$12 Billion Could Do A Lot For Water Infrastructure
Last week’s news that Europe and the U.S. are pulling back from the brink of a tariff war caused markets and stocks to surge. But the tariff situation with China is still unresolved, with additional U.S. tariffs on $200 billion worth of Chinese goods set to take effect, along with further Chinese retaliatory measures. China has already announced retaliatory tariffs on $34 billion worth of American products, including soybeans, corn, wheat, beef, dairy products and sorghum, with significant effects on markets as exporters, shippers and farmers try to adjust. According to the National Grain and Feed Association, China began canceling U.S. soybean purchases as the import tariffs hit, lowering commitments to buy 366,000 metric tons of U.S. soybeans in the season that ends August 31 and cutting purchases by 66,000 tons in the following year.
On the tariff issue, President Donald Trump has come in for significant criticism from businessmen and Republican free traders who support other parts of his agenda. In particular, U.S. corn and soybean farmers, whose business with China has ballooned in the past decade, have been extremely worried about the effects of Trump’s trade moves. Many observers fear that market shifts in response to the president’s trade moves and provocations could well become permanent, to the detriment of already-stressed U.S. farmers.
To mitigate this criticism, Agriculture Secretary Sonny Perdue announced a $12 billion bailout package for farmers. The aid would come from a mix of payments to producers under the Commodity Credit Corporation (CCC) Act, buyouts of products for distribution to food banks, and efforts by the CCC’s Foreign Trade Service to “develop new export markets.”
It was immediately savaged by Republican senators.
Sen. Bob Corker (R-Tenn.) called on the Trump administration to end what he called an “incoherent” tariff policy and said Trump was “offering welfare to farmers to solve a problem [the Trump administration] created.” Sen. Ben Sasse (R-Neb.), a frequent critic of Trump on trade policy, wrote, “This trade war is cutting the legs out from under farmers and the White House’s ‘plan’ is to spend $12 billion on gold crutches. America’s farmers don’t want to be paid to lose—they want to win by feeding the world. This administration’s tariffs and bailouts aren’t going to make America great again, they’re just going to make it 1929 again,” he said.
With this president, it’s hard to tell what is posturing, what is a serious proposal and what is designed to confuse opponents or keep them off guard. Trump’s defenders insist that China will “blink” and that the tariffs will not become permanent. This $12 billion aid proposal may be a negotiating tactic. But it does raise a significant question.
This is a president who seemed unwilling to commit significant amounts of federal money to his touted infrastructure plan, supposedly on cost grounds. Instead, he wanted to shift the infrastructure cost burden to the states and private entities that might charge lock tolls, a move unanimously opposed by our industry. Fortunately, cooler heads in Congress were able to ensure at least adequate funding for the Corps in this year’s appropriation.
But now we learn that a “spare” $12 billion is available to help farmers—under U.S. Department of Agriculture spending authorities. Shifted to other parts of the budget, that $12 billion could go a long way toward addressing remaining shortfalls in waterway (and other) infrastructure needs. Unlike short-term relief for farmers (which would not have been necessary absent the tariff issue), the results of that spending would significantly strengthen our long-term transportation advantage. That would help farmers and everyone else.