Welfare for farmers: Donald Trump's new plan to deal with disastrous tariff blowback

Donald Trump's trade war is hurting his rural base — now he wants taxpayers to bail out stricken farmers

By Matthew Rozsa

Staff Writer

Published July 25, 2018 6:00AM (EDT)

 (Getty/Nova SAFO)
(Getty/Nova SAFO)

President Donald Trump may be opposed to using government resources to help Puerto Ricans suffering from the aftermath of Hurricane Maria, but he's willing to bail out America's farmers — who are facing economic disaster precisely as a result of his policies.

At Trump's orders, Secretary of Agriculture Sonny Perdue announced on Tuesday that dairy farmers, pork producers and soybean farmers will receive a $12 billion package in emergency aid to help them manage the economic hit they're taking as countries like China retaliate against Trump's tariffs with tariffs of their own, according to The Washington Post. While other demographics that might need economic help did not vote for Trump, farmers in states like Indiana, Missouri and North Dakota did — and because those are states with key U.S. Senate elections coming up, Trump cannot afford to lose their support at this time, as The Washington Post reported:

The funds will come through direct assistance, a food purchase and distribution program, and a trade promotion program. The first two of those programs will target farmers who have been squarely hit by Chinese tariffs: soybean, corn, wheat, cotton and sorghum growers will be eligible for direct payments after this year’s harvest, as will dairy and pork producers. Separately, USDA will purchase surplus fruits, nuts, rice, beans, beef, pork and milk for distribution to food banks and other nutrition assistance programs.

This policy is being opposed by prominent Republicans like Sens. Bob Corker of Tennessee and Rand Paul of Kentucky, but Trump will be able to implement it — and up to $30 billion in farm relief overall — because of the Commodity Credit Corporation, a program implemented by President Franklin D. Roosevelt during the Great Depression.

Government bailouts rub many conservatives the wrong way, as Corker made clear to The Washington Post:

"Our farmers have been in nonstop, saying they want trade, not aid, and now they’re being put on welfare. 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," Corker told the Post. In a statement issued later on Tuesday, Corker cited the potential bailout as evidence that "the Trump-Pence tariffs are hurting the American people."

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Agriculture is not the only economic sector facing retaliatory tariffs as a result of Trump's trade policies. Everyone from car manufacturers to oil producers are also being hit — and as Sam Natapoff wrote for Salon earlier this week, the fact that these economic sectors are linked by their support for Trump is very much intended.

This red state ruination is not accidental. Donald Trump brought his belligerent brand of politics to trade, insisting that he could force U.S. trading partners to submit. With their responses, the EU and other countries have made a different point — that in an interdependent global economy, economic aggression affects everyone, even the perpetrator, so that reasonable compromise is manifestly preferable to conflict.

To drive this home, these countries intend to punish Trump’s supporters in the U.S. Many of these retaliatory tariffs have been targeted with malice aforethought, to send a message to Donald Trump and to those who put him in office. Several countries have aimed their fire at both Kentucky and Wisconsin, homes of Senate Majority Leader Mitch McConnell and House Speaker Paul Ryan, levying tariffs on specific local products such as whiskey, cheese and Harley Davidson motorcycles.

Not only is the targeting of pro-Trump states intentional, but the fact that Trump's trade policies are hurting the farm belt was entirely predictable.

"These new duties are often described as ’tariffs on China’ or 'tariffs on the United States,’ but they’re really taxes on American businesses, workers and consumers," Ed Gerwin, a senior fellow for trade and global opportunity at the Progressive Policy Institute, told Salon earlier this month.

He added, "The administration’s new trade taxes on items like auto parts, electrical components, and machinery will raise costs for American businesses, make it harder for them to compete and destroy many more American jobs than they protect. And even if American consumers don’t pay the tariffs directly, they’ll ultimately pay higher prices."

As former Sen. Joseph Lieberman of Connecticut — a Democrat-turned-independent who supported free trade policies in Congress — told Salon earlier this month, in the end, many of the free trade relationships that Trump is trying to unravel have been beneficial to American workers.

"There’s only so much we can make and sell to one another," Lieberman told Salon. "For the good of our economy, we've got to be able to sell the stuff we make here, the services we create around the world, and that requires trade. And generally speaking, it’s easier to do business in America than for us to do business in a lot of countries in the world. So the lower tariffs are in other countries, the better our economy is going to be."

Another observation made by Gerwin earlier this month now appears prophetic.

"China’s targeted, retaliatory tariffs on soybeans, meats and other farm commodities will hammer American farmers already suffering from low farm prices," he said. "And China’s new duties on imports of U.S. vehicles — which have been surging in recent years — will now make it harder for American plants and workers to compete in that key market."

He added, "President Trump has made a big deal about the benefits of recent tax cuts for business and average Americans. But he can’t hide the fact that these escalating tariffs are tax increases that will hurt American competitiveness, cost consumers and destroy jobs."

Avoiding a trade war

Larry Kudlow visited "Salon Talks" to discuss trade and growth before he became Trump's top economic adviser.


By Matthew Rozsa

Matthew Rozsa is a staff writer at Salon. He received a Master's Degree in History from Rutgers-Newark in 2012 and was awarded a science journalism fellowship from the Metcalf Institute in 2022.

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Related Topics ------------------------------------------

Agriculture Donald Trump Farm Belt Free-trade Rust Belt Tariffs Trade Trade War Trump Administration