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Economy

CTW: Farm Aid or Band Aid?

May 27 , 2019

Originally billed as "short-term pain," the US-China trade war seems to be unfolding into long-term troubles.

Speaking at the White House on Thursday, President Trump announced a hefty $16 billion aid package for farmers impacted by the prolonged US-China trade war, $14.5 billion of which will be distributed via cash payment.

Now entering its 10th month, the trade war between the world's two largest economies has had an outsized impact on American farmers, who are losing business due to China's retaliatory agriculture tariffs and extreme weather conditions. Roughly 60 percent of US soybean exports once ended up in China, but without Chinese demand, the Department of Agriculture predicts that the country's soybean surplus will reach 895 million bushels by September, more than double what it was in 2018.

Following last year's $12 billion package of emergency farm aid, the Trump administration's second aid package is once again intended to "help keep our cherished farms thriving and make clear that no country has veto on America's economic and national security," Trump said at a press conference Thursday. Farmers donned in cowboy hats stood by supportively as the president made his comments.

As the 2020 presidential election looms overhead, analysts see Trump's latest round of farm aid as a move to secure support from farmers and lower-income voters, the core of his voting base. Critics are calling the move a "band aid," while others believe that the President is "leveraging his tariffs to blackmail China into following his way," according to James Nolt in his latest article for China-US Focus.

While Trump prepares the country for what seems to be an even lengthier trade dispute, President Xi Jinping is doing the same, calling on the Chinese people to prepare for a "new long march," echoing the country's shared memory of prolonged war.

Some analysts believe that this level of competition may be the "new normal," including Lawrence Lau, author of "The China-U.S. Trade War and Future Economic Relations."

The first round of cash payments in President Trump's aid package is expected to reach farmers as early as late July. Until then, onlookers on both sides of the Pacific will have to wait until the next round of US-China trade negotiations, which are scheduled to occur in over a month.

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