U.S. plans more aid for farmers amid China trade spat

trump & Xi Jinping
trump & Xi Jinping

U.S. Agriculture Secretary Sonny Perdue said on Friday that President Donald Trump had asked him to create a plan to help American farmers cope with the heavy impact of the U.S.-China trade war on agriculture.

A new aid program would be the second round of assistancefor farmers, after the Department of Agriculture's $12 billion plan last yearto compensate for lower prices for farm goods and lost sales stemming fromtrade disputes with China and other nations.

"While China may backtrack, @POTUS is steadfast in hissupport for U.S. farmers and directed @USDA to work on a plan quickly,"Perdue said on Twitter on Friday.

The latest round of trade talks between Washington andBeijing ended on Friday after 90 minutes, the same day increased tariffs onChinese goods went into effect. Trump said talks would continue but there was"no rush" to reach a deal.

The toll on U.S. agriculture has been heavy, in a sector thathas largely been supportive of Trump. Soybeans are the most valuable U.S. farmexport, and shipments to China dropped to a 16-year low in 2018, while soybeanfutures prices fell this week to 11-year lows – and once again closed down onFriday.

"I think he's finally realized that the Chinese tariffshave put a real strain on the countryside, and that if more tariffs are put on,the strain is going to get even worse," said Tom Vilsack, who was USDAsecretary under former President Barack Obama.

A USDA spokeswoman declined to give further details on theplan.

The American Farm Bureau Federation said it was too soon tothrow its support behind the potential program. Davie Stephens, president ofthe American Soybean Association, agreed.

"We need to fix and make sure that this market isviable for not only 2019, but for 2020 and 2021," said Stephens, a soyfarmer in Clinton, Kentucky.

Trump on Twitter erroneously said China would pay the tariffs. However, it is the importer – usually U.S. companies or the U.S.-registered units of foreign companies – that shoulder the costs.

"With the over 100 billion dollars in tariffs that wetake in, we will buy agricultural products from our great farmers, in largeramounts than China ever did, and ship it to poor & starving countries inthe form of humanitarian assistance," Trump wrote on Twitter.

However, any funds from U.S. tariffs go into the U.S.Treasury's general fund, and Congress – not the White House – directs U.S.spending.

"I don't think he understands that he's not adictator," said Vilsack, who is now chief executive of the industry groupU.S. Dairy Export Council. "He can't just order this to happen."

U.S. Customs and Border Protection collects the tax onimports. The agency typically requires importers to pay duties within 10 daysof their shipments clearing customs.

Until this week, the White House's budget plans had calledfor a dramatic, 15% cut for USDA, calling its subsidies to farmers "overlygenerous."

The White House previously used Commodity Credit Corporation (CCC) funds to offset farm income losses in trade disputes. The CCC is a branch of the USDA that has broad authority to make loans and direct payments to U.S. growers when prices for corn, soybeans, wheat and other agricultural goods are low.

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