The Trump administration is spending $28 billion to bail out farmers hurt by the president’s trade war with China – a huge sum that some experts say overestimates the economic losses inflicted by the conflict.
Joseph Glauber, a former chief economist at the Department of Agriculture, told Bloomberg News that according to his analysis of multiple research papers on the subject, soybean farmers are being overcompensated by the bailout program. “It’s clear that the payment rates overstated the damage suffered by soybean growers,” Glauber said. “Based on what the studies show, the damages were about half that.”
Soybeans are far and away the largest single crop affected by the trade conflict, but other crops have been hurt as well. Glauber said that most farm products have taken less of a hit than estimated by the USDA, though there are probably a few that may be even worse off.
The bailout is certainly having an effect on farm income. The USDA forecast last week that net farm income will total $92.5 billion in 2019, a 10% increase over the year before. Nearly 40% of that income will come the bailout payments, disaster assistance, federal subsidies and insurance payments.
Still, farmers are facing serious problems in the long run, as the trade war threatens hard-won export markets that may not recover once the conflict ends, assuming it ever does. “You’re ruining a huge export market,” said Yuqing Zheng, an agricultural economist. “Longer term, we don’t know for sure what the impact will be. Even if there is no future tariff, China might import less from the United States.”