Punish Chinese prices that cause painful reprisals. American farmers on the verge of bankruptcy. A bailout of several billion dollars to keep farmers afloat.
It was again in 2018 when the Trump administration is preparing to combat the same political crisis it was faced seven years ago when President Trump, who imposed rigorous prices on Chinese imports, had to protect the American agriculture industry from the benefits of his trade war.
Trump once again hit China with prices during his second term, arousing the same economically painful reprisals in Beijing. Consequently, the Trump administration is expected to unveil another series of economic support for farmers on Tuesday. The scale and mechanics of bailout remain unclear, but the crisis is even more urgent because China, the largest buyer of American agricultural products, has considerably reduced the purchases of American cultures this year.
“I’m going to do firm stuff this week,” Trump told the White House on Monday.
The need for federal agricultural aid demonstrates the limits of Mr. Trump’s trade program, which is based on prices to obtain a leverage in commercial negotiations which are intended to open markets for American exports. Instead, prices have increased costs for American farmers, who are faced with higher prices for fertilizers and equipment. At the same time, they lost their greatest client.
“We have an industry dependent on exports, we have angry its biggest customer and, Boom, we are now unfingasing the export industry,” said Scott Lincicome, vice-president of the general economy of the Cato Institute, a libertarian thinking group. “It’s a kind of train train slowed down six years.”
Farmers have long been a reliable block of voting for Mr. Trump, making it a rich target for reprisals. In Mr. Trump’s first term, China retaliated at its prices by imposing its own samples from American whiskey, cranberries, pork and soy. The benefits were so painful that the administration provided more than $ 20 billion in farmers.
Republican legislators have estimated that this time, farmers may need $ 50 billion in economic support.
From where this money will come from remains an open question. In 2018, the funds came from the Commodity Credit Corporation, a bucket of silver in the department of agriculture which is currently exhausted.
Trump discussed the funnel for pricing income to farmers, but it is not clear that he has the legal power to do so without authorization from the congress.
The United States is trying to bring China to restart purchases and have been conferences since May. But no agreement has been concluded, and China has rather turned to Argentina and Brazil to meet its agricultural import needs.
Trump administration officials justified the pain that American farmers experience if necessary to redirect a global trade system they keep is rigged against the United States.
The secretary of the Treasury, Scott Bessent, even blamed the Biden administration for the difficult situation.
“The Chinese followed during President Trump’s mandate in 2020,” said Bessent on CNBC last week. “And then under President Biden, their feet were not held at the fire for these AG purchases.”
Promising that “substantial” support was on the way, Mr. Bessent added: “It is regrettable that Chinese leadership decided to use American farmers, soy farmers in particular, hostage or pawn in commercial negotiations.”
Mr. Bessent has thousands of acres of soy agricultural land in northern Dakota.
Trump’s prices in 2018 forced China at the table and the two countries finally reached a limited trade agreement, which forced Beijing to buy 200 billion dollars of American agricultural products over a period of two years.
According to the Peterson Institute for International Economics, China only bought 83% of American agricultural products which it had started to buy until 2021.
Despite the current trade tensions between the United States and China during the Biden administration, China continued to buy American agricultural goods. This has ceased this year when Mr. Trump has increased prices on Chinese imports greater than 100%, which has increased China to increase its own tasks on American goods. American samples have since fallen to 30% and China has reduced its 10% reprisal rates.
Bessent, who directed negotiations with China, said at his confirmation hearing that he would rely on China to honor his commitments to buy the agreement concluded during Mr. Trump’s first mandate. However, despite several cycles of talks with Mr. Bessent, the Chinese have so far refused to honor this agreement.
Chinese negotiators suggested during recent meetings that they could resume the purchases of American soybeans, but that the United States should the same in distribution by abandoning its levies, according to negotiations.
Until July, China bought $ 2.5 billion in soy fewer than the same period last year and bought any since May. If Chinese buyers continue to hold, America will sell $ 10 billion less soy to China than last year.
The drop in sorghum exports is even more striking. Last year, China bought about $ 1.3 billion in American sorghum. But sorghum exports to China are down 97% this year.
Farmers’ income has already been under pressure for years.
Most producers of most row crops lost money in 2023 and 2024, and some have lost money in 2022. Next year should be as bad as, if not worse, 2025.
The cost of machines, fertilizers and seeds has increased more quickly than inflation in recent years, and interest rates have increased, while prices received for almost all crops are lower than the cost of production. Cotton global demand has fallen because textiles include more synthetic fibers, while corn prices are low due to an overabundance of supply.
Any rescue plan for farmers would probably require a lot of money to help them break. Shawn Arita, an economist at the North Dakota State University Risk Policy Center, projects, in total, the producers of nine crops in the row will lose $ 45 billion from what they planted this year, before any government payment. Producers of corn, soy, wheat and cotton are most of this total.
With the current harvest, farmers in the United States have called for government support, even if they say that they prefer to export their products to their customers.
“We certainly need a certain type of help,” said Andy Hineman, who cultivates sorghum, corn and wheat in Dighton, Kan. “I will be the first, if they distribute money, I take it and I will use it with pleasure in our operation.”
But he recognized that the government’s aid would only be a dressing and that some farmers were likely to go bankrupt, while others went through another season.
Ana Swanson Contributed reports.
