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The Trump Administration Will Pay Farmers $16 Billion for Its Trade War

The announcement comes amid criticism of farm subsidies, which exceed revenue Trump has taken in from tariffs on Chinese imports.
A farmer harvests soybeans in Owings, Maryland.

A farmer harvests soybeans in Owings, Maryland.

President Donald Trump unveiled details of a $16 billion bailout for farmers this week to compensate for income lost in the trade war with China, a conflict that has done lasting damage to American industry—and raised farm subsidies to new heights in the process.

"The details we announced today ensure farmers will not stand alone in facing unjustified retaliatory tariffs while President Trump continues working to solidify better and stronger trade deals around the globe," United States Secretary of Agriculture Sonny Perdue said in a statement outlining the trade relief package on Thursday.

The president has claimed the revenue collected from tariffs on $250 billion in Chinese goods will be enough to cover the cost of the bailout. Customs and Border Protection data proves this is not the case, the New York Times reports.

The announcement comes amid criticism of farm subsidies. The U.S. already gives farm operations billions of dollars every year, with most of this going to the biggest producers—and some going to people who are not directly involved with farming, the Government Accountability Office found in 2018. According to the non-profit Environmental Working Group, $38 million of last year's $12 billion in trade relief went to people who do not work on farms.

This time around, the federal government will pay producers for a large variety of crops that never made it China, one of the biggest consumers of U.S. soybeans and other commodities. The Department of Agriculture said it will raise the payment cap to $125,000 per person—twice as much as last year's limit. (EWG claims some farmers were already paid well beyond this limit.)

Many outside estimates put the damage to American industry similarly high. Trump's trade war has cost producers billions in lost income, sent crop prices to record lows, and contributed to a string of recent farm bankruptcies in the Midwest. Analysts expect the latest round of tariffs will also make household goods disproportionately more expensive for low- and middle-income families. As I reported earlier this year:

Trump's tariffs have resulted in the lowest U.S. agricultural exports in three years, according to the Food & Environment Reporting Network's analysis of U.S. Department of Agriculture forecasts. "Farmers have been fighting this fight for the last year," Michael Nepveux, an economist with the American Farm Bureau Federation, says. "Agriculture has always been the tip of the spear when it comes to these trade disputes. This is just another challenge going forward."

Farm groups like Tariffs Hurt the Heartland argue this is a problem that Trump himself created. While a second round of payments might tamp down opposition coming from industry leaders, many worry the U.S agriculture sector will never recover, as China turns to U.S. competitors for its goods.

Corn and soybean farmer Brent Bible, who has advocated against Trump's tariffs, criticized last year's bailout in an interview in February of 2019: "It buffered that price drop we saw in soybeans, but it also—and the administration was shrewd in this strategy—lessened a lot of criticism that the administration was getting from the industry. It was a lot more difficult for farmers to be critical of the policy when they saw a subsidy check coming in on the other side."

"That's not what the ag community wants," he adds. That's not a longterm solution. A government subsidy is not sustainable strategy."