. America’s farmers don’t want to be paid to lose – they want to win by feeding the world,” argues Senator Ben Sasse (R-NE). “This Administration’s tariffs and bailouts aren’t going to make America great again, they’re just going to make it 1929 again.”
Trump on Wednesday plans to discuss trade issues with European Commission President Jean-Claude Juncker. Earlier this week, he said he would propose that both sides drop all tariffs, barriers, and subsidies. “That would finally be called Free Market and Fair Trade,” he tweeted on Tuesday. “Hope they do it, we are ready – but they won’t!”
In a recent speech in Kansas City, Trump urged farmers to “be a little patient” and assured them the sector would recover after his trade offenses lead to the negotiation of better trade deals. In the end, farmers “will be the biggest beneficiary.”
Editor’s note: This was a move designed to help Trump’s constituents with the difficult trade environment. It is both a fair measure and a politically astute one.