American Shipper

Trump authorizes $12 billion bailout for farmers

The aid package aims to protect the domestic agricultural sector from “unjustified retaliatory tariffs” imposed by China, USDA said in a statement.

   President Donald Trump has authorized the U.S. Department of Agriculture to deliver up to $12 billion in aid to American farmers in response to “trade damage from unjustified retaliation,” USDA said in a statement Tuesday.
   The Trump administration earlier this month imposed an additional 25 percent tariff on Chinese goods worth about $50 billion annually, prompting Beijing to retaliate with dollar-for-dollar reciprocal duties, many of which were aimed at staple U.S. agricultural exports like soybeans, sorghum and corn.
   “Of the total unjustified retaliatory tariffs imposed on the United States, a disproportionate amount was targeted directly at American farmers,” USDA said. “Trade damage from such retaliation has impacted a host of U.S. commodities, including field crops like soybeans and sorghum, livestock products like milk and pork, and many fruits, nuts and other specialty crops.
   “High tariffs disrupt normal marketing patterns, affecting prices and raising costs by forcing commodities to find new markets,” the department added. “Additionally, there is evidence that American goods shipped overseas are being slowed from reaching market by unusually strict or cumbersome entry procedures, which can affect the quality and marketability of perishable crops. This can boost marketing costs and discount our prices and adversely affect our producers.”
   The $12 billion in funding authorized under the USDA aid package will be provided in incremental payments to farmers via the Farm Service Agency’s Market Facilitation Program in an effort to ameliorate the damage caused by increased prices for U.S. crops in China, which have in turn resulted in surpluses of goods with nowhere to sell them, as well as expand and develop new markets for those goods.
   In addition, USDA will implement a Food Purchase and Distribution Program through the Agricultural Marketing Service to buy surplus products and distribute them to food banks and other nutrition programs and launch a Trade Promotion Program in conjunction with the private sector to assist in developing new export markets for American agricultural products.
   Secretary of Agriculture Sonny Perdue said the program is a “short-term solution to allow President Trump time to work on long-term trade deals to benefit agriculture and the entire U.S. economy,” but industry groups and federal lawmakers continue to be skeptical of the administration’s approach to international trade policy.
   Zippy Duvall, president of the American Farm Bureau Federation, said the aid package “will provide a welcome measure of temporary relief to our farmers and ranchers who are experiencing the financial effects of the trade war,” but warned that it won’t be enough if the tit-for-tat tariff battle continues to escalate.
   “This announcement is substantial, but we cannot overstate the dire consequences that farmers and ranchers are facing in relation to lost export markets,” he said. “Our emphasis continues to be on trade and restoring markets, and we will continue to push for a swift and sure end to the trade war and the tariffs impacting American agriculture.”
   The American Soybean Association echoed those remarks, calling for a “longer-term strategy to alleviate mounting soybean surpluses and continued low prices, including a plan to remove the harmful tariffs.”
   John Heisdorffer, ASA president and a soybean grower himself, said the administration should look to expand and develop export markets outside of China by concluding negotiations on an updated North American Free Trade Agreement (NAFTA) with Canada and Mexico, as well as negotiating new trade deals with other large buyers of soybeans like Japan, Vietnam, Indonesia and the Philippines.
   “The American Soybean Association has consistently advised the administration that the best way to reduce our nation’s trade deficit is by increasing exports, including of agricultural products,” he said. “Since the administration has decided to use tariffs to address trade concerns with China, and China has retaliated, farmers don’t have time to wait to see how this trade war turns out.”
   U.S. Rep. Ron Kind, D-Wis., who serves on the House Ways and Means Committee, with jurisdiction over taxation, trade and tariffs, said farmers in his state “want trade, not aid,” adding that the USDA program represents a solution to a problem the administration itself created.
   “Our farmers aren’t looking for government handouts. They just want market access and the opportunity to compete,” he said. “This temporary fix, which is expected to cost billions of dollars, will right a wrong that was inflicted by the president himself and could be lifted at any time.”
   Kind and other members of Congress have been outspoken in their criticism of Trump’s tariffs.
   Sen. Rob Portman, R-Ohio, for example, said last week he plans to introduce legislation to check the executive branch’s authority to impose tariffs under Section 232 of the Trade Expansion Act of 1962, the statute Trump used to justify the imposition of broad global tariffs on U.S. imports of steel and aluminum.
   Sen. Chuck Grassley, R-Iowa, also a family farmer, said he doesn’t blame Trump for using tariffs as leverage in trade negotiations, but “it’s not fair to expect farmers to bear the brunt of retaliation for the entire country in the meantime,” noting that the American agricultural producers “depend on access to foreign markets to make ends meet and provide for their families.”
   “The president’s announcement of billions of dollars in aid that will be made available to struggling farmers later this year is encouraging for the short term,” said Grassely. “What farmers in Iowa and throughout rural America need in the long term are markets and opportunity, not government handouts.”
   Apparently undeterred, Trump wrote on Twitter Tuesday, “Tariffs are the greatest! Either a country which has treated the United States unfairly on Trade negotiates a fair deal, or it gets hit with Tariffs. It’s as simple as that – and everybody’s talking! Remember, we are the ‘piggy bank’ that’s being robbed. All will be Great!”