White House readies plan for $12 billion in emergency aid to farmers caught in Trump’s escalating trade war

Damian Paletta and Caitlin Dewey The Washington Post

The U.S. Agriculture Department on Tuesday plans to announce a $12 billion package of emergency aid for farmers caught in the midst of President Trump’s escalating trade war, two people briefed on the plan said, the latest sign that growing tensions between the United States and other countries will not end soon.

Trump ordered Agriculture Secretary Sonny Perdue to prepare a range of options several months ago, amid complaints from farmers that their products faced retaliatory tariffs from China and other countries. The new package of government assistance funds will be announced Tuesday and is expected to go into effect by Labor Day.

The aid package is expected to target soybean farmers, dairy farmers, and pork producers, among others. White House officials hope it will quiet some of the unease from farm groups, but the new plan could revive debates about taxpayer-funded bailouts and the degree to which Trump’s trade strategy is leading to unforeseen costs.

Farm groups have complained that moves by China and other countries in response to Trump’s protectionist trade stance could cost them billions of dollars, spooking Republicans who fear a political and economic blowback to Trump’s approach.

The White House has searched for months for a way to provide emergency assistance to farmers without backing down on Trump’s trade agenda, and the new program will extend roughly $12 billion through three mechanisms run by the Department of Agriculture.

The funds will come through direct assistance, a food purchase and distribution program, and a trade promotion program.

It will rely in part on a Depression-era program called the Commodity Credit Corporation, a division of the Agriculture Department created in 1933 to offer a financial backstop for farmers.

Soy prices have fallen particularly hard in the past few months, though Trump has tried to deflect blame and promised to somehow take care of these farmers, many of whom are from politically crucial states like Iowa and Wisconsin.

The new plan at the Agriculture Department would advance emergency funds for these farmers but likely not provide a long-term solution if the trade disputes with China and other countries persist.

Because the program was created during the Depression, it does not rely on new congressional approval. It allows the CCC to borrow up to $30 billion from the Treasury Department to “stabilize, support, and protect farm income and prices.”

Still, some Republicans several months ago had warned against using the CCC as part of a trade-war related bailout, saying it could distort market forces and pay farmers for products they don’t produce.

Trump is trying to mollify Republicans and business groups, who have increasingly complained that his trade approach is hurting broad sections of the economy.

Sen. Ron Johnson (R-Wis.) said Tuesday he has heard from a number of businesses in his state that the primary beneficiaries of Trump’s tariffs are overseas competitors that aren’t being hit with higher prices on their materials.

Speaking at the Heritage Foundation, Johnson said these trade disputes “could just totally run out of control” and likened them to “throwing a hand grenade of uncertainty” into the economy.

In the past four months, Trump has imposed tariffs against steel and aluminum imports from China, Canada, Mexico, the European Union, Japan, and a range of other countries, and he is threatening to broaden the scope of the tariffs to cars and uranium imports, among other things.

Several of these countries have responded to Trump’s trade measures by imposing tariffs of their own, and farmers have complained that they are the victims of retaliation from other countries, which they rely on to sell their products. China, for example, has announced it was imposing tariffs on imports of U.S. soybeans, diverting some of its consumption to Brazilian production. U.S. farmers complained they had become victims of the trade war, but earlier Tuesday, Trump showed no signs of backing down.

In a series of Twitter posts, he touted his strategy.

“Tariffs are the greatest!” he wrote on Twitter. “Either a country which has treated the United States unfairly on Trade negotiates a fair deal, or it gets hit with Tariffs. It’s as simple as that — and everybody’s talking!”

A number of White House officials, who have been apprehensive about Trump’s use of tariffs, had hoped that other countries would quickly offer concessions before things escalated further. But conservative critics of the White House’s approach said on Tuesday that Trump’s move to offer rescue funds to farmers suggests the standoff with other countries won’t end soon.

“If tariffs are the greatest and trade wars are easy to win, why do you have to buy the political silence of the farmers?” former Congressional Budget Office Director Douglas Holtz-Eakin wrote on Twitter.

It is unusual for the government to extend financial bailouts to U.S. farmers based on trade-related measures first precipitated by the White House. Other countries could attempt to bring a World Trade Organization case against the U.S. for this new plan, alleging the Agriculture Department has created an improper subsidy for farmers.

- Erica Werner contributed to this report

Link: https://www.washingtonpost.com/business/economy/white-house-readies-plan-for-12-billion-in-emergency-aid-to-farmers-caught-in-trumps-escalating-trade-war/2018/07/24/7bec9af4-8f4d-11e8-b769-e3fff17f0689_story.html?utm_term=.da676b2de731