Soybeans are harvested near Stuttgart, Arkansas. In 2025, it is 2018 all over again as the Trump Administration prepares to address the same policy crisis it faced seven years ago. Photo / Rory Doyle, The New York Times
Punishing Chinese tariffs that prompt painful retaliation. American farmers on the brink of bankruptcy. A multibillion-dollar bailout to keep farmers afloat.
It is 2018 all over again as the Trump Administration prepares to address the same policy crisis it faced seven years ago when President Donald Trump, who imposed stiff tariffs on Chinese imports, had to shield the United States agriculture industry from the fallout of his trade war.
Trump has once again hit China with tariffs in his second term, eliciting the same economically painful retaliation by Beijing.
As a result, the Trump Administration was expected this week to unveil another round of economic support for farmers.
The scale and mechanics of the bailout remain unclear, but the crisis is even more urgent as China, the biggest buyer of American farm products, has drastically scaled back on purchases of US crops this year.
“I’m going to do some farm stuff this week,” Trump said at the White House on Tuesday.
However, despite hopes among farmers that a relief package would be announced yesterday, the White House said that the extended government shutdown had delayed such plans.
“No decisions regarding new agricultural policies have been made,” said Anna Kelly, a White House spokesperson, adding that Trump and Agriculture Secretary Brooke Rollins were in touch about the needs of farmers.
The need for federal farm aid demonstrates the limits of Trump’s trade agenda, which relies on tariffs to gain leverage in trade negotiations that are intended to open up markets to US exports.
Instead, the tariffs have pushed up costs for American farmers, who are facing higher prices for fertiliser and equipment. At the same time, they have lost their biggest customer.
“We have an export-dependent industry, we’ve angered its biggest customer, and, boom, now we’re bailing out the export-dependent industry,” said Scott Lincicome, the vice-president for general economics at the Cato Institute, a libertarian think-tank.
“It’s kind of a slow-motion train wreck six years in the making.”
Farmers have long been a reliable voting bloc for Trump, making them a rich target for retaliation.
In Trump’s first term, China hit back at his tariffs by imposing its own levies on US whiskey, cranberries, pork, and soybeans. The fallout was so painful that the Administration delivered more than US$20 billion ($35b) in aid to farmers.
Republican lawmakers have estimated that, this time around, farmers could need as much as US$50b in economic support.
Where that money will come from remains an open question. In 2018, the funds came from the Commodity Credit Corp., a bucket of money at the Agriculture Department that is currently depleted.
Trump has discussed funnelling tariff revenue to farmers, but it is not clear that he has the legal authority to do so without congressional authorisation.
The US has been trying to get China to restart purchases and has been holding talks since May. But no agreement has been reached, and China has instead looked to Argentina and Brazil to fulfill its needs for agricultural imports.
Trump Administration officials have justified the pain that American farmers are experiencing as necessary for reorienting a global trading system that they maintain is rigged against the US.
Treasury Secretary Scott Bessent even blamed the Biden Administration for the predicament.
“The Chinese followed through during President Trump’s term in 2020,” Bessent said on CNBC last week. “And then under President Biden, their feet were not held to the fire for these ag purchases.”
Promising that “substantial” support was on the way, Bessent added: “It’s unfortunate that Chinese leadership has decided to use the American farmers, soybean farmers in particular, as a hostage or pawn in the trade negotiations”.
Bessent owns thousands of hectares of soybean farmland in North Dakota.
Trump’s tariffs in 2018 forced China to the table and the two countries ultimately reached a limited trade deal, one that required Beijing to buy an additional US$200b of US farm products over a two-year period.
According to the Peterson Institute for International Economics, China bought only about 83% of the US farm products that it had committed to purchasing to 2021.
Despite ongoing trade tension between the US and China during the Biden Administration, China did continue to buy American farm goods. That stopped this year when Trump increased tariffs on Chinese imports above 100%, causing China to raise its own duties on US goods. The US levies have since fallen to 30%, and China reduced its retaliatory tariffs to 10%.
To July, China bought US$2.5b fewer soybeans than the same period last year and has purchased none since May. If Chinese buyers continue to hold out, America will sell US$10b fewer soybeans to China than it did last year.
The drop in sorghum exports is even starker. Last year China bought about US$1.3b worth of American sorghum. But sorghum exports to China are down 97% this year.
Farmer incomes have already been under pressure for years.
Most growers of most row crops lost money in 2023 and 2024, and some lost money in 2022. Next year is projected to be as bad as, if not worse than, 2025.
The cost of machinery, fertiliser and seeds has grown faster than inflation over the past several years, and interest rates have risen, while prices received for nearly every row crop are below the cost of production.
Global demand for cotton has fallen as textiles include more synthetic fibres, while corn prices are low because of a glut of supply.
Any bailout for farmers would probably require a lot of money to help them break even.
Shawn Arita, an economist at North Dakota State University’s Agricultural Risk Policy Centre, projects that, in total, growers of nine row crops will lose US$45b from what they planted this year, before any government payments. Growers of corn, soybeans, wheat and cotton make up the bulk of that total.
With harvest under way, farmers in the US have been clamouring for government support even though they say they would much rather be able to export their products to their customers.
“We definitely need some type of aid,” said Andy Hineman, who grows sorghum, corn and wheat in Dighton, Kansas. “I’ll be the first one, if they hand out money, I’ll take it and gladly use it in our operation.”
But he acknowledged that government assistance would be just a Band-Aid, and that some farmers were likely to go bankrupt, while others would limp through to another season.
This article originally appeared in The New York Times.
Written by: Alan Rappeport and Kevin Draper
Photograph by: Rory Doyle
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