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Trump to Offer Farmers
$12 Billion in Trade Aid

by Adam Behsudi, Catherine Boudreau, Helena Bottemiller Evich and Megan Cassella
Politico, July 24, 2018

Trump declared earlier Tuesday that "Tariffs are the greatest!" and threatened to impose additional penalties
on U.S. trading partners as he prepared for negotiations with European officials at the White House.

The Washington State Grain Train recently acquired 29 more grain cars to help farmers get grain to export terminals Agriculture Secretary Sonny Perdue on Tuesday unveiled a three-part, $12 billion plan to ease the sting of retaliatory tariffs on U.S. farmers through a mix of payments, purchases and trade promotion efforts.

The plan seeks to ensure that U.S. farmers and ranchers -- a key constituency for President Donald Trump and Republicans -- don't bear the brunt of an escalating trade fight as the administration pursues an aggressive course to rebalance America's trade relationships.

Trump's moves to slap tariffs on imports from some of America‘s largest foreign buyers have prompted retaliation against U.S. farm goods like pork, beef, soybeans, sorghum and a range of fruits.

The administration's trade aid plan, first reported by POLITICO, is also a bid to shore up support among a slice of the rural electorate ahead of the midterm elections. But the tariffs and subsequent gluts for various farm products have wreaked havoc on farming economies.

"This is obviously a short-term solution that will give President Trump time to work on a long-term trade policy and deal to benefit agriculture as well as all sectors of the American economy," Perdue said during a call with reporters.

Perdue said the amount is in line with the roughly $11 billion in negative effects that USDA has calculated agricultural producers have suffered as a result of "illegal" retaliatory tariffs imposed by China, Canada, Mexico, the European Union and other major economies.

"The programs we are announcing today are a firm statement that other nations cannot bully our agricultural producers to force the United States to cave in," Perdue said.

However, it is unclear whether the aid will cover many of the price losses that various agriculture sectors are experiencing. For instance, U.S. Meat Export Federation say that the tariffs from Mexico -- just one of the nations in the trade war -- will lead to more than $835 million in annualized losses for the pork industry.

The aid also doesn't address other sectors of the economy that have been hurt by retaliatory tariffs by U.S.' largest trading partners, such as manufacturers, consumers and other industries.

"It can't just be about agriculture," Sen. Thom Tillis (R-N.C.) said Tuesday, adding that he is waiting for the administration to provide more information on its plan.

In the first part of the aid plan, the government will provide direct payments to growers and producers of soybeans, sorghum, corn, wheat, cotton, pork and dairy. The second part, a "food purchase and distribution program," would use authority under USDA's Agricultural Marketing Service to purchase fruit, nuts, rice, beef, pork and dairy products from U.S. producers for redistribution to federal nutrition assistance programs.

The plan's third element would put resources toward finding new markets for U.S. farmers to sell their products abroad.

Perdue said all of the programs are authorized under the Commodity Credit Corporation Charter Act, a Depression-era funding program that doesn't require approval from Congress.

The specifics of the aid plan will be subject to a federal rulemaking process, and USDA is expected to make a determination around Labor Day as to when the aid will kick in.

Trump this week is touring Midwestern farm states like Missouri, Illinois and Iowa, where he will likely get inundated with questions about his trade agenda.

The president's interest in reassuring an anxious farm sector was evident on Monday when he gave a shout-out to farmers during an event at the White House while unveiling new campaign-style hats that say, "Make Our Farmers Great Again."

"Make our farmers great again. That's what's happening," Trump said, as he showed off one of the green hats with yellow lettering -- a color scheme resembling that used by tractor maker John Deere. Trump said he just had the new hats made.

Sen. Ben Sasse (R-Neb.), a vocal critic of Trump on trade, blasted the tariff aid as a way of giving farmers "gold crutches" and warned that the current direction of U.S. trade policy could lead to economic circumstances similar to the Smoot-Hawley tariffs that have been partly blamed for straining the economy during the Great Depression.

"America's farmers don't want to be paid to lose -- they want to win by feeding the world," Sasse said in a statement. "This administration's tariffs and bailouts aren't going to make America great again -- they're just going to make it 1929 again," he added.

Other GOP members from farming states also spoke out strongly against the tariffs.

"This is becoming more and more like a Soviet-type of economy here: Commissars deciding who's going to be granted waivers, commissars in the administration figuring out how they're going to sprinkle around benefits," said Sen. Ron Johnson (R-Wis.). "I'm very exasperated. This is serious."

In April, Trump directed Perdue to devise a plan to mitigate any financial damage to U.S. agricultural producers' bottom lines that could result from ongoing trade battles. Until now, the administration has offered few details on the amount of aid that would be provided and how it would be distributed.

As recently as last month, Perdue said it was premature to determine whether his agency needed to provide farmers with subsidies to offset trade losses because it was too soon to gauge the effects of retaliatory tariffs on farmers.

Farmers and the majority of farm-state lawmakers have previously appeared to be lukewarm on the idea of the government doling out aid to offset losses due to tariffs and drops in the market. Many have told POLITICO they would prefer the Trump administration to expand access to foreign markets, rather than start spats with trading partners that lead them to erect barriers on U.S. exports, restrict access and seek out other sources of supply.

"The best relief for the president's trade war would be ending the trade war," Brian Kuehl, executive director of the advocacy group Farmers for Free Trade, said in a statement Tuesday. He said farmers need trade policies that promote stability and allow them to plan for the future.

"This proposed action would only be a short-term attempt at masking the long-term damage caused by tariffs," Kuehl added.

Farmers for Free Trade is funded by the American Farm Bureau Federation -- the nation's largest farm group -- and other industry trade associations, like the National Pork Producers Council and National Corn Growers Association.

Senate Agriculture Chairman Pat Roberts told POLITICO recently that tariff retaliation could have long-term effects on access to foreign markets.

"I think the question in farm country that is equal to what's happening now is: What is our future down the road? How do we put these trade agreements back together? Once you lose a market, you lose it," he said. "We are trying to make the point that we don't want aid, we want trade."

USDA has already used its authority to buy up excess supply in recent months, announcing in May that it would purchase excess cheddar cheese and distribute the product to federal nutrition assistance programs. The dairy industry has suffered in recent years as prices have been driven down by a glut of product on the market.

Sen. John Hoeven, a North Dakota Republican who serves on the Senate Agriculture Committee, said Tuesday he believes the administration is looking to deliver aid in the short term in hopes that trade tensions will be ironed out before long.

"He's trying to get us better trade deals," Hoeven said, referring to the president. "The objective is not to have a long-term relief program. The objective is to get access to the markets on a fair basis for our farmers and ranchers."

Adam Behsudi, Catherine Boudreau, Helena Bottemiller Evich and Megan Cassella
Burgess Everett contributed to this report.
Trump to Offer Farmers $12 Billion in Trade Aid
Politico, July 24, 2018

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