USDA says $12 bil­lion farmer aid to be trimmed

Help pack­age aims to off­set losses re­sult­ing from China-US trade war

Global Times US Edition - - BIZMARKETS -

The US De­part­ment of Agri­cul­ture’s $12 bil­lion pack­age to off­set farm­ers’ losses from the im­po­si­tion of tar­iffs on Amer­i­can ex­ports could end up shrink­ing af­ter an agree­ment to up­date NAFTA was struck, Agri­cul­ture Sec­re­tary Sonny Per­due said.

“We will be re­cal­cu­lat­ing along as we go,” Per­due said in a phone in­ter­view, re­gard­ing the sec­ond tranche of the planned com­pen­sa­tion, es­ti­mated at about $6 bil­lion, which was first an­nounced in July af­ter US and China im­posed trade tar­iffs on each oth­ers’ im­ports.

China has tra­di­tion­ally been the big­gest buyer of US agri­cul­ture ex­ports, but it has been largely out of the mar­ket for sev­eral prod­ucts, such as soy­beans, since im­ple­ment­ing levies on US im­ports in re­tal­i­a­tion for the Trump ad­min­is­tra­tion’s tar­iffs on Chi­nese goods.

The aid pack­age in­cludes cash pay­ments for farm­ers of soy­beans, sorghum, corn, wheat, cot­ton, dairy and hogs. The USDA had al­ready out­lined the al­lo­ca­tions for the first $6 bil­lion at the end of Au­gust.

Per­due said the pic­ture has changed af­ter the United States-Mex­ico-Canada Agree­ment (USMCA) was reached, a re­vamp of the North Amer­i­can Free Trade Agree­ment (NAFTA) be­tween the three na­tions.

“If the tar­iffs do come off and the tar­iff im­pact lessens it will have some im­pact over the mit­i­ga­tion ef­forts be­cause mit­i­ga­tion ef­forts were based on the fact that they would be tar­iff-dam­age re­lated,” he said.

Amer­i­can farm­ers have yet to see the full ben­e­fit of the new ac­cord as an on­go­ing dis­pute over steel and alu­minum tar­iffs mean they still face re­tal­ia­tory mea­sures when trad­ing with Canada and Mex­ico. That agree­ment also does not ad­dress the harm as a re­sult of the trade war with China.

In May, the US an­nounced tar­iffs of 25 per­cent on steel im­ports and 10 per­cent on alu­minum im­ports, prompt­ing re­tal­i­a­tion from top trad­ing part­ners in­clud­ing Canada and Mex­ico.

“The Pres­i­dent feels tar­iffs have been very in­stru­men­tal in get­ting Canada to the ne­go­ti­a­tion ta­ble. Now that we have an agree­ment, I be­lieve their use­ful­ness re­gard­ing those two coun­tries have di­min­ished and I think we should go back to our prior re­la­tion­ship of no tar­iffs on steel and alu­minum,” he said.

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