Donald Trump has used trade wars and tariffs to muscle through better terms with trading partners, resetting the table to undo what Trump argues were deals that robbed the US. In the meantime, however, the brinksmanship has done its own damage, especially to the agricultural industry, where farmers have lost significant income from exports that normally would have taken place.
The White House has studied the issue for weeks, especially mindful that rural America is Trump's power base. Early in the Schumer Shutdown, the administration began discussing how to buffer American farmers from the damage done by trade wars. Today, they have launched a new program that will indemnify farmers against $12 billion in losses:
The Trump administration is planning to announce $12 billion in aid to U.S. farmers, according to administration officials, as the agriculture sector grapples with the fallout from President Trump’s far-reaching tariffs.
The aid package is expected to be unveiled at the White House on Monday afternoon, where Trump is holding a roundtable with farmers, the officials said. Top administration officials have been discussing the bailout behind the scenes for months.
Much of the aid—$11 billion—will be in the form of one-time payments through the Farmer Bridge Assistance program, which helps U.S. crop farmers. The remaining $1 billion will go toward commodities not covered under the bridge assistance program, the officials said. Bloomberg earlier reported the details of the bailout.
The aid will be a shot in the arm to soybean farmers, who have faced devastating financial losses this year. Farmers have said the extra money would help them pay down their debts this year and finance the cost of planting next year’s crop.
As the talks dragged on, especially with China, the worry was that slack prices would impact the next cycle of crops and force food prices to rise in the coming year. The $12 billion package aims to supplement the next cycle as well as make up for the losses this year. The big question is where Trump will find the money for this aid.
Politico reported two months ago that Trump wants to use tariff revenues for the backstop:
USDA’s Commodity Credit Corporation fund — which President Donald Trump previously tapped to provide $28 billion in farm aid during his first-term trade war with China — has just $4 billion left in the account. Trump officials, including those at the Treasury Department, are looking at how to tap tariff receipts or other funding to supplement the payments without triggering a messy fight in Congress. ...
Hill Republicans have been pushing Agriculture Secretary Brooke Rollins and other Trump officials for weeks to do something to aid farmers reeling from high input costs and the president’s tariffs, which have cut off American soybean farmers’ key markets in China as Beijing retaliates.
Trump has said he would use tariff revenue to provide cash bailouts to farmers, but Congress would likely need to vote to authorize such a move, triggering a major fight between Republicans and Democrats amid already dire government spending conversations.
The "dire" conversations got wrapped up temporarily in the collapse of the shutdown, or at least the brinksmanship did. Congress still has to pass the rest of the FY2026 budget before January 30 or pass another CR to extend negotiations. Farmer subsidies generally have widespread bipartisan support, but an attempt to redirect tariff revenue may generate pushback from Democrats, as Trump's tariffs are too much his signature policy to incorporate into bipartisan solutions.
Of course, there are other options. Congress could fund the program itself apart from tariff revenues. It sounds a little absurd to suggest that $12 billion is a relatively minor outlay for the federal government, but FY2026 at the moment has a budget of $1.69 trillion in discretionary spending (and far more in mandatory or statutory spending). This funding would amount to 0.7% of all discretionary spending in the projected FY2026 budget. Alternately, Trump could redirect spending from other USDA appropriations, although that could trigger a fight with Congress later.
Whatever the White House and Congress choose, they will likely need to choose quickly. Trump finally got China to commit to a robust purchase of soybeans, but no one's quite sure whether they will fulfill that promise:
Trump has said for months he would provide aid to farmers because of the trade disputes. He reached a trade deal in October with China, the largest customer for U.S. soybeans.
But Chicago soybean futures fell below $11 a bushel Dec. 8 for the first time since October amid uncertainty over whether China will buy as much U.S. supply as Washington expects.
“Under the president’s direction, these farmers will have a backstop if in fact we are not able to move these commodities out,” Rollins told reporters Oct. 16.
The American Farm Bureau Federation said Nov. 24 that aid was “urgently needed” with farm bankruptcies on the rise, as the costs to grow crops outpaced the revenues farmers received.
This was "urgently needed" in mid-October. It's likely at a crisis level at the moment. And with that crisis comes political risk for Trump and the GOP, which will face a very bleak harvest season at the midterms if farmers don't turn out for Republicans.
