$16B more in farm aid for trade war in the pipeline

U.S. agriculture officials are preparing to roll out another $16 billion in aid to farmers hurt by the Trump administration’s trade war with China, with payments to begin next month.

The second round of tariff-aid payments will give time for President Donald Trump to strike trade deals, Agriculture Secretary Sonny Perdue said on a conference call on Thursday that gave details of the package.

Payments are based on similar damage criteria as those for a first round and are designed to avoid distorting planting decisions. But rather than rates based on crop type, the program uses a blend of crops grown in each county, with corn growers getting the same rate as wheat, for example.

In 2018, the payout to individual farmers was capped at $125,000; this time, it has been raised to $250,000 per person or legal entity, with a cap of $500,000 across three categories, for those who grow soy as well as vegetables and pigs.

The cap comes in response to claims of significant abuse in last year’s $12 billion trade relief package.

American farmers are struggling as losses from trade disputes pile on top of woes including wild planting weather and years of global overproduction that have kept prices low. U.S. farm income dropped 16% last year to $63 billion, about half the level it was as recently as 2013. For Trump, appeasing his rural-voter base has become crucial ahead of 2020 elections.

Trump announced the new aid package in May as he stepped up his trade war with China by threatening new tariffs. At the time, the USDA said growers will receive a payment based on a single county rate multiplied by a farm’s total plantings in 2019.

With aid flowing to farmers, Trump has avoided erosion of his political support in rural areas. In June, 54% of rural voters approved of Trump’s job performance versus a national approval rating of 42%, according to a Gallup survey of 701 selfidentified rural voters.

U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin are set to travel to China Monday for the first high-level, face-to-face trade negotiations between the world’s two biggest economies since talks broke down in May.