As some of the US farm products continue to get run over by the retaliatory tariffs slapped by China, the Trump administration brews up plans to alleviate the harsh situation in the country by setting aside USD$4.7 billion of a monetary aide to farmers severely affected by the trade war it is currently engaging with Beijing.
According to Reuters, the US Department of Agriculture (USDA) has announced on Monday the administration's proposal to roll out an emergency plan to bail out the embattled US agricultural sector.
The "three-pronged approach" will see the release of about USD$4.7 billion as an initial aid for US farmers. More than half of the said amount will go to agricultural producers of seven basic commodities who were the first casualties of China's retaliatory tariff on agricultural products. These are farmers producing corn, cotton, dairy, hog, sorghum, soybean, and wheat farmers.
In a previous report from this site, Beijing slapped a hefty 25 percent levy on pork and other pork products on July. An additional 25 percent was later implemented on the said food commodity.
China is one of the largest importers of pork products especially "surplus" parts like the feet, brains, entrails, and hearts. These are deemed unpalatable to the American consumers.
All in all, the USDA is authorized to provide a total of USD$12 billion to offset the cumulative losses incurred by the US agricultural industry.
A small portion of this aid, consisting of up to USD$200 million will go straight to help develop international markets where US agricultural products can be traded.
Sonny Perdue, the USDA Secretary, told the press during a conference on Monday, that agriculture will certainly be the "tip of the spear" that other nations could use to hurt the US economy. It is then the initiative of the department to formulate a workable strategy which would help "mitigate the trade damages sustained" by the nation's farming sector, a report from CNBC said.
Nevertheless, the USDA official admitted that "economic pressure was already there for farmers" long before the US-China trade tariffs took place. The trade war just made it worse.
Ever since the trade spat exploded, prices of US agricultural goods took a nosedive. With markets such as China and its allies hitting US exports with additional duties, it makes it harder for the farmers to sell their crops.
What makes it worse is the surmounting product surplus. Given the perishable nature of the commodity, farmers are then forced to sell them at a very low price.
