Trump to give $12 billion to bail out farmers hurt by trade war

The USDA will be giving $12 billion to help limit some of the damaged caused by Trump’s trade war with China, other nations. EJ photo/Travis Charlson

The White House announced Tuesday that it would be offering up to $12 billion in aid relief to farmers hurt by the Trump administration’s ongoing trade war. 

The move comes in response to backlash President Trump received by starting trade wars with various foreign countries back in March, which experts say could cost Iowa farmers alone more than $600 million.

“What we need is certainty when it comes to our trade relationships,” said Mike Naig, Iowa Secretary of Agriculture. “As I travel the state I continue to hear Iowa farmers want more trade, not aid.”

The reactions to the trade war have been mixed — opponents say that the risk isn’t worth the reward, but those in favor insist that the damage will be worth it in the long run.

“There is no denying that the disruption in trade relations with China is unsettling to many in agriculture, but if the president succeeds in changing China’s behavior, America’s farmers will reap the benefits,” said U.S. Secretary of Agriculture Sonny Purdue in a release. 

But even some of Trump’s own party have begun to question his trade tactics, which go against long-held Republican beliefs in free trade and open markets. 

“What farmers in Iowa and throughout rural America need in the long term are markets and opportunity, not government handouts.” said Sen. Chuck Grassley, R-Iowa, in a release. 

Last year, $14 billion worth of U.S. soybeans were shipped to China, and Iowa is the nation’s second-leading producer of soy beans. 

Soybeans were one of the goods China slapped retaliatory tariffs on, and the average price of Soybeans in north central Iowa has dipped 20 percent since the trade war started back in March. 

The move to “bail-out” farmers indicates that Trump isn’t about to back down on trade, as he looks to keep pressure on China, the European Union, and several other countries locked up in the disputes. 

Falling incomes in recent years already have farmers feeling pinched financially, but the $12 billion in aid money should mitigate some of the damage brought on by the trade wars. 

Payments are slated to go out in September through the end of harvest, and will be administered by the USDA.

The plan is separated into three programs:

A market facilitation program that will provide payments to producersr

r
1. A food purchase and distribution program, which will purchase surplus agricultural commodities

r

2. r
3. A trade promotion program to assist in developing new export markets.

r

rSince the payments will be authorized by the USDA’s Commodity Credit Corporation, which can borrow up to $30 million at a time from the Treasury Department, the payments won’t need the legislatures approval. 

However, the payments only deal with immediate impact of a trade war that could last indefinitely. 

“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,” Grassley said. 

Even so, experts say that coming to a solution and repairing trade relations is a must.

“Ultimately, resolving trade differences and repairing relationships with our trading partners must be our top priority because much of the demand for our corn lies outside our state and our country’s borders so fair and open trade remains the key,” said Iowa Corn Growers Association President Mark Recker. 

It’s hard to say how long the trade war will last — so far, Trump has slapped tariffs on Mexico, Canada, the EU and China to name a few. Each country has responded with tariffs of their own.

But if the trade war drags on, China stands to be hurt more than the U.S., as China exports significantly higher percentage of its goods to the U.S. than the other way around. 

However, China’s President Xi Jinping can ignore the concerns of his people much more readily than Trump can ignore his, as rural voters in agricultural areas make up a key chunk of Trump’s support. 

Trump has accused Xi and China of capitalizing on this advantage, and it explains why China would go after U.S. agricultural exports. 

“China is targeting our farmers, who they know I love & respect, as a way of getting me to continue allowing them to take advantage of the U.S.,” Trump tweeted Wednesday.

However long the trade war will continue remains to be seen, as neither side has showed signs of backing down. 

In the meantime, farmers will have to hope that the $12 billion in aid is enough to see them through to the end.  

“I don’t fault the President for trying to get a better deal for Americans, but it’s not fair to expect farmers to bear the brunt of retaliation for the entire country in the meantime,” Grassley said.