Nov 5, 2019

U.S. farmers could really use some help

Illustration: Sarah Grillo/Axios

Investors have been basking in the glow of the "phase one" trade deal between the U.S. and China, but farmers, who are supposed to be the main beneficiaries of the agreement, have reason to be wary, experts say.

What's happening: U.S. farmers have been suffering this year. Chapter 12 bankruptcies have risen 24% over the previous year, and farm debt is projected to hit a record high $416 billion.

  • While farm income is expected to reach its highest total since 2014, 40% of that income will come from trade assistance, disaster assistance, the farm bill and insurance indemnities, according to the American Farm Bureau Federation.

What we're hearing: That's "definitely not the normal," Farm Bureau chief economist John Newton tells Axios.

  • The $28 billion bailout package for farmers that President Trump signed earlier this year has "increased the percentage to a level we’ve not seen in a while."

The big picture: Newton says the amount of U.S. agriculture buys from China that Trump has cited — $40 billion to $50 billion — would go a long way toward getting farmers "back to a level playing field," along with the revamped NAFTA deal. But, analysts have expressed some doubts about the reality of such figures.

  • "Even if the deal is signed, it’s unlikely that either side could deliver on its bloated promises to sharply increase U.S. farm exports to China to $50 billion annually, or anywhere near that total," Peterson Institute senior fellow Jeffrey Schott wrote Monday.
  • Schott, a former Treasury Department international trade official, also noted that "Trump has many times announced Chinese plans to buy U.S. farm products like soybeans, only to pull back and charge Beijing with reneging."

Between the lines: Chinese imports of U.S. agricultural products totaled $24 billion in 2017 and peaked at $29 billion in 2013, according to U.S. government data. Imports fell to $9 billion last year as a result of the trade war.

  • Increasing imports to $40 billion would require removing a number of major technical and political hurdles.
  • These include China changing its laws banning hormones and drug residues in meat and reversing already made investments in Brazilian soybean shipments, industry analysts told Reuters in October.

The bottom line: The trade deal, which is supposed to be signed in a matter of weeks, is largely dependent on China agreeing to meet that $40 billion to $50 billion metric. If the deal falls apart, it's likely Trump will again escalate the trade war.

Go deeper: China is driving milk prices higher

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WSJ: Tariff revenue spiked to a record $7 billion in September

A truck passes by China shipping containers at the Port of Los Angeles. Photo: Mark Ralston/AFP via Getty Images

The U.S. amassed $7 billion in import tariffs in September, a 9% jump from figures in August and a 59% year-over-year increase due to new taxes on consumer goods, figures compiled by the Commerce Department show, per the Wall Street Journal.

Why it matters: President Trump has falsely said China is paying for the tariffs. Business executives and economists generally recognize the revenue as a growing burden on American importers and U.S. customers.

Go deeperArrowNov 6, 2019

Trump administration to offer additional relief to farmers amid trade war

Photo: Ricky Carioti/The Washington Post via Getty Images

The Department of Agriculture will distribute the second round of aid payments for 2019 aimed at buffering the impact of President Trump's trade war with China starting next week, according to a USDA statement.

The state of play: The administration already paid farmers $6.7 billion for production in this year and $8.6 billion last year, per Politico. The earlier payment in 2019 covered half of the farmers' eligible production, and the latest round will cover an additional quarter.

Go deeperArrowNov 16, 2019

10-year Treasury yield slumps as U.S.-China trade deal remains elusive

Data: FactSet; Chart: Axios Visuals

The yield on the U.S. 10-year Treasury note touched a three-week low on Wednesday after a Reuters report dashed hopes the U.S. and China would sign a "phase one" agreement before the end of the year.

The details: A trade "deal is still elusive, and negotiations may be getting more complicated," per Reuters.

Go deeperArrowNov 21, 2019