White House Weighs Helping Farmers as Trump Escalates Trade War

by Tony Romm (New York Times) The Trump administration has discussed providing financial aid for farmers who may be subject to retaliation by America’s trading partners. -- Ahead of President Trump’s plan to impose sweeping tariffs across the globe this week, his administration is weighing a new round of emergency aid to farmers, who are likely to be caught in the middle if America’s trading partners retaliate.

The early discussions offer a tacit acknowledgment that Mr. Trump’s expansive tariffs could unleash financial devastation throughout the U.S. agricultural industry, a crucial voting base that the president similarly tried to safeguard during his 2018 trade war with China.

While the president has not announced any details of an aid package, his advisers have signaled in recent days that he could follow a playbook similar to the one he used in his first term, when he directed billions in payments to farmers who saw their exports to China plummet amid a trade war with Beijing.

Such a rescue package ultimately proved expensive, with the government shelling out about $23 billion after China imposed high retaliatory duties on soybean, corn, wheat and other American imports beginning in 2018. That money came from a fund at the U.S. Department of Agriculture, a portion of which can be used to respond to emergencies, including trade disputes.

But an expensive federal bailout threatens to cut deeply into one of Mr. Trump’s signature reasons for pursuing protectionist policies in the first place: a desire to rake in “lots of money,” as the president himself has said. Mr. Trump and his Republican allies say the new tariffs could help pay for their still-forming plan to expand and extend a set of expiring tax cuts, which could cost into the trillions of dollars.

“In addition to consumers being impacted by tariffs, now you have taxpayers who are going to be on the hook,” said Alex Durante, a senior economist at the Tax Foundation, a think tank that generally favors lower taxes.

But the impact on farmers is expected to be particularly acute. China, which has been hit with 20 percent tariffs since Mr. Trump took office, has already retaliated with levies on chicken, wheat, corn and cotton. The European Union has drawn up a sizable list of agricultural and consumer products to target if Mr. Trump makes good on his threat to impose steep tariffs on that bloc.

Many domestic producers worry that Mr. Trump’s tariffs could undercut commodity prices and make their corn, eggs, soybeans and other goods less desirable to foreign purchasers if those nations respond with levies on American exports.

Retaliation for Mr. Trump’s last tariff campaign, starting in 2018, resulted in a $27 billion loss in agricultural exports over that period, according to estimates by U.S.D.A. economists. Much of the losses came as a result of a trade war with China, after Mr. Trump targeted a vast swath of the country’s exports, prompting Beijing to mete out its own punishment.

One idea the administration has weighed is whether to offer new tariff relief through the Commodity Credit Corporation at U.S.D.A., according to the people familiar with the matter.

The Commodity Credit Corporation is a key U.S.D.A funding vehicle: It supplies the money for federal programs to support farm incomes, stabilize commodity prices and respond to natural disasters. While its finances are complicated, the entity may borrow up to $30 billion from the Treasury Department.

In Mr. Trump’s first term, the U.S.D.A. program doled out money based on a formula that projected agricultural losses. The funding salved some of the sting from the trade war — and offered a political boon to Mr. Trump entering an election year — but it also faced significant complaints from farmers that the aid was slow and hard to access.

Josh Gackle, the chairman of the American Soybean Association, said the industry’s preference is not for government handouts but “access to a free and fair trade market.” READ MORE / MORE