U.S. farmers are in the eye of the trade storm that’s erupted between the Trump administration and China, and the White House is reportedly considering a Depression-era program to give them some relief.
President Donald Trump and Beijing have been hurling tit-for-tat tariffs at each other in recent weeks, following Trump’s decision in March to impose tariffs on steel and aluminum imports. The spat trickled down to American farms in a real way when China, in its latest trade salvo, proposed a series of tariffs on 128 items worth some $50 billion. Among the items targeted by the Chinese are soybeans and a number of other agricultural products.
Now, amid fears that farmers will be the hardest hit by the brewing trade war, Trump is reportedly considering relying on a Depression-era program to bail out these Americans.
The program, the Commodity Credit Corporation, was created in 1933 to “stabilize, support, and protect farm income and prices” during the Great Depression. Initially created via executive order by President Franklin Roosevelt, it was incorporated under the Department of Agriculture in 1939. The CCC serves as a financing arm for the USDA’s farm price and income support commodity programs and agricultural export subsidies, and it’s authorized to engage in a series of activities to aid farmers.
During the Depression, the CCC allowed for the use of non-recourse loans, letting farmers keep their products off the market while prices were critically low. The loans, at 10 cents per pound, were above the average market price, and served as a form of price support to farmers.
With a broad range of authorities, the CCC could assist farmers today in a number of ways, including using a price support tactic similar to the one employed during the Depression. If the program is revived, its cost could climb into the billions, since it allows borrowing of up to $30 billion from the Treasury.
The White House is reportedly considering a number of options to address the concerns of farmers. However, Congressional lawmakers recently removed earlier restrictions on the CCC’s activities, potentially hinting at plans to revive the program. The change—subtly included in the massive $1.3 trillion spending bill, according to The Wall Street Journal—overturned years of precedent that had kept the CCC from supporting prices of agricultural goods.
Lawmakers are divided on the approach, though most who have spoken publicly have expressed concern. Sen. Pat Robert (R–Kan.) told The Washington Post that while he’s not “diametrically opposed to it,” he wants to ensure that the CCC isn’t misused by giving famers a financial incentive for products to sit idle. Sen. Joni Ernst (R–Iowa) expressed stronger misgivings about the program, saying that “farmers want to be productive.”
Farm groups just want to return to unimpeded trade with China. Farmer and vice president of the American Soybean Association Davie Stephens told The WSJ that “farmers are more interested in negotiation than mitigation,” arguing for a solution in which “tariffs don’t have to be implemented.”
And for his part, Trump acknowledged that farmers will be hurt by Chinese tariffs, but argued that they will be better off in the long-run.
“These are great patriots. They understand that they’re doing this for the country,” Trump said. “And we’ll make it up to them. And in the end, they’re going to be much stronger than they are right now.”
