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

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 assistance for farmers, after the Department of Agriculture’s $12 billion plan last year to compensate for lower prices for farm goods and lost sales stemming from trade disputes with China and other nations.

“While China may backtrack, @POTUS is steadfast in his support 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 and Beijing ended on Friday after 90 minutes, the same day increased tariffs on Chinese 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 that has largely been supportive of Trump. Soybeans are the most valuable U.S. farm export, and shipments to China dropped to a 16-year low in 2018, while soybean futures prices fell this week to 11-year lows – and once again closed down on Friday.

“I think he’s finally realized that the Chinese tariffs have 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 USDA secretary under former President Barack Obama.

A USDA spokeswoman declined to give further details on the plan.

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

“We need to fix and make sure that this market is viable for not only 2019, but for 2020 and 2021,” said Stephens, a soy farmer 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 we take in, we will buy agricultural products from our great farmers, in larger amounts than China ever did, and ship it to poor & starving countries in the 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 a dictator,” said Vilsack, who is now chief executive of the industry group U.S. Dairy Export Council. “He can’t just order this to happen.”

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

Until this week, the White House’s budget plans had called for a dramatic, 15% cut for USDA, calling its subsidies to farmers “overly generous.”

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.