Perdue Says Second Tranche of Trump Tariff Payments is On Its Way

Farmers can expect a cash injection of billions of dollars in Trump tariff payments later this month or in December, said Agriculture Secretary Sonny Perdue on Thursday. "We hope that trade will supplant the need for aid in 2020," he said, pointing to progress in negotiations to resolve the Sino-U.S. trade war.

So far, producers have received nearly $6.7 billion in Market Facilitation Program payments, as the trade war payments are officially known, on this year's crops and livestock. When the administration announced the stopgap aid last summer, it said a second and third tranche of $3.65 billion would be offered in November and January "if conditions warrant."

"We just got authorization for the second tranche," Perdue said during a teleconference from Mexico City, where he was part of an agricultural trade mission. "We'll be getting it ready at the end of this month, or December."

If negotiations with China are successful, trade war payments will not be necessary next year, said Perdue. U.S. farm exports fell by 6% during fiscal 2019, the first full year of the trade war, to their lowest level in three years, said the USDA. Sales to China, formerly the No. 1 customer, totaled $7.5 billion, roughly one third of their level before the countries imposed high tariffs on each other's products. Soybeans are the leading U.S. casualty.

U.S. and Chinese negotiators tentatively agreed on the removal of some of the tariffs as part of a "phase one" agreement that has yet to be completed. President Trump says the agreement will oblige China to buy $40 billion to $50 billion of U.S. farm products over two years. Officials "continue to haggle over terms," said the Washington Post. "Among them: the extent to which the U.S. will roll back tariffs on Chinese imports as well as specific Chinese pledges to protect the intellectual property and trade secrets of U.S. companies." Initially, the agreement was to be signed in mid-November. Now a December ceremony is possible.

"If the two parties reach the first-phase agreement, they should, in accordance with the contents of the agreement, simultaneously and proportionally cancel the tariffs that were already raised," said China's Commerce Ministry spokesman Gao Feng. "This is an important condition for reaching an agreement."

The tariff rollback "faces fierce internal opposition in the White House and from outside advisers," said Reuters, citing unnamed sources. Critics feared the United States would lose leverage if it agreed to the move.

Farmers and ranchers received $8.6 billion in Trump payments to mitigate the impact of the trade war on 2018 production. Early this week, a nationwide poll for the Ag Economy Barometer found that farmers, by a 2-to-1 margin, expect there will be Trump payments on 2020 crops.

Perdue said Mexican agriculture officials share the desire of U.S. leaders for congressional approval of the United States-Mexico-Canada Agreement. Mexico ratified the "new NAFTA" last summer. Canada says it will act as soon as the United States does. House Democrats have worked for months with U.S. trade representative Robert Lighthizer to refine the pact's labor, environmental, pharmaceutical, and enforcement provisions.

"The longer it goes," said Perdue, "it could get entangled in [election-year] politics."

On Thursday, the National Pork Producers Council launched a campaign supporting ratification of the USMCA. The campaign, dubbed "It's pork o'clock somewhere," is the latest move by farm groups to push for a vote on the trade pact this year. "A USMCA agreement provides much-needed market certainty for U.S. pork producers, ensuring zero-duty market access to two of our largest export markets," said pork council president David Herring, a North Carolina hog farmer.