The Trump administration announced $12 billion in aid for American farmers Tuesday to alleviate the pain of the trade war with China, trying to tamp down growing criticism in a key segment of the president’s support base.
The aid, which will include direct payments and purchases of surplus crops, can be administered by the U.S. Department of Agriculture (USDA) without congressional approval. President Donald Trump, in an appearance in Kansas City shortly before the announcement, said he has heard the criticism of his trade policies from ag-related executives and lobbyists. “They have some of the greatest lobbying teams ever put together,” he said. But he added farmers will ultimately benefit if the tariff pressure causes other countries to agree to new trade terms. “Just be a little patient,” the president said.
Sales of soybeans, a major crop in Minnesota, have slowed to a crawl since the United States slapped 25 percent tariffs on $34 billion in Chinese imports on July 6 and China retaliated with taxes on an equal amount of U.S. products, including soybeans, pork and electric cars.
China is the largest buyer of soybeans in the world, while the United States is the largest soybean grower, followed by Brazil and Argentina.
Some farmers, as well as some key Republicans in Congress, aren’t convinced that the new aid package is the solution. Bill Gordon, a soybean farmer near Worthington, Minn., said his crop lost $100,000 in value since talk of tariffs picked up in the late spring, and he sees no way that an infusion of government money can make up for that.
“We’d rather have trade,” Gordon said. “Any aid package, no matter what dollar amount, is a Band-Aid on an arterial bleed.”
Sen. Amy Klobuchar, a Minnesota Democrat, said she expects farmers will be grateful for the money but that it was a solution to a problem the Trump administration created.
“Another way to deal with this was to keep negotiating,” Klobuchar said. “We expected a lot of pushing at China. But the [trade] issues we’ve created with allies like Canada are problematic.”
Some farm-state Republicans criticized Trump’s move, suggesting it amounted to the government’s picking winners and losers in the economy.
“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,” Sen. Ron Johnson, a Wisconsin Republican, told Politico. “I’m very exasperated. This is serious.”
The announcement capped a second day in which the White House focused on criticism from farmers and agribusinesses. On Monday, Trump showed off a new green-and-yellow “Make American Farmers Great Again” baseball cap at a news conference. U.S. Secretary of Agriculture Sonny Perdue announced the aid program Tuesday afternoon, saying it was driven by “illegal retaliatory tariffs” from China.
“This 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,” Perdue said in a statement.
Mike Petefish, a farmer near Claremont, Minn., whose soybean crop has lost $250,000 in value in recent months, said stalled negotiations over the North American Free Trade Agreement, the president’s decision to pull out of the Trans-Pacific Partnership agreement and his administration’s willingness to grant oil companies waivers from renewable fuel mandates have all hurt the price of soybeans.
“While $12 billion as a stand-alone number sounds like a lot of money, when you look at the economic impact this trade war has caused, it doesn’t even scratch the surface,” Petefish said by phone as he sprayed soybeans in a field south of town. “Imagine someone destroys your car and then says I’ll give you a ride to the next place you need to go. Well gee, thanks.”
Petefish said farmers are “a fairly proud bunch, and if we would have our preference we would just as soon have prices that keep us profitable.” He also said he fears the assistance package is “purely political” and aimed at quelling farmer anger ahead of midterm elections.
Soybean prices have fallen by about $2 per bushel since May 1, though they rose about 10 cents on Tuesday to $8.58.
The USDA said trade damage from Chinese retaliation to Trump’s tariffs has affected soybeans and sorghum, livestock products such as milk and pork, and many fruits, nuts, and other specialty crops.
The government will make payments to producers of soybeans, sorghum, corn, wheat, cotton, dairy and hogs to help them manage disrupted markets, deal with surpluses and develop new markets at home and abroad, the USDA said. The government will also purchase “unexpected surplus of affected commodities” and distribute them to food banks and other nutrition programs, and will spend money to help agribusiness develop new export markets.
The acknowledgment from the White House that the trade war is hurting farmers is “reassuring,” said Kevin Paap, president of the Minnesota Farm Bureau Federation, but the long-term damage of losing access to the giant Chinese soybean market may be severe.
“Once you lose a market,” Paap said, “it’s really hard to get that back.”
Joel Schreurs, a farmer near Tyler, in western Minnesota, said he’s glad Trump is working to renegotiate what Schreurs also perceives to be unfair trade deals.
But he said the president’s tactics are hurting him as a soybean farmer, and the aid package doesn’t alleviate his concerns.
“In the short-term it’s definitely appreciated, but long-term we’re still very concerned, because China was such a big player in our export market,” Schreurs said. “We’re just a casualty of the war. Hopefully it’s not a long-term problem.”