The Trump administration may again pay more taxpayer dollars to farmers harmed by Trump’s tariffs than the U.S. government spends on nuclear delivery systems and weapons. During Donald Trump’s first term, his administration used funding from the Commodity Credit Corporation to alleviate political problems caused by China retaliating against U.S. agricultural products. If the current trade war continues, the tactic likely will be repeated.
Failure Of Tariffs In First Term Led To Taxpayer Funds Sent To Farmers
During Donald Trump’s first term, his administration levied tariffs on Chinese imports. The Chinese government retaliated and focused its actions against U.S. agricultural products. As a result, U.S. farmers suffered.
In 2018, U.S. farmers’ soybean exports to China dropped by 75%, reported the U.S. International Trade Commission. U.S. agricultural exports to China plummeted from $24 billion in 2014 to under $10 billion in 2019.
Trade analysts had predicted that China would retaliate against U.S. exporters, but Trump and his team ignored the warnings. Instead, after the retaliation caused farmers financial pain, the Trump administration used the Commodity Credit Corporation as a type of political fund and doled out up to $30 billion to farmers.
Donald Trump was clear about why the administration made the payments. “I sometimes see where these horrible dishonest reporters will say that ‘oh jeez, the farmers are upset,’” he told attendees at an Illinois farmer show in August 2019, reported Bloomberg. “Well, they can’t be too upset, because I gave them $12 billion and I gave them $16 billion this year. . . . I hope you like me even better than you did in ’16.”
The Trump administration took advantage of the minimal legal requirements associated with spending by the Commodity Credit Corporation. “The Charter Act . . . grants the Secretary of Agriculture broad powers and discretion in the use of the CCC,” according to the Congressional Research Service. “These broad authorities that Congress has granted to CCC allow it to carry out almost any operation that is consistent with the objective of supporting U.S. agriculture. . . . Recent congressional action restoring CCC’s authority have allowed for the Trump Administration’s use of CCC to mitigate commodity price declines from retaliatory tariffs on a variety of U.S. agricultural products.”
Legal concerns did not stop Trump from using nearly all of the Commodity Credit Corporation’s $30 billion borrowing authority. “Senior government officials, including some in the White House, privately expressed concern that the Trump administration’s nearly $30 billion bailout for farmers needed stronger legal backing,” reported the Washington Post.
The Trump administration took credit for sending the money to farmers in a December 31, 2019, White House fact sheet: “The Trump administration has authorized a total of $28 billion in aid for farmers who have been subjected to unfair trade practices.”
The money spent on farmers increased the budget deficit and will do so again if the Trump administration uses the same tactic in 2025. “Since the two trade aid packages were undertaken using CCC’s discretionary authority, no congressional budget offset was required, and administrative PAYGO [the pay as you go budget rule] was not raised,” according to the Congressional Research Service. “The corporation’s permanent, indefinite funding authority means that trade aid expenditures are reimbursed annually as a net realized loss, thus increasing total federal spending.”
The Sequel On Tariffs May Look Like The Original
“A trade war with China during President Trump’s first term hit American farmers hard. This time, it could be worse,” reported the New York Times. “On Tuesday, China’s Ministry of Finance said it would add tariffs of as much as 15% on a wide range of agricultural imports from the United States, including chicken, wheat, corn and cotton. Beijing’s retaliation for escalating American tariffs on Chinese-made products also includes 10% tariffs on imports of sorghum, soybeans, pork, beef, aquatic products, fruits, vegetables and dairy products.”
Another cost for farmers is the more expensive potash used in fertilizer. The Trump administration put a 25% tariff on imports of potash from Canada. Donald Trump temporarily reduced the tariff to 10%. In his State of the Union address, Trump promised his tariff policy would benefit American farmers.
In addition to China, Mexico and Canada, the Trump administration has threatened to impose tariffs on goods from the European Union. EU leaders have promised to retaliate against U.S. products. Trump also plans to impose “reciprocal” tariffs on products from other countries. Economists warn that those and other tariffs will raise prices for consumers. Analysts say the Democrats likely lost the 2024 presidential election because high prices angered many voters.
In 2025, the U.S. Department of Defense will spend a projected $27 billion on U.S. nuclear delivery systems and weapons, less than the $30 billion in borrowing and spending authority for the Commodity Credit Corporation. According to the Congressional Budget Office, the budget for nuclear delivery systems includes the cost of ballistic missile submarines, intercontinental ballistic missiles, bombers and “other nuclear activities.”
In 2020, the National Foundation for American Policy concluded that spending on farmers due to retaliation from tariffs exceeded U.S. government spending on the nation’s nuclear forces. That will almost certainly be the case again unless the Trump administration ends the trade wars it has initiated worldwide.