As Trade War Begins, Feds Eye $30 Billion Bailout Fund For Farmers Facing Losses
President Donald Trump’s trade war was officially launched at 12: 01 Friday morning as U.S. officials were already strategizing a controversial move to use emergency funds to mitigate the damage to farmers facing punishing retaliatory tariffs.
The Trump administration officially levied tariffs on $34 billion worth of Chinese products at the start of a major trade combat are anticipated to exact significant costs on both consumers and businesses. China was expected to announce its own comparable tariffs on $34 billion of U.S. goods Friday. Chinese officials had said they would not announce the tariffs until after the U.S. did so. The Chinese tariffs, including a 25 percentage charge on soybeans, are expected to made U.S. farmers particularly hard, since the country currently buys nearly two-thirds of the soybeans produced by U.S. farmers.
But Trump, who has attacked Harley-Davidson for plans to move some production to its overseas plants to avoid retaliatory European tariffs, is looking to save “my farmers” from the trade war he launched. Rural support was critical to his presidential victory. Unhappy farmers could spell trouble for midterm elections.
Agriculture Secretary Sonny Perdue said last month at a Chicago convention that the Commodity Credit Corporation is a “tool” he’s considering to comply with Trump’s instructions to “craft a strategy to support our farmers against retaliatory tariffs. The program, which was started to help farmers during the Great Depression, allows the Agriculture Department to borrow as much as $30 billion from the U.S. Treasury that could be used to buy harvests from farmers that would go unsold in a trade war.
It’s a whole lot easier not to wreck the car in the first place than it is to think about what a mend might look like. American Soybean Association
Rep. Collin Peterson( D-Minn .), the ranking Democrat on the House Agriculture Committee, has said employing the funds would set a bad precedent by politicizing farm payments , Bloomberg reported.
“I am against a one-time bailout of a situation created by the administration, ” Peterson said earlier this year. Farmers “want their markets left intact and not screwed up by some policy. Dedicating them money isn’t necessarily going to buy them off.”
Even Republican farm state Sen. Chuck Grassley( R-Iowa) said last month in a call with reporters that subsidies are “not what farmers in Iowa want — help from the federal Treasury, ” the Des Moines Register reported.
Critics say that spending the massive money is a waste of public money to mitigate a Trump bungle. It would also be a significant expenditure just as the U.S. indebtednes is on track to be the biggest in historydue to corporate taxation cuts and spending hikes.
Former USDA chief economist Joseph Glauber told The Financial Times earlier this month that many farmers already have some safeguards from government-backed price and income supports and insurance.
As for using CCC money, Glauber added: “I simply don’t like the idea of the government coming up with some balm to spread over meanders the hell is self-inflicted. It seems to be a huge moral hazard problem.”
Even those who support using the funds say they won’t be enough to save farmers grappling with decreasing demand triggered by retaliatory foreign tariffs. Farmer also risk losing key marketplaces in the long term even as they’re subsidized. Farmers in Brazil are boosting soybean production to scoop up the Chinese market.
Brian Kuehl, executive director of Farmers for Free Trade, “ve called the” trade war “downright scary.”
“When American soybeans and corn become more expensive, South America wins, ” Kuehl said in a statement.
Farm lobby groups had been combating against the imposition of the U.S. tariffs, arguing instead for negotiations over specific issues.
“It’s a whole lot easier not to wreck the car in the first place than it is to think about what a repair might look like, ” a spokesman for the American Soybean Association told The New York Times earlier this year.