WASHINGTON (AP) – United States (US) President Donald Trump rolled out another USD16 billion in aid for farmers hurt by his trade policies, and financial markets shook on Thursday on the growing realisation that the US and China are far from settling a bitter, year-long trade dispute.
US Agriculture Secretary Sonny Perdue said that the first of three payments is likely to be made in July or August and suggested that the US and China were unlikely to have settled their differences by then.
“The package we’re announcing today ensures that farmers do not bear the brunt of unfair retaliatory tariffs imposed by China and other trading partners,” Perdue said.
The latest bailout comes atop USD11 billion in aid Trump provided farmers last year.
“We will ensure our farmers get the relief they need and very, very quickly,” Trump said.
Seeking to reduce America’s trade deficit with the rest of the world and with China in particular, Trump has imposed import taxes on foreign steel, aluminium, solar panels and dishwashers and on thousands of Chinese products.
US trading partners have lashed back with retaliatory tariffs of their own, focussing on US agricultural products in a direct shot at the American heartland, where support for Trump runs high.
William Reinsch, a trade analyst at the Center for Strategic and International Studies and a former US trade official, called the administration’s aid package for farmers “a fairly overt political ploy”.
“It’s not economics,” Reinsch said. Trump wants win the farm states again in the 2020 election, “and he’s got members of Congress beating up on him” to resolve the trade conflicts.
Financial markets slumped on Thursday on heightened tensions between the US and China. The Dow Jones industrial average fell 286 points, or one per cent, to 25,490. It had been down 448 points earlier in the day.
US crude plunged six per cent on fears that the trade standoff could knock the global economy out of kilter and kill demand for energy.
Economists at the New York Federal Reserve, meanwhile, estimated the latest round of tariff hikes will cost the typical US household USD831 a year. “In sum, according to our estimates, these higher tariffs are likely to create large economic distortions and reduce US tariff revenues,” the New York Fed economists wrote.
Talks between the world’s two biggest economies broke off earlier this month with no resolution to a dispute over Beijing’s aggressive efforts to challenge American technological dominance. The US charges that China is stealing technology, unfairly subsidiaing its own companies and forcing US companies to hand over trade secrets if they want access to the Chinese market.
Trump and Chinese President Xi Jinping are expected to discuss the standoff at a meeting of the Group of 20 major economies in Osaka, Japan, next month. There are no current plans for talks to occur before then.
Speaking to reporters on Thursday, Trump suggested that he might be willing to make the embattled Chinese telecommunications giant Huawei part of the trade talks with China. His administration last week put Huawei, which it has called a threat to national security, on a blacklist that effectively barred US firms from selling the Chinese company computer chips and other components without government approval. The move could cripple Huawei, the world’s largest manufacturer of networking gear and second-biggest smartphone maker.
“I can imagine Huawei being included in some form of a trade deal,” Trump said. He offered no details but said any arrangement “would look very good for us, I can tell you that”.
Briefing reporters on the farm aid package, Perdue said he doubted that “a trade deal could be consummated before” the first payments to farmers in July or August.
