Update: the WSJ confirms the earlier report, noting that the Trump administration on Tuesday will announce a plan to extend some $12 billion in emergency aid to farmers amid growing concerns that the U.S. agricultural sector could suffer from President Donald Trump’s escalating trade dispute with allies, a person familiar with the matter said.
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Earlier this month we reported that not everyone was happy with Trump's trade war with China which has retaliated by levying duties on $34 billion of U.S. products, covering 545 categories, ranging from soybeans, pork, chicken and seafood to sport-utility vehicles and electric vehicles, and as a result of plunging commodity prices, one group emerged as especially hard hit by the administration's tariffs: farmers.
Two weeks ago, we quoted Casey Guernsey, a spokesman for Americans for Farmers and Families, who said that "China dealt its latest blow to American agriculture today with threats of even more tariffs on the horizon. Following Canada’s tariffs on U.S. products earlier this week, America’s farmers and families are staring down a dark path with no signs of relief in sight. We are counting on the administration and Congress to reach a resolution on responsible trade policies -- before we’re forced to shut down our operations for good."
Many others joined in, begging the administration for relief: John Heisdorffer, a soybean grower from Keota, Iowa, and president of the American Soybean Association, said in a statement on the website:
"Soybeans are the top agriculture export for the United States, and China is the top market for purchasing those exports, The math is simple. You tax soybean exports at 25 percent, and you have serious damage to U.S. farmers."
Cheese producers were also hard hit, forced to discount their products to keep customers, with many putting orders put on hold and resulting in the biggest cheese inventory in US history.
"We have seen large drops in our dairy product sales prices at all levels," said Catherine de Ronde, economist for the Agri-Mark Inc. dairy cooperative. "It will create a significant backup of dairy products."
Iowa Senator Joni Ernst appeared on CBS' "Face The Nation" warning that: "farmer ranchers are “always the first to be retaliated against” in these types of “trade negotiations," adding that farmers have been put in “very vulnerable position.”
Meanwhile, Iowa Secretary of Agriculture Mike Naig said that "there are real issues in our trade relationship with China that need to be addressed, but Iowa agriculture cannot continue to bear the brunt of the retaliation from our trading partners."
In short, America's farmers were getting ever more angry with Trump's policies.
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This morning, Trump responded and according to Politico "the Trump administration is planning to ease fears of a trade war by announcing later Tuesday billions of dollars in aid to farmers hurt by tariffs." The Washington Post puts a number to the aid: $12 billion.
Under the White House plan, the money will be disbursed in at least three ways, coming through direct assistance, a food purchase and distribution program, and a trade promotion program.
The plan, which has been in the works for months, seeks to ensure U.S. farmers and ranchers — a key constituency for President Donald Trump and Republicans — don’t bear the brunt of an escalating trade fight with China, the European Union and other major economies.
Trump, back in April, directed Agriculture Secretary Sonny Perdue to devise a plan to mitigate any financial damage to U.S. agricultural producers’ bottom lines that could result from the ongoing trade battles. But the administration has so far offered few details on the amount of aid that would be provided and how it would be distributed.
And since subsidies are merely another facet of trade warfare, expect China - which has also revealed similar subsidies to its own exporters - and especially Europe, to respond in kind shortly, as the tit-fof-tat global trade war continues.