Instead of paying off farmers, stop the tariffs
Coming in July or August, U.S. farmers should be getting payments from their government in an attempt to make up for the negative impacts of tariffs put in place as part of the federal government’s numerous trade wars across the globe.
A similar payout to farmers was organized last year, in the amount of about $10 billion so far. This next round of payments is supposed to mean $14.5 billion in direct payments to farmers.
“The new package covers three dozen commodities compared with the nine earmarked for aid in 2018,” according to Chuck Abbott with Successful Farming. “For this year, the USDA says it will calculate trade war damage per county and divide the money among farmers based on how many acres of the eligible crops are planted this year. The USDA will announce the payment rates later.”
$14.5 billion for farmers sounds great, until you realize a couple facts:
• That money isn’t extra money for farmers; it’s helping them dig out of holes the trade wars have put them in; and
• That money has to come from somewhere.
The best-case scenario is that farmers break even with where they were before tariffs were put in place. And even then, that outcome is significantly more expensive to the U.S. economy as a whole than if we never had any trade wars and just allowed free markets to do their thing.
President Donald Trump has claimed funding for the new farmer payments will come from U.S. tariffs on Chinese goods, but that doesn’t mean China is paying. It means U.S. consumers are paying. Tariffs on Chinese goods are paid by importers, who then pass the cost on to retailers, who pass the cost on to consumers. Farmers are consumers, as well, which means some of the money they’re getting back is money that came out of their own pockets.
There’s a good reason economists from across the political spectrum universally hate tariffs and trade wars: They makes things exceedingly complicated but accomplish nothing except higher prices and depressed economic activity. Neither of those things are good for quality of life or economic mobility.
The current gravity-defying U.S. economy is probably the only reason the current administration has been able to get away with this strategy of shooting farmers in the foot, then paying them off with bandages and Neosporin. In any other economic climate, the trade wars would have long ago ruined many industries and cratered opinion of current political leaders.
There’s a much better plan that could be employed by those in power now: Stop the trade wars while you’re still ahead. Give farmers back their economic independence before the economy dips — it will eventually — and the full reality of skyrocketing tariffs hits home with many of the people who put you in office.