Will Trump’s $16 Billion Farm Aid Be Enough to Offset US-China Trade War?
“Will it cover the losses? No. But it makes enough of a difference to keep a lot of farmers so they can survive.”
President Trump announced a $16 billion farm aid package to compensate for losses caused by the U.S. trade war with China on Thursday. Critics are concerned the financial aid will not be enough to help ailing agricultural workers, as last year’s $12 billion package failed to prevent bankruptcies and alleviate the hardship of US farmers.
US-China Trade War
After President Trump imposed 25 percent tariffs on $250 billion of Chinese goods, Beijing responded with tariffs on U.S. agricultural commodities like soybeans. Farmers had already been struggling before the trade war began, suffering from historic flooding, debt, and falling commodity prices. Agriculture Secretary Sonny Perdue spoke before Trump’s announcement, acknowledging the hardship the trade war has imposed on US farmers while praising the president’s response.
“All of us are hopeful of a renewed or signing of fair trade deal,” Perdue said. “I can’t recall a president more concerned about farmer well-being. We are working hard to assess trade damages and this package ensures farmers will not bear the brunt.”
The new package is different from last year’s $12 billion financial aid, which was criticized for giving disproportional rates to different crops, such as $1.65 in aid per bushel of soybeans but only a penny per bushel of corn. Instead, this package will be distributed at a set rate dependent on acres, regardless of crop.
“This support for farmers will be paid for by the billions of dollars the Treasury takes in” from China, Trump said. But despite the president’s claim, China does not pay the U.S. tariffs on their imports, importers do, and those costs carry over to consumers in higher prices for products.
“Will it cover the losses? No. But it makes enough of a difference to keep a lot of farmers so they can survive,” Randy Spronk, a hog farmer and former president of the National Pork Producers Council, told the Washington Post.
American Farmers Frustrated
Speaking with Vox’s Alexia Fernández Campbell, Minnesota pork and soybean farmer Shayne Isane said, “The patience of American farmers has worn very thin. If a trade deal can be reached then it was all worth it, but if it doesn’t get settled soon, it will be disastrous for American farmers. People don’t realize that once you lose a market, it’s hard to get it back.”
Senator Tammy Baldwin (D-Wis.) is one of the most strident critics of Trump’s trade war, alleging that it has contributed to 1500 bankruptcies in her state of Wisconsin’s dairy sector. Sen. Baldwin expressed outrage in a letter to President Trump, asking why $62 million in farm aid funds was paid to a subsidiary of a Brazilian company under investigation by the Department of Justice.
“Allowing taxpayer funds to support foreign agricultural companies, particularly corrupt foreign companies, at a time when farmers in Wisconsin and across the country are suffering from pain caused by your trade wars is outrageous and I’m calling on you to explain how you allowed this to happen,” Baldwin wrote in her letter to Trump Thursday.
As Mary Papenfuss of the Huffington Post reported, the U.S. Department of Agriculture is paying $62.4 million to buy pork from JBS USA, a subsidiary of the biggest meatpacking company in the world, the Brazil-based JBS S.A. The Department of Justice and Security and Exchange Commission (SEC) are currently investigating JBS for “potential violations of the Foreign Corrupt Practices Act,” and both the company’s founders have served jail time in Brazil for corruption. The USDA fined JBS USA $50,000 last year for failing to provide US farmers with accurate accounting information.
“Farmer aid packages that provide payments to huge foreign companies add insult to injury,” Baldwin wrote Trump. “Providing aid to foreign companies that have a history of corruption and are under investigation by your own Administration is simply outrageous.”
2020 presidential candidate Beto O’Rourke spoke with CBS about the trade war on Sunday, calling President Trump, “both the arsonist who created this problem in the first place and the firefighter who wants the credit for addressing it.”
“From listening to farmers that I’ve met all over this country, and especially in Iowa, they’re not looking for bailouts. They want to connect with those markets that they have worked a lifetime to establish, markets that are now closed to them because of this trade war. … In the short term, we absolutely have to make sure that they’re OK. But we should never have been in this place in the first place,” said O’Rourke.
Trade, Not Aid
Sen. Chuck Grassley, who supports the president’s trade war and is personally applying for aid for the 750-acre farm he co-owns with his son, agrees that in the long term, “farmers want trade not aid.”
“Glad Pres Trump/USDA Scty Perdue are helping farmers hurting from China tariffs. In the long run farmers want trade not aid. China needs to wake up & realize US is serious about their abuses. PresTrump ran on cracking down on China & is keeping his promise Free trade is a 2way st,” Sen. Grassley tweeted.
Analysts say that while the most recent trade package should be enough to keep farmers afloat in the short term, it will be insufficient if the trade war continues through 2020.