$12bn Trade War Bailout For US Farmers Announced By Trump Administration

A $12bn plan aimed at helping the US farmers who are hurt by the escalating trade was unveiled by the Trump administration.

In the wake to various countries raising import taxes for US products such as soybeans in retaliation to the tariffs imposed United States President Donald Trump. This aid would help and protect the farmers and the industry

The plans of the US government include providing subsidies to the farmers and buying off unsold crops.

Farmers have been irked by the tariffs and they constitute an important voting group for Trump.

Trump has said that his tariffs have been imposed to put pressure on other countries to alter their policies towards exports from the US.

After countries strike new trade deals, farmers would be the “biggest beneficiary” of the disputes Trump said in a speech on Tuesday.

But according to the agriculture industry that generates about 20 per cent of its revenues from exports is of the view that demand for US produce is being hurt by the approach of the president and the relationships that the industry has with buyers is being hit for the long term.

Since April, there has already been a fall of 15 per cent in the prices for soybeans following the announcement of retaliatory tariffs by China which is also one of the largest buyer of the crop.

“Farmers need stable markets to plan for the future,” said Brian Kuehl, executive director of the industry group Farmers for Free Trade, which represents pork producers, corn growers and others.

“As such, we urge the administration to take immediate action to stop the trade war and get back to opening new markets.”

The trade disputes could result in total losses of about $11 billion for the sector, expects the US Agriculture Department.

US officials said that direct payments to farmers for produce such as soybeans, sorghum, and wheat, would be the major use of the $12bn in emergency relief. The amount does not need to be approved by the Congress.

The government also plans to use the money to purchase some other crops like fruits and nuts and then distribute them to food banks and other government nutrition programmes. Boosting of export efforts would account for expenditure of a part of the money.

“This is a short-term solution that will give President Trump and his administration time to work on long-term trade deals that benefit agriculture and all sectors of the economy,” US Agriculture Secretary Sonny Perdue said.

The package has bene backed by some Republicans and even Democrats.

But the aid package was criticized to be a short-term solution for a problem that has been self-inflicted by industry groups that represent agriculture, and politicians from agricultural states.

“Time and time again I’ve heard from farmers that they want trade, not aid,” said Senator Ron Johnson, a Republican from Wisconsin.

“Instead of throwing money at a problem we’ve helped create, the better option is to take action to make it easier for our farmers – and manufacturers – to sell their goods at fair prices to consumers around the world.”

Senator Rand Paul, a Kentucky Republican, tweeted on Tuesday: “If tariffs punish farmers, the answer is not welfare for farmers. The answer is remove the tariffs.”

Senator Ben Sasse, a Nebraska Republican, said in a statement: “This trade war is cutting the legs out from under farmers and White House’s ‘plan’ is to spend $12 billion on gold crutches.”

(Adapted from BBC.com)

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Categories: Economy & Finance, Geopolitics, Regulations & Legal, Strategy, Sustainability, Uncategorized

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