White House explores new farmer bailout plan as US-China trade war heats up

President Donald Trump speaks Monday during a meeting with Hungarian Prime Minister Viktor Orbán in the Oval Office of the White House. Associated Press

WASHINGTON -- White House officials are scrambling to come up with a new bailout plan to placate furious farmers after President Donald Trump's initial idea of donating unused crops to poor countries came under scrutiny, people briefed on the planning said.

Amid intense political pressure from Senate Republicans, White House officials are eyeing different ways to advance funds to agriculture companies that have complained they are being caught in the middle of the escalating trade battle with China.

Senate Finance Committee Chairman Chuck Grassley, R-Iowa, said he planned to write a letter to Trump to explain the concerns of farmers because he felt the argument he had repeatedly made to the president in person was not registering.

"I'm not sure if you talk to him face to face he hears everything you say," said Grassley, who has emerged as one of Trump's chief critics on the administration's trade approach in recent weeks.

Pressed for details of the plan on Monday, Trump told reporters, "It's being devised right now."

Trump wrote on Twitter that farmers would be "one of the biggest beneficiaries" of his trade policies. He said that would come either from China buying more U.S. products or U.S. government making up the difference.

One idea under consideration would be an expansion of bailout funds from the Commodity Credit Corp., a division of the U.S. Department of Agriculture.

Trump already directed that the USDA pay out $12 billion to farmers last year who said they were rapidly losing funds because of new import penalties from China. But China signaled Monday that it plans to dramatically increase its restrictions in retaliation for tariffs that Trump has imposed on Beijing.

Sen. John Hoeven, R-N.D., who chairs the agriculture appropriations subcommittee, said U.S. officials would use a type of "market facilitation payment" but also make direct purchases on behalf of the government from U.S. producers.

He did not specify how much money would be directed to these initiatives, but he said some of it would be paid for with money that the Treasury Department brings in through tariffs on Chinese imports.

White House officials and Senate Republicans are looking for new ideas because many farmers are growing increasingly anxious as the trade war with China enters a second year. Soybean farmers, in particular, have been hit hard, but pork producers have also said they are experiencing a major impact. Other groups, including cherry producers, have said their businesses are suffering immensely.

Trump has long promised farmers that the trade deal with China would lead to enormous benefits for U.S. agriculture companies, and he has even tried to negotiate direct purchases of U.S. produce from the Chinese government.

But when broader trade talks faltered last week and Trump slapped 25 percent tariffs on $200 billion in Chinese goods, China immediately moved to retaliate, and a number of U.S. farm products will be impacted. China is one of the biggest markets for U.S. farm exports, and a shift in demand can leave many farmers without alternatives.

Hoeven said there was a chance that White House officials could attempt to purchase U.S. farm products and then give them to poor countries. A similar program was established under the Food for Peace Act.

But government officials have found that these programs are very difficult to administer, in part because it can be hard to move crops on a large scale to poor countries efficiently. There are also concerns that dumping large amounts of crops can disrupt the local farming infrastructure, and some poor countries do not need certain crops that could be in abundance in the United States, such as soybeans.

In addition, Grassley said there are strict limits on how U.S. officials could simply donate food to poor countries. He said the way Trump has discussed it could violate World Trade Organization rules.

"It's fair to say that I want to point out that there's problems with what he's planning to do, and he ought to take those into consideration," Grassley said.

Speaking to reporters Monday, Trump mentioned how he planned to give assistance to farmers, but he did not offer specifics in part because White House officials have not decided exactly how to proceed.

He estimated that the total aid package would be around $15 billion, which would come in addition to the $12 billion the White House gave farmers last year.

"They'll be planting," he said. "They'll be able to sell for less, and they'll make the same kind of money until such time as it's all straightened out. So our farmers will be very happy."