Trump's Argentina bailout deepens Illinois farmers' woes
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A soybean farm in Dwight, Illinois. Photo: Scott Olson/Getty Images
The Trump administration threw Argentina a financial life raft this week, and Argentina promptly responded by offering China an enticement in the form of untaxed soybeans.
Why it matters: Illinois farmers stand to lose big. We grow more soybeans than any other state and formerly counted China as our No. 1 soy market.
- But amid President Trump's current trade war, Chinese orders for this year's U.S. soybean harvest stand at zero while Brazil and Argentina reap the rewards.
State of play: Argentina suspended its 26% soybean export tax this week, leading China to double its Argentine soybean purchases overnight.
- The move further prices out U.S. soybean farmers, who are already grappling with a 20% retaliatory tariff imposed by China.
What they're saying: China's purchase of South American soybeans and the fact that "U.S. farmers are shut out of various markets does hurt us," Andrew Larson, director of government relations at the Illinois Soybean Association, tells Axios.
- "Obviously, we would love to be able to fill the demand, but we know that Argentine farmers do too."
The other side: "The soybean farmers have been screaming for assistance since we took office," a senior White House administration official tells Axios. "So this isn't new. And the president is going to help."
Between the lines: That "help" could come in the form of huge subsidies, similar to the $28 billion the Trump administration paid out to farmers in the wake of export losses from the president's 2018 trade war with China.
- A Trump administration official tells Axios the next round of bailout money could come from various sources, including diverted tariff revenue.
Zoom out: Worry over lost agricultural sales stretches across the Midwest.
- "There is a growing concern that as the harvest ramps up, the piles of corn and soybeans will not have the markets they once had, causing further downward pressure on commodity prices and the farmers' bottom line," Ty Higgins of the Ohio Farm Bureau tells Axios.
Republican House members from soybean country are speaking up.
- "This is a bitter pill for North Dakota soybean farmers to swallow," U.S. Rep. Julie Fedorchak (R-N.D.) said.
- Axios reached out to Illinois' Republican representatives on the issue, but none responded.
The intrigue: Purdue agricultural economist Joanna Colussi tells Axios that, based on current data, China could theoretically skip U.S. soybean purchases all together this year and fulfill Chinese domestic demand with Argentine soybeans alone.
The bottom line: The U.S. propped up Argentina, and Beijing reaped the reward, potentially leaving American farmers as collateral damage.