Trade Not Aid! President's Trump's Response: Aid Again!

Photo: teepublic.com

One has to wonder whether America is better off in terms of the Trade War with China.  Especially, from the standpoint of exported agricultural goods.  Farmers and ranchers across America have been promised a better life.  Their sacrifice in the form of starving their profits to better America in the long term has been a form of pride.  Although, one has to wonder whether America really will emerge from these Trade Wars better off than previously (with free trade).



I bring this up solely due to the reporting from Politico Agriculture on the announcement from the White House of a possible 3rd round of aid to farmers:

FROM 'BIGGER TRACTORS' TO TRADE AID 3.0: Trump has tweeted that he hopes farmers will remember his trade bailout program more than his actual trade deals. That seems more likely now that he's proposing to pay producers for their trade-related losses for the third year in a row — just one week after the "phase one" agreement with China took effect, and contrary to what USDA officials have been telling the industry to expect, your host writes.

Déjà vu all over again: Trump's impromptu, all-caps Twitter announcement of more aid, potentially, came just one day after Agriculture Secretary Sonny Perdue said farmers would need to navigate the market on their own in 2020, now that the U.S. and China have reached a deal on agricultural exports. If that sounds familiar, it's because that's basically what happened last year, when Trump ordered another bailout package during a low point in trade talks with Beijing.

— "The president's tweet was a surprise to us," Ted McKinney, undersecretary for trade and foreign ag affairs, said Friday at a USDA event, adding that the department will "go with that decision."

Mixed signals: The Trump administration's agricultural forecasts offer conflicting messages about whether additional trade aid is really needed this year. USDA Chief Economist Robert Johansson last week predicted a "return to normal trade" in 2020, along with other "more hopeful signs" for the farm economy after a recent downturn.

— Farm income is projected to increase this year despite a steep dropoff in federal farm payments as the 2019 trade aid program winds down. Perdue himself has predicted a "record year for agricultural exports" with China pledging to purchase at least $40 billion worth of U.S. farm goods in 2020 and 2021 each.

— On the other hand, some trade analysts doubt such massive exports are possible, given Beijing's insistence on following market demand and complying with WTO limitations. The coronavirus outbreak, which has slowed Chinese economic activity, is another obstacle. And USDA's own export outlook, which didn't fully account for the new trade deal, projected farm sales to China would total just $14 billion in 2020.

The bottom line: USDA has already paid more than $23 billion directly to producers since 2018, on top of other trade relief programs like commodity purchases and marketing assistance — none of which was appropriated by Congress. In the thick of Trump's trade war, the funds were a lifeline for many farmers, who represent a critical piece of his political base. Now that trade tensions are easing, the administration might be harder pressed to justify more spending on the ad-hoc program in an election year, especially with Democrats already questioning the fairness of how the funds are distributed.

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