Trump to offer farmers $12B in trade aid

The Trump administration is planning to ease fears of a trade war by announcing Tuesday about $12 billion in aid to farmers hurt by retaliatory tariffs, according to three sources familiar with the plan. The administration's plan is expected to use two commodity support programs in the farm bill, as well as the Agriculture Department’s broad authority to stabilize the agricultural economy during times of turmoil by buying up excess supply. The plan is also expected to focus on providing aid to the dairy sector in particular, one of the sources said. The plan has been in the works for months. It seeks to ensure that 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 as the administration pursues an aggressive course to rebalance America's trade relationships. Trump's moves to slap tariffs on imports from some of America‘s largest foreign buyers have prompted retaliation against U.S. farm goods like pork, beef, soybeans, sorghum and a range of fruits. The administration's trade aid plan is also a bid to shore up support among a slice of the rural electorate ahead of the midterm elections. But it has been criticized by some parts of the agriculture industry and is also sparking questions about whether other sectors suffering from retaliation will receive assistance. “It can’t just be about agriculture," Sen. Thom Tillis (R-N.C.) said Tuesday, adding that he is waiting for the administration to provide more information on its plan. Trump this week is touring Midwestern farm states like Missouri, Illinois and Iowa, where he will likely get inundated with questions about his trade agenda, which has been rebuked by a number of U.S. industries, including the agricultural sector and the business community in general, along with many members of Congress. The president’s interest in reassuring an anxious farm sector was evident on Monday when he gave a shout-out to farmers during an event at the White House while unveiling new campaign-style hats that say, “Make Our Farmers Great Again.” “Make our farmers great again. That’s what’s happening,” Trump said, as he showed off one of the green hats with yellow lettering — a color scheme resembling that used by tractor maker John Deere. Trump said he just had the new hats made. Sen. Ben Sasse (R-Neb.), a vocal critic of Trump on trade, blasted the tariff aid as a way of giving farmers "gold crutches" and warned that the current direction of U.S. trade policy could lead to economic circumstances similar to the Great Depression era. “America’s farmers don’t want to be paid to lose — they want to win by feeding the world,” Sasse said in a statement. “This administration’s tariffs and bailouts aren’t going to make America great again — they’re just going to make it 1929 again.” 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 ongoing trade battles. But the administration has offered few details on the amount of aid that would be provided and how it would be distributed. As recently as last month, Perdue said it was premature to determine whether his agency needed to provide farmers with subsidies to offset trade losses because it was too soon to gauge the effects of retaliatory tariffs on farmers. Perdue was spotted wearing a “Make Our Farmers Great Again” hat. Farmers and the majority of farm-state lawmakers have previously appeared to be lukewarm on the idea of the government doling out aid to offset losses due to tariffs and drops in the market. Many have told POLITICO they would prefer the Trump administration to expand access to foreign markets, rather than start spats with trading partners that lead them to erect barriers on U.S. exports, restrict access and seek out other sources of supply. "The best relief for the president’s trade war would be ending the trade war," Brian Kuehl, executive director of the advocacy group Farmers for Free Trade, said in a statement Tuesday. He said farmers need trade policies that promote stability and allow them to plan for the future. "This proposed action would only be a short-term attempt at masking the long-term damage caused by tariffs," Kuehl added. Farmers for Free Trade is funded by the American Farm Bureau Federation — the nation's largest farm group — and other industry trade associations, like the National Pork Producers Council and National Corn Growers Association. At a Senate Finance Committee hearing last month, Iowa Republican Sen. Chuck Grassley told Commerce Secretary Wilbur Ross, who was testifying, that he had heard a group of senators tell the president at a recent meeting that “we don't want money from the Treasury — we want markets." "I think he heard very clearly the comment from the farm state representatives that they don't want government aid," Ross said in response, offering no details on the administration's plans. Senate Agriculture Committee Chairman Pat Roberts (R-Kan.) told POLITICO recently that tariff retaliation could have long-term effects on access to foreign markets. “I think the question in farm country that is equal to what’s happening now is: What is our future down the road? How do we put these trade agreements back together? Once you lose a market, you lose it,” he said. “We are trying to make the point that we don’t want aid, we want trade.” The administration has been considering a two-part approach to support farmers' incomes. One part of the plan would provide payments to farmers through the Price Loss Coverage and Agriculture Risk Coverage programs, which cover traditional commodities like corn, soybeans and wheat, according to the sources familiar with the plan. Payments under PLC and ARC are triggered when prices dip below certain levels set by Congress, or farm revenue at the county level comes in below a guaranteed amount, respectively. Another tool USDA plans to use is its authority under an obscure entity known as the Commodity Credit Corporation to buy up excess supply on the market in an effort to boost domestic prices. The government used this authority in May when USDA announced it would purchase excess cheddar cheese and distribute the product to federal nutrition assistance programs. The dairy industry has suffered in recent years as prices have been driven down by a glut of product on the market. Sen. John Hoeven, a North Dakota Republican who serves on the Senate Agriculture Committee, said Tuesday he believes the administration is looking to deliver aid in the short term in hopes that trade tensions will be ironed out before long. “He’s trying to get us better trade deals,” Hoeven said, referring to the president. “The objective is not to have a long-term relief program. The objective is to get access to the markets on a fair basis for our farmers and ranchers.” Burgess Everett contributed to this report. source: https://www.politico.com/story/2018/07/24/trump-trade-aid-for-farmers-737108 #Headlines by: mcassella@politico.com (Megan Cassella)

Original Post: https://www.politico.com/story/2018/07/24/trump-trade-aid-for-farmers-737108