The Trump administration will provide $16 billion in aid to U.S. farmers continuing to be hit by steep retaliatory tariffs from China, Agriculture Secretary Sonny Perdue said May 23 as the White House attempts to lessen the effects on the Republican voting core.
Perdue told Fox Business Network that the aid will be provided to farmers feeling the burn from retaliatory tariffs from China, including producers of soybeans, wheat and meats. He claimed that China will pay for the $16 billion and that the revenue coming from U.S. tariffs will fund the aid package, a claim President Donald Trump has made before in tariff battles with various global economies.
"China's going to pay for these, the $16 billion of tariffs coming in," Perdue told Fox. "It's a transfer coming in, and we're doing again through the [Commodity Credit Corporation] program. ... But actually the tariff money that we were receiving, the revenue we were receiving is what the president has intended to fund the farmers who have been hurt by these retaliatory tariffs."
The aid comes as U.S. exporters prepare for a spike in Chinese tariffs to up to 25% on $60 billion of U.S. exports, including soybeans, beef, peanut oil, wheat and sugar beginning June 1.
U.S. exports of soybeans to China have plummeted as a result of Beijing's steep retaliatory tariffs against the farm product.
Source: The Associated Press
In a news release later May 23, Perdue confirmed that Trump instructed the USDA to authorize $16 billion in aid programs, which he said is in line with the estimated impacts from retaliatory tariffs on U.S. agricultural goods and "other trade disruptions."
The department said $14.5 billion in direct payments will be made in three tranches under the Commodity Credit Corporation Charter Act, with the first in late July or early August. The second and third tranches are tentatively scheduled for November and early January 2020.
Producers of certain farm products including soybeans, sorghum, wheat, corn and rice will receive payments based on acreage and total plantings, while dairy producers will receive a per-hundredweight payment on production history.
The payments will help absorb additional costs of managing disrupted markets, deal with surplus commodities, and expand and develop new domestic and foreign markets, the USDA said.
An additional $1.4 billion will be used to purchase surplus commodities, including fruits, vegetables and meats, by the Food and Nutrition Service for food banks, schools and elsewhere. A remaining $100 million will be issued through the Agricultural Trade Promotion Program to assist in developing new export markets.
Trump met with U.S. farmers and ranchers to discuss relief efforts the afternoon of May 23, saying in a news conference announcing the aid that farmers are not asking for subsidies but for a "level playing field." This $16 billion aid package follows $12 billion of relief authorized in 2018 for producers of corn, cotton, dairy, hogs, sorghum, soybeans and wheat to counter the economic effects of China's retaliatory tariffs for U.S. levies on the Asian nation's goods.
However, some farm groups have cautioned that the aid is a temporary fix rather than a permanent solution. Uncertainty over whether the trade spat between the U.S. and China will come to an end also has made planting difficult as exports have waned, oversupply of product is rampant and prices have plummeted as a result.
Trump and Chinese President Xi Jinping are likely to meet at the G-20 summit in Osaka, Japan, in late June to address stalled trade talks and alleged reneging on trade commitments in recent weeks.
Sen. Chuck Grassley, R-Iowa, the Senate Finance Committee Chairman and member of the Agriculture Committee, said the spat with China has undermined years of building up markets by farmers.
"Farmers don't want aid," Grassley told CNBC May 23. "They want trade. They want markets."
Perdue's comments come after the U.S. Agriculture Department said May 21 that its forthcoming aid package is being designed to avoid skewing planting decisions, adding that farmers should not form expectations "based on inaccurate media stories."
A May 21 report from Bloomberg said the cash aid could come in the form of $2 per bushel to soybean growers, 63 cents per bushel to wheat growers and 4 cents per bushel to corn growers. Perdue did not address specifics of the package, and the USDA did not immediately return a request for comment.
"Some of this $16 billion is going to be used for market access programs to go and build markets elsewhere," Perdue told Fox Business Network. "And if China decides not to play then we will sell these great products elsewhere."