Farmers in the USA have been adversely impacted after the Trump administration imposed tariffs on aluminium and steel imports, triggering a trade war with several countries including China, which has announced retaliatory measures against American goods.
The size of the direct payments to farmers as a result of trade shortfalls would be unprecedented, said Scott Irwin, an agricultural economist at the University of IL. The tariff, which is a tax Chinese buyers pay the government to purchase the commodity, ensures Chinese buyers will buy from other countries. Because it’s an existing program, congressional approval isn’t necessary. The funds will go toward programs to assist farmers for losses associated with the tit-for-tat tariffs.
The move meant to cushion the blow for a politically important constituency was met with broad criticism by many farmers and farm-belt lawmakers, including Republicans.
And it is not just Europeans opposing these tariffs, but American companies as well.
In June when U.S. Secretary of Commerce Wilbur Ross announced the U.S. would be levelling a 25 per cent steel tariff and 10 per cent tariff on aluminum against Canada among other countries, he cited section 232 of the U.S. Trade Expansion Act, which handles trade matters considered a threat to national security.
Summit Agricultural Group CEO Bruce Rastetter on the impact of tariffs on American farmers.
“It’s a Band-Aid on a broken leg”, said Michael Petefish, a 33-year-old Trump supporter and fifth generation soybean farmer in southern Minnesota. At current prices, most farmers lose money on corn, dairy, soybeans and pigs.
The size of the aid package is in line with the estimated $11 billion cost of the tariffs to American farmers. Since 2013, overall annual net farm income has decreased by 50 percent, and the USDA predicts it will drop to negative $1,300 this year.
“The administration must develop a support mechanism that will mitigate the significant damage that is being inflicted upon our most vital worldwide markets for years to come”, he said in a statement. The Trump administration will reportedly give $12 billion in aid to farmers hurt by the tariffs.
For instance, China is the biggest buyer of USA soybeans, importing more than $12.4 billion worth of the oil seed in 2017, according to the Peterson Institute for International Economics. Still, an extended trade dispute that lingers into the fall harvest – and elections – holds the potential to shake that support.
Wang Huiyao, president of the think tank the Centre for China and Globalisation, said Trump was also trying to show to China and other countries that he was determined to carry on with the trade war.
Trump has threatened to impose tariffs on imported cars, prompting the Europeans to suggest they may place tariffs on $20 billion of American goods in retaliation.
Republican senators Tuesday condemned the Trump administration’s $12 billion bailout plan for farmers hit by crippling tariffs on their goods.
Unfortunately, America’s hard-working agricultural producers have been treated unfairly by China’s illegal trading practices and have taken a disproportionate hit when it comes to illegal retaliatory tariffs, he said.
Earlier Tuesday, the president praised tariffs in a tweet.
Tariffs are the greatest!
President Donald Trump slammed critics from within his own party for “weakness” after a number of Republicans vented about a new $12 billion package to aid farmers who are suffering from new foreign tariffs in an escalating trade war.