Republican lawmakers are beginning to fear they’ll have to enact billions of dollars in new aid to rescue farmers harmed by President Donald Trump’s escalating trade wars with China, Canada, and Mexico.
Running Low on USDA Funds
A USDA fund Trump tapped for a $28 billion farm bailout during his first-term tariff clash with China is now running low, lawmakers say. After upcoming payments are made, there will only be an estimated $4 billion left for the Trump administration to spend on any fallout from his newest trade battle, according to two people granted anonymity to describe internal conversations. Farmers are warning that their products will be harder to sell if the three countries retaliate with their own tariffs.
Impact on Bipartisan Spending Talks
Replenishing that fund could become another sticking point in the bipartisan spending talks happening ahead of a potential mid-March government shutdown. With farm-state Republicans expecting federal help from the fund, known as the Commodity Credit Corporation, to offset any trade-war impacts on their constituents, Democrats could make their own steep demands in exchange.
Long-Term Concerns
Crippling retaliatory tariffs during Trump’s 2018 trade war with China resulted in deep financial losses for U.S. farmers. The new round of threatened tariffs — this time targeting the U.S. agriculture industry’s top three trading partners — are rattling Hill Republicans and farm interests once again.
It’s not just the immediate threat of price spikes and economic losses that’s of concern. There’s also a fear that tariffs could reshape markets for decades to come: China, for example, has increased its purchases of corn, soybean, and other farm products from Brazil and other rising competitors since the 2018 trade war.
American Farm Bureau Federation’s Warning
“The long-term harm is what concerns me,” said one Hill Republican granted anonymity to air private worries. Among those raising alarms is the American Farm Bureau Federation, which this weekend detailed the immense fallout for rural America should the trade wars proceed. New levies “may inadvertently create financial hardships for U.S. farmers and ranchers who are already operating on very thin or negative margins,” the group’s president and long-time Trump ally Zippy Duvall wrote to the president Friday.
Tariff Escalation
Trump on Saturday went forward with 25 percent tariffs on Canada and Mexico, as well as new 10 percent tariffs on China, sparking the threat of retaliatory actions by those countries against American imports. Trump agreed to suspend the Mexican tariffs for 30 days on Monday, and Canadian Prime Minister Justin Trudeau announced Trump had agreed to a similar pause.
Republican Perspectives
Republican lawmakers, for the most part, have not joined in the dire warnings about blowback for farmers and consumers. Some — including Ways and Means Chair Jason Smith (R-Mo.), who is hoping to use tariff revenue to help offset the cost of extending GOP tax cuts — are strongly backing Trump’s tariff threats.
Among the few GOP members who have spoken out are Sens. Chuck Grassley (R-Iowa) and Mitch McConnell (R-Ky.). Several farm-state Republicans are pushing the White House to make specific exemptions to the tariffs. Grassley, for instance, pushed to exclude Canadian potash — a mineral mix used in fertilizer production.
Effectiveness of Tariffs
But many others in the GOP privately say they don’t expect to break with Trump. And others claimed the pauses granted to Canada and Mexico were proof Trump’s strategy is working. “What President Trump is doing with tariffs or the threat of tariffs … it’s sometimes changing their behavior, and has, in fact, changed the behavior of Mexico just today,” said Sen. John Barrasso of Wyoming, the No. 2 Republican leader. “So it’s an effective tactic.”
