Local farmers aren’t quite sure what to make of President Donald Trump’s seeming embrace, over the weekend, of a world without government subsidies for people who make products for export.
“What exactly is he talking about doing?” said Doug Trantham, who grows cotton and corn in Alexandria. “Until he says more, I don’t know where you go with it.”
Trantham was hard at work on the farm Saturday when Trump made an early departure from the G-7 economic summit in Canada. In remarks to reporters, the president seemed to embrace a philosophy of free trade that was at odds with his protectionist image so far.
“No tariffs, no barriers, that's the way it should be — and no subsidies," the president said according to CNBC and other outlets. Later in the same press conference, the president said: “You want a tariff-free, no barriers and you want no subsidies."
The remarks may have been throwaway lines by a president known for mystifying policy pronouncements and sudden shifts of tone. Coming from a president who earlier this month imposed tariffs on steel and aluminum, they certainly seem to be a change of course. And they would seem to be a challenge to the roughly $20 billion the U.S. spends per year on subsidies for farmers. Renewal of those subsidies is expected to be up for debate in the U.S. Senate this week in the form of a five-year Farm Bill.
“There are really two questions here — one about tariffs and the other about subsidies,” said Henry Kinnucan, an agricultural economist at Auburn University who studies food trade.
Trump ran for office on a promise to protect U.S. industry from foreign competitors. His recent tariffs on steel and aluminum imports were widely seen as a response to “steel dumping,” a practice in which countries with government-subsidized steel markets allegedly flood competing nations with cheap steel in an effort drive competitors out of business.
But Trump didn’t mention steel in his G7 summit remarks. He talked instead about Canadian tariffs on milk — an industry that, in the U.S. is subsidized.
“Dairy is one of the most protected products in almost every country,” Kinnucan said. In the U.S., he said, the government in essence guarantees dairy farmers a price and agrees to buy up any surplus milk they produce.
Most subsidies no longer work that way, Kinnucan said. Decades ago, he said, the government would set an expected price for crops and reimburse farmers if the market didn’t meet the expected price. Current subsidies usually take the form of crop insurance that will reimburse a farmer for a bad year when crop yields are too low.
Kinnucan said it’s not clear farmers are getting hurt by free trade.
“Generally, in most of U.S. agriculture, we’ve had a positive trade balance forever, almost,” Kinnucan said. “That’s generally interpreted as a sign that we have an advantage.”
‘Doesn’t know anything’
Farmers have typically been free-traders, Kinnucan said, and could be spooked by the prospect of trade war.
“If we start putting tariffs on feed coming from Canada, they’ll start putting tariffs on pork,” he said. “And on and on, and where does it stop?”
John Bert East, who grows cotton and corn in Cherokee County and leads the county branch of the Farmers Federation, said a world without tariffs would work fine for him, if the playing field were really even.
“There’s a lot of technology that we have to pay for that they don’t have to pay for,” East said. To make ends meet, East said, American farmers often buy genetically-modified, pesticide-resistant crops that are easier to grow. Americans pay fees to the producers of the seeds, he said. Some other countries don’t require those fees, and Europeans generally don’t buy genetically modified food, he said.
Asked about Trump’s statement on ending subsidies, farmers seemed to find the question difficult to parse. Did the president really mean getting rid of all tariffs and all subsidies? In agriculture?
Wendell Wilson, Calhoun County director of ALFA, declined comment, saying he didn’t know the situation well enough. He referred questions to Trantham, another ALFA member.
“I’d be willing to give up subsidies,” Trantham said. “I always have been.”
Still, Trantham is quick to say that he’d support an end to subsidies only of the playing field is truly level.
“If you’re going to use our products in a trade war, you’re probably going to need some kind of price supports,” Trantham said.
Trantham cited the 1980 grain embargo against Russia. Meant to punish the Soviet Union for the invasion of Afghanistan, the embargo led to a surplus of grain on the U.S. market and caused grain prices to drop.
Mary Johns, a spokeswoman for ALFA, said the organization usually does take a small-government approach, but doesn’t want an outright end to all tariffs and subsidies.
“Because global trade is complicated, we want to make sure those subsidies and tariffs make it possible for farmers to farm, because it’s a national security issue,” she said.
Trump’s thoughts on subsidies have been hard to track over time. A White House budget proposal earlier this year would have cut subsidies. A Washington Post report from April said Trump was considering extending subsidies to farmers.
Kinnucan, the agriculture professor, said it’s possible the President doesn’t have a good grasp of what crops are subsidized and by how much.
“He seems like someone who doesn’t know anything, and doesn’t want to know anything,” Kinnucan said.