USDA Announces $12 Billion Trade Assistance Plan

July 26, 2018

This week U.S. Secretary of Agriculture Sonny Perdue announced a $12 billion plan to support farmers hurt by retaliatory tariffs imposed by U.S. trading partners.  In acknowledgment of the disproportionate effect on U.S. farmers of trade retaliation, President Trump directed Secretary Perdue to implement a plan to protect U.S. farmers and agricultural interests. USDA’s trade assistance package will help offset the roughly $11 billion in negative effects suffered by U.S. agricultural producers.

“This is a short-term solution to allow President Trump time to work on long-term trade deals to benefit agriculture and the entire U.S. economy,” Secretary Perdue said.

In announcing the trade assistance package, USDA Secretary Sonny Perdue stated, “USDA will not stand by while our hard-working agricultural producers bear the brunt of unfriendly tariffs enacted by foreign nations. The programs we are announcing today help ensure our nation’s agriculture continues to feed the world and innovate to meet the demand.”.

Recent U.S. decisions to impose tariffs on steel and aluminum in addition to other imports from China have provoked retaliation in the form of countermeasures by China, the European Union, Mexico, and Canada on thousands of U.S. exports, including corn, rice, soybeans, sorghum, cotton, fruits, nuts, wine, wood, cheese, and pork.

In providing this aid to farmers negatively impacted by tariffs, USDA is exercising its authority under the Commodity Credit Corporation Charter Act. USDA will provide aid via three programs:

  1. Market Facilitation Program: This program will provide payments directly to the farmers who have been the most affected. Producers of soybeans, sorghum, cotton, wheat, corn, dairy, and hogs will receive direct payments associated with the 2018 production year.
  2. Food Purchase and Distribution Program: USDA’s Agriculture Marketing Service will purchase any unexpected surplus of affected commodities such as fruits, nuts, legumes, beef, pork, and milk. The purchasing process is expected to continue over several months.
  3. Trade Promotion Program: USDA plans to implement a new trade promotion program similar to the existing Market Assistance Program and Foreign Market Development Program. The program will work to enhance current export markets and develop new ones through trade shows, promotions, and by alleviating regulations and other barriers. Unlike the other two programs, this program will be open to all agriculture commodities.

While Congressional approval is not required to implement the trade assistance package, specific details will be subject to a formal administrative rulemaking process. There is still a lot that is not known about the plan. USDA has not disclosed the amount of payments, although officials mention payments will be based on production. Other determinants for assistance remain unclear.  USDA officials expect to announce more details around Labor Day.

USDA dismissed concerns that the new trade assistance package violates WTO commitments with regard to trade-distorting subsidies. When the U.S. joined the WTO, negotiators agreed to cap trade-distorting domestic subsidies at $19.1 billion annually. USDA says that even with the new assistance, U.S. subsidies remain well below that cap.

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