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Jul 24, 2018

White House readies plan for $12 billion in emergency aid to farmers caught in Trump’s escalating trade war I Politics I The Washington Post.

washingtonpost.com

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

by Damian Paletta



In this July 18, 2018 photo, soybean farmer Michael Petefish stands inside a bin with soybeans at his farm near Claremont in southern Minnesota. American farmers have put the brakes on unnecessary spending as the U.S.-China trade war escalates. (AP Photo/Jim Mone)
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The White House plans to announce on Tuesday a plan to extend $12 billion in emergency aid to 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.
An announcement could come as soon as Tuesday.
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 different 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 that was 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 a growing chorus of complaints from Republicans and business groups, who have complained that his trade approach is hurting broad swaths 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.
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.
Damian Paletta Damian Paletta is White House economic policy reporter for The Washington Post. Before joining The Post, he covered the White House for the Wall Street Journal. Follow
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