Trump promises an even bigger farmer bailout if needed
President Trump’s latest tweet indicated that more aid could be headed to farmers adversely affected by the U.S.-China trade war.
In an all-caps tweet, he wrote: “If our formally targeted farmers need additional aid until such time as the trade deals with China, Mexico, Canada and others fully kick in, that aid will be provided by the federal government, paid for out of the massive tariff money coming into the USA!”
IF OUR FORMALLY TARGETED FARMERS NEED ADDITIONAL AID UNTIL SUCH TIME AS THE TRADE DEALS WITH CHINA, MEXICO, CANADA AND OTHERS FULLY KICK IN, THAT AID WILL BE PROVIDED BY THE FEDERAL GOVERNMENT, PAID FOR OUT OF THE MASSIVE TARIFF MONEY COMING INTO THE USA!
— Donald J. Trump (@realDonaldTrump) February 21, 2020
The U.S. has already approved $28 billion in farmer aid through its market facilitation program. The first round of payments, totaling $4.7 billion, was paid in September 2018. The second round was distributed three months later. By February 2019, the total bailout reached $7.7 billion.
In May 2019, the U.S. Department of Agriculture (USDA) announced it would provide an additional $16 billion to help farmers while trade negotiations between the U.S. and China continued. Overall, $19 billion in aid has been granted so far, with the rest to be distributed in 2020.
Trump’s announcement comes at a time when farm bankruptcies are at an 8-year high, partially due to the trade war. U.S. Courts data shows that farm bankruptcy rates increased by 20% in 2019, to a total of 595 Chapter 12 bankruptcies across the country.
Amid trade uncertainty, poor cropping conditions, and other mitigating factors, nearly one-third of farm income in 2019 came from government aid, according to the USDA.
‘It’s not just a benefit to farmers’
Although Trump has stated numerous times that China is the one paying for these tariffs, that’s not actually the case.
Research from the National Bureau of Economic Research (NBER) has shown that “U.S. tariffs continue to be almost entirely borne by U.S. firms and consumers … approximately 100% of these import taxes have been passed on to U.S. importers and consumers.”
Nevertheless, farmers have remained ever grateful for the government payments — although they have stressed they “want trade, not aid” at the end of the day.
“All Americans eat and so, it’s in America’s interest for the price of food and for the share of disposable income that’s spent on food to keep that relatively low,” Veronica Nigh, chief economist at the American Farm Bureau, told Yahoo Finance recently. “While it’s tax dollars being used to support farmers, we’d generally argue keeping farmers in business, therefore keeping the supply of food ample, is in the nation’s interest…
“It’s not just a benefit to the farmers, but a benefit to everyone who eats as well.”
Adriana is an associate editor for Yahoo Finance. She can be reached at adriana@yahoofinance.com. Follow her on Twitter @adrianambells.
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