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

[Arthur Stamoulis]

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=.d86f7e2227ff <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=.d86f7e2227ff>

White House readies plan for $12 billion in emergency aid to farmers caught in Trump’s escalating trade war
By Damian Paletta and Caitlin Dewey
July 24 at 1:00 PM

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 temporarily 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. China and Mexico have imposed tariffs on U.S. produced pork this year in retaliation for Trump’s tariffs.

The money would be extended just as voters in some of the most heavily impacted states are preparing to cast votes in the midterm elections. There are several key Senate races in farm dependent states like Missouri, North Dakota, and Indiana this November, and the outcome of those races could determine who controls the chamber next year.

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.

Soybean 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. And there was biparitsan criticism from Republicans and Democrats on Tuesday to what the White House was trying to do. At least two Republicans said the plan equated to a type of welfare program for farmers.

“Our farmers have been in nonstop, saying they want trade, not aid, and now they’re being put on welfare,” said Sen. Bob Corker (R-Tenn.). “So the tariff policies that have been put in place by the administration are now causing them to invoke a welfare policy for our farmers which I’m sure is not what they wish. So pressure is continuing to build. We’re getting more and more complaints I know the administration is also and hopefully soon this ill-thought out policy will end.”

Sens. Rand Paul (R-Ky.) and Ben Sasse (R-Neb.), meanwhile, had equally harsh criticism about the Trump administration’s new plan.

“If tariffs punish farmers, the answer is not welfare for farmers — the answer is remove the tariffs,” Paul wrote on Twitter.

After months of criticism from Republicans and business groups over Trump’s approach to trade, White House officials have sought to mollify complaints and some had hoped that the agriculture assistance might help. Trump has urged patience from his critics, as he believes that applying pressure on other countries will force them to remove tariffs on U.S. goods, helping U.S. companies. But, so far, the opposite has occurred.

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.

Former Congressional Budget Office Director Douglas Holtz-Eakin said the emergency aid for farmers would likely be considered Trump’s first taxpayer funded bailout of private entities, an unusual occurance during a strong economy. Holtz-Eakin, a Republican, is one of several conservative economists who have been sharply critical of Trump’s trade approach, and he said Tuesday that the programs the Agriculture Department will use to help farmers were not designed for this purpose.

“This is a terrible idea,” Holtz-Eakin said. These programs exist to insure famers against the vagaries of nature and crop cyles. They are not there to offset bad policy. Two wrongs don’t make a right. It’s a misuse of the programs.”

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.

This week could prove a crucial one for Trump’s trade strategy. He is scheduled to meet Wednesday with European Commission President Jean-Claude Juncker, who has been very critical of the way Trump is trying to use tariffs to extract concessions from a range of countries.

Trump on Tuesday suggested that the Juncker visit should be seen as a sign that European officials are willing to bend to his demands, but European officials have cautioned that no major deals will be cut this week. On Thursday, Trump is scheduled to travel to Illinois and Iowa to talk about the economy and his trade agenda, states where the new package of federal funds for farmers will likely come under close scrutiny.

Separately, House Republicans plan to meet with one of Trump’s top trade advisers, Peter Navarro, who has been very supportive of the tariff-driven approach used by the White House so far this year.

- Erica Werner contributed to this report.
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://lists.citizenstrade.org/pipermail/ctcfield-citizenstrade.org/attachments/20180724/730b0b8f/attachment.html>