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Farm groups fear Trump aid won’t fix trade damage
Farm groups say President Trump's promised $12 billion aid to farmers is not enough to repair the damage from tariffs and are urging him to produce a long-term solution that will open foreign markets.
Farmers are expressing some support for the much-needed help but say it's more important for the administration to reverse course on the tariffs, which Trump argues he's using as leverage to bring trading partners to the negotiating table.
Agriculture groups and lawmakers have been calling on the Trump administration to stop imposing the tariffs because their products - from pork to soybeans - are being targeted for retaliation by other nations.
The American Soybean Association said that "producers cannot weather sustained trade disruptions."
"While soybean growers appreciate the administration's recognition that tariffs have caused reduced exports and lower prices, the announced plan provides only short-term assistance," said John Heisdorffer, the group's president and a soybean grower from Keota, Iowa.
U.S. soy prices have dropped more than $2 per bushel in the past couple months as the trade war between the U.S. and China ramped up.
"Our best course of action is to expand other markets and develop new ones to buy the soybeans we're not selling to China," he said.
Farm groups found themselves in a difficult spot Tuesday after Agriculture Secretary Sonny Perdue said the agency will authorize up to $12 billion for programs to help farmers caught in the tariff war, which would cover the estimated $11 billion in retaliatory tariffs on U.S. agricultural goods.
U.S. Trade Representative Robert Lighthizer said Trump is taking "strong action" "to make sure America's farmers and ranchers are not left to bear the brunt of illegal retaliation by China and other countries."
But farm groups say the assistance is only a short-term fix and are more concerned that American farmers will find themselves losing important export markets.
"This announcement is substantial, but we cannot overstate the dire consequences that farmers and ranchers are facing in relation to lost export markets," said American Farm Bureau Federation President Zippy Duvall.
"Our emphasis continues to be on trade and restoring markets, and we will continue to push for a swift and sure end to the trade war and the tariffs impacting American agriculture," he said.
Farmers argue that the economic cyclone of tariffs is creating long-term, irreversible damage that will cut into the $20 billion trade surplus in agriculture that has been built up over the years.
"Unfortunately, a one-time check won't replace the deterioration of long-term contracts and relationships," said Brian Kuehl, executive director of Farmers for Free Trade.
The aid also won't address other parts of the sector - from producers, to grain bin operators, to shippers.
"We urge the administration to take immediate action to stop the trade war and get back to opening new markets," Kuehl said.
Farm and business groups have both been putting a full-court press on Trump to stop the barrage of retaliatory tariffs between the U.S. and trading partners such as Canada, Mexico, China and the European Union.
The U.S. Chamber of Commerce, which didn't directly comment on the $12 billon plan, has repeatedly urged the administration to reconsider their tariffs policy.
"U.S. tariffs, together with Chinese retaliation, are disrupting global trade and supply chains, further damaging American businesses, workers, farmers, ranchers and investors," the Chamber wrote in its Section 301 submission to the Office of the U.S. Trade Representative on Tuesday. "Unilateral tariff strategies have no record of historical success and have always led to unintended consequences."
The White House's plan to provide aid to farmers for the tariffs also got a cold reception from congressional Democrats and Republicans.
"So, we have a policy now that is taxing the American consumer and then bailing out U.S. farmers with welfare," said House Financial Services Committee Chairman Jeb Hensarling (R-Texas) during a CNBC breakfast. "I don't get it. I don't agree with it."
"They put in place a policy that requires our farmers to go on welfare and, you know, it's a ridiculous policy that just needs to be reversed," said Sen. Bob Corker (R-Tenn.).
Sen. Chuck Grassley (R-Iowa) said farmers don't want government money, "we want markets."
"There'll never be enough money to solve the problem," said Sen. Jerry Moran (R-Kan.). "What happens when other countries gain our markets? Can you do $12 billion regularly? How long does this take?"
But senators have no way to stop the aid package from going into place next fall because Perdue will use his authority at the USDA to hand out the checks.
Despite the mounting criticism, Trump has defended his use of tariffs, arguing that the U.S. has been on the losing end of trade agreements.
On Tuesday, Trump assured supporters the steep tariffs will eventually bring benefits and called for patience for the plan to take shape.
"And the farmers will be the biggest beneficiary. Watch. We're opening up markets. You watch what's going to happen. Just be a little patient," he said during a speech in Kansas City, Mo., on Tuesday.
Mick Mulvaney, head of the White House budget office, said Wednesday that trade policy is harder than taxes and regulatory cuts because "you have to get the Chinese and other countries to do what you want them to do and change their behavior."
"That's really, really hard," he said during a CNBC breakfast in Washington.
But it's unclear how long Republicans will wait ahead of a midterm election. Experts warn that U.S. trading partners have targeted their tariffs in some cases toward red states that backed Trump.
The U.S. is in a trade deal with Canada and Mexico, the North American Free Trade Agreement, but has few other deals around the globe. The U.S. has no trade pacts with China or the EU.
Trump has levied tariffs of 25 percent on imported steel and 10 percent on aluminum. The White House also has slapped tariffs of 25 percent on $34 billion worth of Chinese imports. China quickly responded with an equal batch of duties. Another $16 billion is in the pipeline.
For now, despite Trump's aid, farm groups are still pressing for a change in trade policy.
Kent Bacus, director of international trade for the National Cattlemen's Beef Association, said that "trade agreements and trade enforcement are the most effective long-term solutions to the challenges faced by U.S. beef producers."
Iowa Corn Growers Association President Mark Recker said that the group will "support these payments if this stands as our only recourse."
"Ultimately, resolving trade differences and repairing relationships with our trading partners must be our top priority," he said.
Sylvan Lane contributed.