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Trump vows new farm bailouts as China purchases appear weaker than promised

UPDATED: Fri., Feb. 21, 2020

Reardan farmer Tom Zwainz fills a truck with grain during the harvest in August 2018. The U.S. Department of Agriculture said Thursday that China may miss purchase projects as part of the new trade deal. President Donald Trump promised Friday to provide additional bailout funding to American farmers if necessary. (Tyler Tjomsland / The Spokesman-Review)
Reardan farmer Tom Zwainz fills a truck with grain during the harvest in August 2018. The U.S. Department of Agriculture said Thursday that China may miss purchase projects as part of the new trade deal. President Donald Trump promised Friday to provide additional bailout funding to American farmers if necessary. (Tyler Tjomsland / The Spokesman-Review)
By Jeff Stein and Laura Reiley Washington Post

President Donald Trump promised in an all-caps tweet Friday to provide additional bailout funding to American farmers if necessary, as questions arise over whether China’s purchases of agricultural products will fall short of what it pledged in the recently signed trade deal.

Trump said he may expand the nearly $30 billion bailout program until the administration’s recently struck trade deals with China, Canada, and Mexico “kick in.” On Thursday, the U.S. Department of Agriculture’s chief economist, Robert Johansson, projected that agricultural exports to China would reach roughly $14 billion in the fiscal year that ends Sept. 30, far short of what White House officials said would take place based on the “Phase One” trade deal with Chinese leaders. White House officials have said agricultural exports to China would be between $40 billion and $50 billion in each of the next two years.

Trump also said in the tweet that the federal bailout funding will be “PAID FOR OUT OF THE MASSIVE TARIFF MONEY COMING INTO THE USA!” Tariffs are paid by U.S. importers on goods brought into the United States. Trump often says the tariffs are paid by foreign countries, but this is not the case. And critics have noted that U.S. companies often pass these higher costs onto U.S. consumers.

The president’s promise to extend the bailout program if necessary are a sharp reversal from what Trump administration officials have been saying for months. U.S. Agriculture Secretary Sonny Perdue said in January that there would be no need for additional bailout funding due to the trade deal with China.

But since a partial trade deal with signed with China last month, the coronavirus outbreak has severely hampered China’s economy, with normal operations at numerous Chinese firms delayed amid the spread of the disease. This has raised questions about whether Chinese officials planned to follow through on huge purchases of U.S. farm products when many of their businesses are operating at low capacity.

Speculation about another round of bailouts has been growing among U.S. farm groups, but the timing of the president’s announcement was a surprise. Some farmers were skeptical of Perdue’s recent promises that the bailout program would be ending, given the questions surrounding China’s commitment to making the agricultural purchases.

“Farmers are no dummies. They’ve seen this get rolled out the past two years, programs invented out of whole cloth,” said Robert Johnson, president of the National Farmers Union. “The president is going to do whatever he can to appease the farmers because it’s an election year. The only surprise here is the timing.”

The bailout was created by the Trump administration as a way to try to calm outrage from farmers who complained they were caught in the middle of the White House’s trade war with China. In an attempt to pacify farmers, the Agriculture Department created an expansive new program without precedent that makes direct payments to farmers. Unlike many other government bailout programs, farmers are not required to pay any of the money back.

The United States has already pledged or spent $28 billion in bailout payments to American farmers, an amount that is twice the size of the Obama-era bailout of the auto industry. Many Republicans assailed Obama’s actions, but they have largely been supportive of Trump’s assistance to farmers. In some cases, that assistance has gone to foreign-owned firms with plants operating in the U.S.

Senior administration officials previously expressed alarm about the administration’s legal justification for the maneuver, which they have based on a New Deal-era program. Congressional Democrats backed off an opportunity to force Trump to scale back the program amid pressure from Democratic lawmakers representing farm states.

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