Trump adds $16 bil­lion for farm­ers hit by trade war

Lexington Herald-Leader - - Front Page - BY PAUL WISEMAN AND CHRISTO­PHER RUGABER

Pres­i­dent Don­ald Trump rolled out an­other $16 bil­lion in aid for farm­ers hurt by his trade poli­cies, and fi­nan­cial mar­kets shook Thurs­day on the grow­ing re­al­iza­tion that the U.S. and China are far from set­tling a bit­ter, year­long trade dis­pute.

U.S. Agri­cul­ture Sec­re­tary Sonny Per­due said that the first of three pay­ments is likely to be made in July or Au­gust and sug­gested that the U.S. and China were un­likely to have set­tled their dif­fer­ences by then.

“The pack­age we’re an­nounc­ing to­day en­sures that farm­ers do not bear the brunt of un­fair re­tal­ia­tory tar­iffs im­posed by China and other trad­ing part­ners,” Per­due said.

The lat­est bailout comes atop $11 bil­lion in aid Trump pro­vided farm­ers last year.

“We will en­sure our farm­ers get the re­lief they need and very, very quickly,” Trump said.

Seek­ing to re­duce Amer­ica’s trade deficit with the rest of the world and with China in par­tic­u­lar, Trump has im­posed im­port taxes on for­eign steel, alu­minum, so­lar pan­els and dish­wash­ers and on thou­sands of Chi­nese prod­ucts.

U.S trad­ing part­ners have lashed back with re­tal­ia­tory tar­iffs of their own, fo­cus­ing on U.S. agri­cul­tural prod­ucts in a di­rect shot at the Amer­i­can heart­land, where sup­port for Trump runs high.

Wil­liam Rein­sch, a trade an­a­lyst at the Cen­ter for Strate­gic and In­ter­na­tional Stud­ies and a for­mer U.S. trade of­fi­cial, called the ad­min­is­tra­tion’s aid pack­age for farm­ers “a fairly overt po­lit­i­cal ploy.”

“It’s not eco­nomics,” Rein­sch said. Trump wants win the farm states again in the 2020 elec­tion, “and he’s got mem­bers of Congress beat­ing up on him” to re­solve the trade con­flicts. Fi­nan­cial mar­kets slumped Thurs­day on height­ened ten­sions be­tween the U.S. and China. The Dow Jones in­dus­trial av­er­age fell 286 points, or 1%, to 25,490. It had been down 448 points ear­lier in the day.

U.S. crude plunged 6% on fears that the trade stand­off could knock the global econ­omy out of kil­ter and kill de­mand for en­ergy.

Talks be­tween the world’s two big­gest economies broke off ear­lier this month with no res­o­lu­tion to a dis­pute over Bei­jing’s ag­gres­sive ef­forts to

chal­lenge Amer­i­can tech­no­log­i­cal dom­i­nance. The U.S. charges that China is steal­ing tech­nol­ogy, un­fairly sub­si­diz­ing its own com­pa­nies and forc­ing U.S. com­pa­nies to hand over trade se­crets if they want ac­cess to the Chi­nese mar­ket.

Trump and Chi­nese Pres­i­dent Xi Jin­ping are ex­pected to dis­cuss the stand­off at a meet­ing of the Group of 20 ma­jor economies in Osaka, Ja­pan, next month. There are no cur­rent plans for talks to oc­cur be­fore then.

Speak­ing to re­porters Thurs­day, Trump sug­gested that he might be will­ing to make the em­bat­tled Chi­nese telecom­mu­ni­ca­tions gi­ant Huawei part of the trade talks with China. His ad­min­is­tra­tion last week put Huawei, which it has called a threat to na­tional se­cu­rity, on a black­list that ef­fec­tively barred U.S. firms from sell­ing the Chi­nese com­pany com­puter chips and other com­po­nents with­out gov­ern­ment ap­proval. The move could crip­ple Huawei, the world’s largest man­u­fac­turer of net­work­ing gear and sec­ond-big­gest smart­phone maker.

“I can imag­ine Huawei be­ing in­cluded in some form of a trade deal,” Trump said. He of­fered no de­tails but said any ar­range­ment “would look very good for us, I can tell you that.”

Brief­ing re­porters on the farm aid pack­age, Per­due said he doubted that “a trade deal could be con­sum­mated be­fore” the first pay­ments to farm­ers in July or Au­gust.

The sec­ond pay­ment will be made around Novem­ber and the third likely in early 2020, USDA of­fi­cials said, un­less a trade deal has been reached by then.

The di­rect pay­ments will make up $14.5 bil­lion of the $16 bil­lion pack­age and will be handed out on a county-by-county ba­sis. The amounts will be de­ter­mined by how much each county has suf­fered from the re­tal­ia­tory du­ties im­posed by China, as well as pre­vi­ous tar­iffs put in place by the Eu­ro­pean Union and Turkey.

The rest of the pack­age in­cludes $1.4 bil­lion to pur­chase sur­plus food com­modi­ties from farm­ers and dis­trib­ute them to U.S. schools and food banks, and $100 mil­lion to help de­velop new ex­port mar­kets over­seas.

The pay­ments will go to farm­ers pro­duc­ing roughly two dozen crops, in­clud­ing soy­beans, corn, canola, peanuts, cot­ton and wheat. Dairy and hog farm­ers are also el­i­gi­ble.

“Farm­ers want trade, not aid, but this will be help­ful,” said Repub­li­can Sen. Pat Roberts of Kansas, chair­man of the Se­nate Agri­cul­ture Com­mit­tee.

U.S. soy­bean ex­ports to China have been hit par­tic­u­larly hard, fall­ing from $12.3 bil­lion in 2017 to just $3.2 bil­lion last year.

The aid off­sets some of the losses. But farm­ers are wor­ried about the fu­ture and whether they can win back lost sales in China, a mar­ket they’ve spent years break­ing into. “I don’t think any kind of bailout pack­age, even if it was per­ma­nent, would sub­sti­tute for the loss mar­kets,” said Ru­fus Yerxa, pres­i­dent of the Na­tional For­eign Trade Coun­cil and a for­mer U.S. trade of­fi­cial.

Trump has said that China is foot­ing the bill for the farm bailout by pay­ing the tar­iffs. But tar­iffs are taxes paid by U.S. im­porters, and stud­ies have shown that Amer­i­can con­sumers and busi­nesses usu­ally end up ab­sorb­ing the higher costs.

Per­due ac­knowl­edged that the tar­iffs, re­gard­less of who pays them, are sent to the Trea­sury Depart­ment and not ear­marked for the re­lief pro­gram. But he said that China is “in­di­rectly” pay­ing for the aid.

“The pres­i­dent feels that China is pay­ing for this pro­gram through the tar­iffs,” Per­due said.

Trump has im­posed 25% tar­iffs on $250 bil­lion in Chi­nese im­ports and is plan­ning to hit an­other $300 bil­lion worth, a move that would ex­tend im­port taxes to just about ev­ery­thing China ships to the United States.

EAMON QUEENEY NYT

The pro­posed fed­eral pay­ments will go to farm­ers pro­duc­ing roughly two dozen crops, in­clud­ing soy­beans, corn, canola, peanuts, cot­ton and wheat. Dairy and hog farm­ers are also el­i­gi­ble.

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