Negotiations to end America’s trade war with China collapsed last Thursday (May 30, 2019), with U.S. negotiators accusing the Chinese government of not honoring the terms agreed upon in previous negotiation talks. After the collapse, both countries issued statements signifying determination to go into a long battle, making farmers even more vulnerable to the hard stance taken by the Chinese government on U.S. agricultural products.
When he made his remarks about the collapse at the White House, U.S. president Donald Trump immediately reached out to the agricultural sector by flanking himself with gentlemen in cowboy hats, looking like midwest farmers and ranchers. Trump asserts that China has been taking advantage of America for far too long, whilst vowing to protect the agricultural industry that Beijing is using to harm the U.S. economy.
In order to help agricultural states weather the effects of trade retaliations with China, Trump directed the US Agriculture Department to make available $16 billion, as aid to farmers. The amount ordered released is in addition to the $12 billion in emergency relief extended as financial support by the Trump administration last year.
Additional aid will come by way of a $1.4 billion program that will see to the purchase of surplus commodities impacted by the ongoing trade war. Purchases will then be distributed to different programs for the less fortunate, including food banks and school feeding programs. Another $100 million will be released in launching initiatives for the development of new export markets for the benefit of American farmers.
Trump argues that China will be footing the cost of the billion dollar aid, through the retaliatory tariff that the U.S. will collect from China’s importation of U.S. agri-products. Yet this is hardly the scenario that is looming, because China vows to channel all agricultural imports to other countries, particularly Brazil, America’s closest competitor in the agri-export trade.
Actually, the financial aid, which the Trump administration is doling out to farmers comes from a Depression-era $30 billion borrowing program of the Treasury Department. Release of the funds does not require Congressional approval should the Executive Branch decide to tap it. It is quite clear therefore that the money being doled out to farmers as financial assistance still falls on be shoulders of America’s taxpayers.
Understanding the Impact of the China Trade War on U.S.Agricultural States
Last Saturday, the Chinese government hiked its tariff on U.S. import goods to 25% as retaliation to Trump’s raising of the U.S. 10% tariff on Chinese importations to 25%. The raised Chinese tariff affects not only the U.S. soybean-producing farmers, as it is now imposed on virtually all U.S. agri-products imported by Chinese businesses, including pork, beef, apples, oranges and almonds. The announcement of the tariff raise, also mentioned a move to cancel a major pork order that is expected to really hit hard the states of Ohio, Iowa and Wisconsin.
Since the number of bankruptcies among farmers continues to rice, they are not at all too happy with Trump’s financial aid announcement. They are saying that they do not want another government check. What they have been hoping for was for things to go back to normal, because once they lose a market, it would be difficult to get it back.