(Bloomberg) -- U.S. farmers will see the first payments of a $12 billion subsidy program designed to shield them from a burgeoning trade war starting in September, Agriculture Secretary Sonny Perdue said.
“The mitigation payments will be eligible in September in some degree and into October and the fall,” Perdue said on the sidelines of an event at the U.S. Embassy in Buenos Aires. “It depends on when the farmer comes in and applies.”
U.S. President Donald Trump announced the subsidy this week as he sought to ease anxiety among farmers who feel they will be shut out of important markets in Asia. Trump has applied tariffs to steel and aluminum imports, threatened to place tariffs on vehicles made in the EU and said he will place levies on $500 billion of Chinese imports. All these measures have heightened tension that a burgeoning trade war may dampen global growth.
The U.S. soybean harvest is from September to November. Money for the payments will be tapped from programs already authorized by the U.S. Department of Agriculture, Perdue said. The subsidies would be for the 2018 crop season only because farmers couldn’t have foreseen current global trade feuding when they planted. In 2019, he added, growers won’t need the help as they’ll adapt their sowing plans to market conditions.
“It’s a one-time effort,” he said.
Farmers have a “legitimate anxiety” of losing export markets permanently should the trade war drag on for months or years, especially with South American supplies from Argentina and Brazil able to fill some of the void, Perdue said.
“But I hope it doesn’t go on that long,” he said. “The U.S. desire for global trade is to remove all tariff and non-tariff barriers. So, we hope to have all these little disputes resolved very quickly.”
Perdue was speaking at an event to celebrate the recent entry of U.S. pork into the Argentina after he met for two days in Buenos Aires with global counterparts from the Group of 20 nations. He pointed to the pork exports as a good example of free trade the G20 is seeking to promote.
He said an agreement in the works with Mexico on NAFTA should be reached “very soon”. Perdue’s Mexican counterpart Baltazar Hinojosa Ochoa said on Friday he saw talks closing within two months, even as Mexico looks to Argentina to diversify its corn and wheat supplies that currently come almost entirely from the U.S.
It’s down to the European Union to come up with a way of ensuring private buyers increase soybean purchases from the U.S. after the measure was included as part of a trade-war ceasefire, Perdue said.
©2018 Bloomberg L.P.
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