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Advances this week in President Trump's plan to impose drastic tariffs around the world, his administration is weighing new emergency aid against farmers who are likely to be caught in the centre if their American trading partners retaliate.
Early discussions provide the implicit recognition that Trump's vast tariffs could unleash financial destruction across the US agricultural industry.
The president has not released details on the aid package, but his advisors recently informed him that he could follow a playbook similar to that he used in his first semester.
Such rescue packages were ultimately expensive, and the government fired around $23 billion after China placed high retaliation duties on soybeans, corn, wheat and other American imports in 2018. The money came from the US Department of Agriculture fund.
Agricultural secretary Brooke Rollins last week said the administration might try to provide emergency aid to farmers, and told reporters that Trump asked global trade to “in-place programs that could mitigate possible economic catastrophes.”
However, the prices could prove even higher as Trump threatened to target many countries, including US allies such as Europe, Canada, Mexico and Japan. The potential scope of their collective retaliation could cause deeper and more lasting harm to American businesses.
“We are a source of energy and energy,” said Joseph Glauber, a researcher at the International Food Policy Institute who served as USDA's chief economist.
According to four people familiar with the issue, administration officials discussed the early outlines of farmer relief with industry lobbying groups and Republican Congressional offices. They have raised several potential mechanisms to fund. Some of them may need laws, people said.
But expensive federal bailouts threaten to diminish one of the reasons Trump signs on pursuing protectionist policies in the first place: as the president himself said, the desire to steal “a lot of money.” Trump and his Republican allies say the new tariffs can help pay for their still-formed plans to expand and expand the set of expired tax cuts.
“In addition to the fact that consumers are affected by tariffs, there are now taxpayers in Hook,” said Alex Durante, a senior economist at the Tax Foundation.
The White House declined to comment, but officials who spoke only on condition of anonymity said the debate on tariff aid was preliminary given the ongoing debate over Trump's tariffs and negotiations with other countries.
USDA did not respond to requests for comment.
Trump recently signaled that his original, offensive ambitions might be relaxed, but he has advanced plans to impose “retaliatory” tariffs on countries that place duties and other costly trade barriers on US imports. The president has promised that tariffs starting April 2 will be important. He aims to raise revenue, reset the country's trade relations and Kajol companies, and manufacture more products in the US.
“We may be less than what they are charging. They charged us so much, so I don't think they can take it,” Trump said Monday.
Economists have widely warned that tariffs could fall significantly on American consumers, especially when raising prices to compensate for the fact that businesses have to pay more to import the goods they need. These fears have helped send this month's reliability tumbling to the lowest level of this month since January 2021, according to survey results released by the conference committee.
However, the impact on farmers is expected to be particularly severe. China, which has been hit by 20% tariffs since Trump took office, has already retaliated for taxation on chicken, wheat, corn and cotton. The European Union has created a fairly substantial list of agricultural and consumer products to target if Trump is doing good about his threat of imposing sudden tariffs on the bloc.
Many domestic producers worry that if Trump's tariffs reduce the price of goods and respond to taxing corn, eggs, soy and other goods on American exports, they can create something undesirable for foreign buyers.
“Obviously, we are interested in the economics of the place today,” said Kenneth Hartman Jr., an Illinois farmer who serves as chairman of the National Association of Corn Growers' Corn Committee.
Once Trump's tariffs come into effect, Hartman said his industry “want to see some new markets come into being.” However, he also expressed concern about the long-term trade war. This could lead US growers to hand over the market to foreign competitors. Worse, it faces the risk of severe retaliation from its longtime trading partners, particularly Mexico.
“That's probably our biggest concern right now,” Hartman said.
Retaliation for Trump's last tariff campaign, which began in 2018, caused $27 billion in agricultural exports over that period, estimated by USDA economists. Much of the loss came as a result of a trade war with China after Trump targeted a vast strip of country's exports, prompting Beijing to punish itself.
According to those familiar with the issue, one idea the administration weighed was whether to provide new tariff relief through the USDA's Product Credit Corporation.
Commodity Credit Corporation is the USDA's leading funding vehicle. It will support farm revenue, stabilize product prices and fund federal programs to respond to natural disasters. Its finances are complicated, but the entity can borrow up to $30 billion from the Treasury Department.
In Trump's first term, the USDA program raked money based on a formula that predicts farm losses. The funds saved some of the stab wounds from the trade war and gave Trump political benefits to the election year, but also faced serious complaints from farmers that aid was slow and difficult to access.
Josh Gakkle, chairman of the American Soybean Association, said industry preferences are “free and fair access to trade markets,” not government handouts. In the meantime, he said the administration hopes that from future tariffs the government can “find ways to deal with its economic impact on our farms.”
But questions are growing whether the USDA is free to fund farmers, particularly if Trump's upcoming tariffs will cause a widespread international blow.
The gap may require Congress to fill agency borrowing authorities early, raising complex political debates on Capitol Hill, where some conservative Republicans have historically criticised the USDA program and tried to limit the way the department uses its funds.
