Trump's Bailout for Farmers Makes Sense
Some outlets have reported that American farmers have been hit hard by bad weather, or, they are suggesting, they are hurting (somehow) because of Trump’s tariff war.
This is coming on the heels of suggestions at the White House that American agriculturalists may soon receive additional subsidies, or a bailout.
Let’s set the record straight. In the first place, farmers aren’t suffering from bad weather, nor are they being harmed by tariffs. That is not what’s taking place.
The White House has been taking up subsidies as a way to get more agricultural products out the door. Many seem unaware of this, but agriculture is one of the main ways in which the United States reduces our trade deficit with China.
China sells us cheap clothes, toys and housewares, and in return we need to give them…something in return.
Here’s a quick look at our top exports to China:
Semiconductors & Electronic Components – $19 billion
Soybeans – $15 billion
Aircraft – $13 billion
Oil & Gas – $11 billion
Automobiles – $8 billion
Pharmaceuticals & Medical Equipment – $6.5 billion
Cotton & Other Agricultural Products – $4.5 billion
Industrial Machinery – $3.5 billion
Chemicals – $3 billion
Tech Services & IP Royalties – $2.5 billion
As anyone knows, the U.S. has sought to restrict semiconductor sales to China—for security reasons—and China has retaliated by cancelling the purchase of aircraft.
China has also said that it will stop purchases of liquid natural gas (LNG).
These top items do not represent the bulk of our trade with China, but they are some some “easy hits” for our trade reps, and so they tend to get a lot of weighting in talks.
I wanted to raise this issue, because there have been some pretty vocal complaints by some in logistics. Why should a paltry 3 million farmers get subsidies when 8 million in logistics are the ones suffering amid tariffs.
To be continued, as they say.
Thanks for patience as I continue to figure out things here on Substack.