Trump Announces $16 Billion to Compensate US Farmers for China Trade Wars

The Trump Administration will be offering American farmers up to $16 billion to make up for profit losses related to the trade dispute with China.

The aid package provides between $15 and $150 per acre based on location, with higher rates in the South and lower rates in the Midwest. Payments are capped at $500,000 per applicant, and will be offered only to individuals who made less than $900,000 a year between 2014 and 2016.

Farmers who lost crops due to floods and heavy rainfall can apply for a payment of $15 per acre. 

“President Trump has a great affection for America’s farmers and ranchers and it’s pretty evident in this program,” says Agriculture Sec. Sonny Perdue.

Farmers are a key Trump constituency, and despite the trade war with China, nearly 80% of American farmers and ranchers still approve of Trump’s performance as president.

“While we are grateful for the continuing support for American agriculture…America’s farmers ultimately want trade more than aid,” says Zippy Duvall, President of the American Farm Bureau Federation. “It is critically important to restore agricultural markets and mutually beneficial relationships with our trading partners around the world.”

The $16 billion program, which begins in August, will cover 29 commodity crops including corn, wheat, soybeans, sorghum, and upland cotton; dairy and hog farmers; and specialty crops like nuts and cranberries.

Soybean growers have been disproportionately affected by the tariffs, with Chinese purchases dropping 75% to reach a 16-year low 2018. Before the trade war, China had been purchasing nearly one-third of all soybeans grown in the US.

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The trade dispute with China began in April 2018 when Trump announced steep tariffs on steel and aluminum imports (from all suppliers). China immediately responded with a 25% tariff on 128 US products.

In July, the US imposed a 25% tariff on $34 billion in Chinese goods and China responded with a tax on $34 billion in US goods.

In September, the US levied a 10% tariff on $200 billion in Chinese imports and China responded with a tax on $60 billion in US goods.

Both sides called a halt to new tariffs in December and China agreed to purchase a “very substantial” amount of US products. 

In May, the Trump Administration announced it would increase tariffs on $200 billion of Chinese imports from 10% to 25% and accused China of backtracking on a drafted trade agreement. To date, China has purchased only 13.6 of the 20 million tons of soybeans it agreed to buy.

Editor’s note: As a former farmboy from Kentucky, this is very welcome news. Trump knows that farmers are sensitive to markets, and major shifts because of the China trade rift have cause a lot of problems for farmers (who are some of the most patriotic Americans!).  This subsidy will be balanced by much larger gains in other areas of an eventual China trade agreement. In the mean time, it takes a lot of pressure off of the farmers and the White House.