The Trump administration said Thursday that it would provide $14.5 billion in “direct payments” to farmers as part of an aid package to offset the damage caused by the trade war with China. Another $1.4 billion would be allocated to purchase surplus agricultural commodities.
The assistance, which wouldn’t require congressional approval, would be the second aid package the Trump administration has given to farmers within the last year, having authorized $12 billion in farm aid last year.
President Trump said it was a necessary expenditure to push back against China’s policies and that “patriotic” farmers backed his effort. He argued that the U.S. tariffs on Chinese goods would cover the costs of the aid. “It all comes from China. We’ll being taking in hundreds of billions of dollars from China,” he said.
Agriculture Secretary Sonny Perdue said the $16 billion in new aid would ensure that farmers “do not bear the brunt of unfair retaliatory tariffs imposed by China and other trading partners. Our team at USDA reflected on what worked well and gathered feedback on last year’s program to make this one even stronger and more effective for farmer.”
[Related: Farmers in US heartland fume over fallout from Trump’s China tariffs]
The aid is to be provided primarily through the agency’s Commodity Credit Corporation, which provides price supports for farmers and doesn’t require congressional approval.
California Democrat Jim Costa, the chairman of the Livestock and Foreign Agriculture Subcommittee, called the White House’s proposal a “rushed and poorly-planned bailout” that was not a substitute for resolving the trade disputes themselves.
“For more than a year now, producers of every commodity have said the same thing: they want long-term access to export markets, not hasty attempts by the federal government to clean up its own mess,” Costa said. He urged the White House to instead rescind the tariffs and “sit down in a constructive manner with the Chinese.”
Veronique de Rugy, senior research fellow at George Mason University’s Mercatus Center, disputed that the U.S. tariffs on Chinese goods would cover the cost of the aid, noting that the reason the assistance was needed in the first place was that China wasn’t buying as much as it used to as a consequence of the tariffs.
“The need for this second bailout of farmers is the direct result of the Trump administration’s failed trade strategy to unilaterally hike tariffs on China but also on our other trading partners,” de Rugy said. “Of course, so far, instead of getting the desired compromises and amazing trade deals Americans in general, and farmers in particular, have shouldered high costs of these multi-fronts trade disputes.”
The $14.5 billion in direct payments will go to producers of alfalfa, barley, canola, corn, peas, cotton, lentils, rice, mustard seed, dried beans, oats, peanuts, sesame seed, chickpeas, sorghum, soybeans, sunflower seeds, and wheat, among other products, based on a farm’s total plantings of those crops for this year. Pork producers will receive payments based on their livestock headcount, and dairy producers will receive payments based on their past production levels.
The payments will be made in up to three tranches, the first coming in late July or early August, with later payments to be determined based on market conditions. The remaining $1.4 billion will be used to purchase surplus beef, pork, lamb, poultry, and milk.
Trump and his officials have claimed that they were close to a trade deal with Beijing at the end of April, only to have China attempt to walk back several concessions at the last minute. This prompted the administration to hike all existing tariffs on Chinese goods to 25%, up from 10% in most cases, as a means to pressure China restore the concessions. Trump has also threatened to place 25% tariffs on a further $300 billion worth of goods, effectively covering all Chinese imports.
Beijing has denied it ever made the concessions and has said it would retaliate by hiking tariffs on $60 billion in U.S. goods to as high as 25% starting June 1.
Trump is set to meet with Chinese President Xi Jinping in Japan at the G-20 summit in late June.
