Trump dispenses billions to help suffering farmers
But payments may not mitigate fallout over his trade war
WASHINGTON — Moving to offset the effect his trade war has had on rural America, President Donald Trump has bypassed Congress to send about $20 billion in aid to farmers, mostly going to a bundle of states that are essential to his reelection chances next year.
The payments have ranged from as little as $2 for some small-scale farmers to more than $1 million each for some corporate agricultural enterprises.
To sidestep Congress, which has long considered price supports for farmers its exclusive domain, the administration cited an obscure law from the 1940s that was passed in the aftermath of the Dust Bowl and the Great Depression.
Until Trump, no president had ever used that law to make direct payments to farmers, let alone tens of billions. The strategy bears some resemblance to the one Trump used to shift millions of dollars that Congress appropriated for the military to pay for sections of his border wall. Unlike the border wall money, however, the farm aid has not drawn challenges from Congress, perhaps because Democrats have their own political reasons for not wanting to oppose help for rural areas in politically important states.
The payments are likely to reach nearly $25 billion by early next year, making them twice the net cost to taxpayers of former President Barack Obama’s auto industry bailout during the Great Recession.
Even so, they may fall short of covering farmers’ losses from the trade war with China or fully mitigating the political fallout Trump has faced in some Midwestern communities.
It’s not that farmers are in open revolt against Trump. Surveys and interviews suggest most are sticking with him and hoping for the best. But the trade war’s effect — especially the uncertainty about future policies — could dampen enthusiasm come Election Day next year.
“Turnout is the key question: Are they just going to stay home or are they going to vote for Trump?” asked Katherine Cramer, a political science professor at the University of Wisconsin who has researched rural attitudes and the political and cultural divide between rural and urban Americans.
If farmers feel too pinched by the trade conflict, “the greatest impact will be a lack of enthusiasm — and they’ll stay home and not vote — which could make a huge difference,” she said.
For farmers, the cost of the trade war can be measured in lost markets in China, which has been by far the largest buyer of the soybeans and other grain crops that are the lifeblood of agriculture across the Midwest and Great Plains.
U.S. sales of soybeans to China exceeded $14 billion in 2016, but prices fell as tensions mounted. Soybean exports to China plunged to $3.1 billion last year.
Early last month, Trump announced that he and Chinese President Xi Jinping would shortly be signing a “Phase 1” agreement in which China would buy $40 billion to $50 billion of U.S. farm goods a year, about double the annual amount before exports to China plummeted last year.
That hasn’t happened.
Some farmers say they are wearying of Trump’s on-again, off-again rhetoric, with its still-unfulfilled promises of an imminent end to the conflict with Beijing.
Some farmers worry that China is developing new supply chains in Brazil, Argentina and elsewhere that may be hard to break even if the trade war ends.
Scott Henry of Nevada, Iowa, a small town 40 miles north of Des Moines, backed Trump in 2016. And the 29-year-old, third-generation corn and soybean grower hasn’t given up on the president yet. Neither is he certain to vote for him.
“Trump has done just enough with tax policy and business regulations to keep people” supportive, he said.
But, he added, “I have no confidence that we’ll actually get anywhere on trade. What we’ve learned is there’s a lot of talk from this administration and very little action.”
Trump has “bought some votes from farmers” with the added farm spending, he said, adding that he’s a little troubled by the scale of the expense.
Trump justified the spending by claiming he was using tariff money collected from China to pay for it. But U.S. importers and American consumers, not China, foot the bill for tariffs on Chinese imports. And the cash payments to farmers actually come from taxpayer funds through the borrowing authority of the Commodity Credit Corp., acknowledged Richard Fordyce, the Department of Agriculture’s Farm Service Agency administrator.
In an interview, Fordyce said the administration moved ahead of Congress because it saw the need and wanted to respond directly to the impact from retaliatory tariffs.
“The payments are coming at a time when the farming years are very cyclical,” he said. “These payments are coming at a time when it’s critically important for them and their farming operations.”