This week began with a glimpse into how the gritty details of protectionist trade policy get hashed out – and it wasn’t pretty.
America’s farmers find themselves in an increasingly untenable situation, as their imports have become more expensive and their exports less desirable, thanks to the trade wars started by President Donald Trump. Sensing political vulnerability, the president held a roundtable with farmers at the White House on Monday afternoon to announce a long-awaited $12 billion bailout for American agriculture.
Trump’s tariffs have driven up input costs for farmers. Fertilizer prices skyrocketed; some cost $100 per ton more than a year ago.Trump has recognized a handful of the negative consequences, which is why, for example, he removed import taxes on certain fertilizers last month.
It was attempts at central planning and micromanagement that stuck farmers with higher costs in the first place. Nowhere is this more obvious than with soybeans. First, Trump cut off farmers from their biggest client, China, when he introduced “reciprocal tariffs” this spring, reducing their exports to near-zero. Farm exports to China alone dropped nearly 40 percent between the first half of 2024 and 2025. Then, certain he could tell the Chinese Communist Party how to spend its money, Trump got China to agree to buy 12 million metric tons of soybeans this year, and 25 million for the following three years, in exchange for lifting the bulk of other import taxes. Unsurprisingly, China has not been true to its word, buying only 20 percent this year of what was agreed.
The details of the $12 billion aid package were expected months ago, delayed in the autumn by the longest-ever government shutdown. What some economists estimate could be a $44 billion loss industry-wide this year will only be partially offset by this bailout. The loser here is American taxpayers, who top up farmers every year via direct payments through the Farm Service Agency.
None of this addresses the root problem, but it is typical of Trump’s arbitrary approach to policy: Rice farmer Meryl Kennedy praised the tariffs but complained that India, Thailand and China are “dumping rice” into the country. Trump asked Treasury Secretary Scott Bessent to follow-up. “Yes, sir,” he replied.
In other words, tariff policy for rice is formulated by a combination of flattery and rent-seeking. As for “dumping”, the rice coming from the aforementioned countries is mostly aromatic varieties that aren’t grown domestically. That makes them akin to coffee beans and bananas, which the president reversed tariffs on last month because they can’t be locally sourced — at least without gigantic greenhouses.
The toxic combination of guaranteed taxpayer relief and protectionist instincts have been undermining America’s farming industry since before Trump was born. Just as in the 1930s, the subsidies reflect the extent to which the federal government tries to control, and coerce, the market: price floors, excessive red tape, picking winners and forcing taxpayers to pony up to keep it all afloat.
The government treats agriculture like a national security concern that must be protected at all costs rather than like any other industry, which should succeed or fail on the value of its product. We reap what we sow, and that means higher food prices and fewer options while leaving many U.S. farmers, even after the handouts, worse off they would have been had he never imposed tariffs.
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