U.S. Farmers Receive a Rescue Package for Trade War Losses

August 28, 2018
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Ongoing international trade disputes have been justified by the White House as necessary for economic growth, and to claw back losses from what many perceive as unfair trade imbalances. The United States has a massive trade deficit with countries like China and other trade partners. From a high-level view, bringing balance to trade is something that is both necessary and long overdue. However, at the grass roots, almost literally so for farmers, international tariffs have caused significant damage.

Seemingly in recognition of the fact, the White House and the USDA have agreed to make up to $4.7 Billion of rescue package payments to U.S. farmers who are struggling to stay afloat.

First Round of Payments for Farmers to Start Almost Immediately

On Monday, Agriculture Secretary Sonny Perdue told the media that funds would be made available to farmers who had been directly impacted by overseas tariffs. China, Mexico, Canada, and the European Union have all levied tariffs on agricultural and food products since President Trump introduced heavy steel and aluminum tariffs earlier this year.

A total fund of $12 Billion has been agreed, with the $4.7 Billion being an initial payment. The USDA says that additional payments would be made in the coming months if they are needed.

Soy farmers have been impacted the most, and they will receive up to 75% of the allocated rescue package. Cotton, dairy, pork, wheat, and sorghum farmers have also suffered significant damages, and the hardest hit will receive a portion of the remaining funds.

Some of the Funds Will Be Used to Create New International Markets

Not all the money will go directly to farmers. Up to $200 Million will be used to promote U.S. products in international markets, with the aim of creating new opportunities for farmers in markets where they were previously underrepresented, or not represented at all.

While a weaker year for smaller farmers might not impact investors directly, there is still a significant knock-on effect in the form of reduced economic output. Investors should see this latest news as being positive, as it will help to keep the agricultural economy afloat in what has been a trying time with ongoing international trade tensions.

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