Unable to reach a trade deal with China and end punishing tariffs, President Trump last week promised American farmers and ranchers a new round of aid as the protracted trade battle intensified.
Trump, in a post on Twitter, said his administration would use tariff money collected on Chinese imports to buy “agricultural products from our Great Farmers, in larger amounts than China ever did, and ship it to poor and starving countries in the form of humanitarian assistance.”
We take this as a sign that farmers should not expect a resolution to the dispute any time soon. That’s unfortunate.
Trump has targeted the imbalance in U.S.-China trade and other Chinese excesses since the early days of his campaign. China is notorious for imposing non-tariff barriers to trade. There are legitimate issues concerning Chinese currency manipulation and a lack of respect for intellectual property rights.
The Trump administration applied tariffs on Chinese goods in an attempt to redress the grievances.
For all its shortcomings in other areas, China has been a good customer for U.S. agricultural goods — $23.8 billion in 2017, a whopping 17% of U.S. ag exports. China promptly retaliated by placing tariffs on pork, poultry, beef, fruits and vegetables, dairy products, soybeans and grains.
Since the dispute took off last year there has been a series of tit-for-tat tariff increases. Though it seemed earlier this month that a deal was at hand, the Chinese walked away and Trump moved to increase tariffs on $200 billion of Chinese goods.
Farmers and ranchers — who largely supported Trump’s election — find themselves paying the tab.
It’s unclear if Trump’s tweet about buying goods and giving them to poor countries is an actual proposal or just a promise to provide some type of unspecified aid to U.S. agriculture.
Last year the administration put $12 billion into aid for farmers and ranchers impacted by not only Chinese tariffs but the fallout from disputes with Canada, Mexico, Europe and other trading partners.
While better than nothing, the payments fell far short of the losses producers have experienced. The administration needs to do more if it expects farmers and ranchers to continue giving it their support.
Even if future programs were able to make farmers whole, assistance checks are not a replacement for stable export markets.
The trade situation continues to hang heavy over farmers. They rightfully worry that the trade relationships they have worked so hard to develop will be lost if tensions are not soon eased.
The administration’s tariffs are having an impact on the Chinese economy and might eventually lead to a better trade deal for U.S. exporters. It will be a hollow victory if farmers and ranchers lose their livelihoods in the course of the fight.