Trade war may prompt new bailout for farmers
Washington — President Donald Trump on Tuesday rushed to placate furious farmers and Senate Republicans about his escalating trade war with China, with lawmakers now considering a package of fresh bailout funds to quell a rebellion in agricultural states.
The fresh uproar came as farmers, lawmakers, business executives, and global investors are looking to Trump for clues on how far he intends to take the trade showdown with China. On Monday, Trump suggested the standoff could last years and lead to structural changes in the global economy.
On Tuesday, Trump offered conflicting forecasts, musing that a deal could come in the next month but also predicting a furious economic battle with Beijing.
In one Twitter post, he said he would sign off on a deal “when the time was right,” but in another post he called for using the U.S. Federal Reserve to thwart China’s economic agenda.
“In any event, China wants a deal!” Trump wrote.
Stocks climbed on Tuesday and clawed back a chunk of their losses from Monday’s rout, the latest whipsaw move as investors weigh just how badly the escalating U.S.-China trade war will hurt the economy.
The day’s rally was nearly a mirror image of Monday’s plunge, when the S&P 500 had its worst day since early January, but not as severe: Technology companies led the way higher
after bearing the brunt of the selling on Monday, Treasury yields rose modestly and gold gave back a bit of its gains.
The S&P 500 rose 22.54 points, or 0.8 percent, to 2,834.41. It recovered nearly a third of its loss from Monday, and would now need to rise 3.9 percent to regain the record it set a couple weeks ago. The Dow Jones Industrial Average rose 207.06, or 0.8 percent, to 25,532.05, and the Nasdaq composite index jumped 87.47, or 1.1 percent, to 7,734.49.
Of course, stocks are still lower than they were last week, following China’s pledge to raise tariffs on U.S. goods. Stocks also remain lower than they were on May 5, when Trump ignited this latest round of fear for markets by announcing on Twitter that the U.S. would raise tariffs on Chinese goods.
The mounting concern from farmers and business groups showed signs of bleeding into the 2020 presidential campaign. Trump has attacked former Vice President Joe Biden, a Democratic contender for the nomination, and alleged that Democrats didn’t act forcefully enough to counter China in past decades. But Biden on Monday told the radio station WMUR that Trump was creating collateral damage with his blunt trade agenda, which has relied on costly tariffs that U.S. companies must pay to bring in Chinese products.
“The American worker is getting killed by this,” Biden said. “The American farmers are getting killed.”
In a sign of the concern gripping lawmakers, some GOP leaders are looking at a way to amend an unrelated disaster-relief package to free up billions of dollars in rescue money for U.S. farmers.
Trump has alleged for years that China rips off U.S. businesses and consumers by stealing intellectual property and rigs their currency to flood the U.S. with cheap imports. He has also complained that the U.S. imports $500 billion more in Chinese goods than it exports to Beijing, an imbalance he says is unfair.
To force the Chinese government to change its behavior, he has imposed steep tariffs on $250 billion in Chinese goods and threatened to extend these import penalties to more than $300 billion in additional products.
China has responded in two ways, both by trying to negotiate with him to stop the tariffs and by imposing import penalties on U.S. exports like soybeans and other items. This has led U.S. farmers to complain they are being caught in the middle of the standoff, putting pressure on lawmakers to intervene.