Key Takeaways
- President Trump announced plans to direct some tariff revenue to support farmers, but warned of short-term economic pain.
- The administration is exploring various options, including using Section 32 authority, to alleviate financial burdens on farmers amid tariff impacts.
- Legal uncertainties surround the use of tariff revenues, as Congress must ultimately approve any significant funding efforts.
Trump’s Tariff Revenue Plan for Farmers
President Trump stated on Thursday that his administration intends to allocate a portion of tariff revenues to assist farmers affected by trade tensions. During a press briefing in the Oval Office, Trump emphasized the commitment to ensuring farmers are financially stable, although he cautioned that there might be a period of hardship before these payments commence.
The president’s remarks align with comments from Agriculture Secretary Brooke Rollins, who indicated in a recent Financial Times interview that the administration was considering a bailout financed by tariff revenues. Speaking at the Ag Outlook Forum in Kansas City, Missouri, Rollins reiterated the administration’s dedication to exploring all available options for farmer support.
Republican lawmakers have also shown interest in utilizing tariff revenue for a potential bailout. House Agriculture Committee Chair Glenn “GT” Thompson noted that such payments might be incorporated into a future farm bill. However, Thompson later amended his stance, indicating possible legal hurdles in channeling tariff funds directly to farmers.
During Trump’s first term, the administration used the Commodity Credit Corporation to provide compensation for farmers impacted by tariffs. This fund, which has a borrowing limit of $30 billion, is already strained as it is being tapped for other payments within the coming months, making it unclear how much could remain for any new initiatives aimed at addressing tariff hardships.
Concerns have been raised that there may not be enough funds available to create a sufficiently large program to adequately support farmers. A former USDA official, speaking anonymously, expressed doubts about the feasibility of utilizing the $30 billion cap for this purpose.
The administration is also weighing the option of leveraging its Section 32 authority, which allows the use of 30% of tariff revenues to purchase surplus agricultural commodities. This strategy aims to both bolster domestic consumption and improve farmers’ purchasing power, as outlined by the Congressional Research Service. Traditionally, Section 32 has been applied to commodities not covered by other support programs.
However, there are significant legal limitations concerning Section 32. Experts indicate that only $350 million is available for direct payments aimed at restoring farmers’ purchasing power, with most of the funds directed toward USDA-administered child nutrition programs. The legality of using Section 32 to aid farmers remains uncertain, according to Harrison Pittman, director of the National Agricultural Law Center.
The ultimate ability to provide tariff assistance to farmers depends on Congressional action. A former USDA official suggested that clarifying the connection between tariffs and farmer assistance would be beneficial. Despite this, experts caution against underestimating the administration’s potential to act unilaterally.
Complicating matters further, the Supreme Court is set to review the legality of Trump’s tariffs in early November, which could impact the whole framework if the court finds that Trump exceeded his authority in imposing the tariffs. If the tariffs are declared illegal, the administration may have to refund collected tariffs.
In response to Trump’s announcement, Thompson expressed support for the president’s commitment to farmers and vowed to collaborate with the administration in formulating effective assistance strategies during these challenging economic times.
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