If Clabaugh were a soybean farmer, he might be eligible for some of the $12 billion in federal funding the Trump administration has made available to specific U.S. farmers, an effort to shield them from China’s new tariffs on their products. Those farmers started getting their bailout checks last month, but the bailout is available only to specific groups of producers, excluding other firms and workers along the long supply chain built to connect Chinese markets with U.S. products.
The incomplete nature of the farm bailout underscores the administration’s challenge in assessing the broad fallout from Trump’s trade war and deciding which victims should be compensated for their losses and which should have to pay for them out of pocket.
The administration says it’s targeting those directly affected by foreign retaliation, sending funds to producers of cotton, corn, dairy, sorghum, wheat and pork, among other commodities. In August, Agriculture Secretary Sonny Perdue said in a news release it would help “mitigate the trade damages sustained by our farmers” from “unfair” retaliation by foreign countries.
But critics charge the administration’s efforts are arbitrary at best and, at worst, a politically motivated attempt to shield a group of Republican voters from the economic pain of Trump’s policies — particularly ahead of a difficult midterm election.
Larry Kudlow, the president’s top economic adviser, said the bailout plan was crafted with input from Sens. Charles E. Grassley (R-Iowa), Joni Ernst (R-Iowa) and John Thune (R-S.D.), allies of the president and farm-state Senators.
Sens. Maria Cantwell and Patty Murray, Democrats from Clabaugh’s home state of Washington, said they were not consulted on the plan.
“It is bad enough that President Trump and his administration started trade wars that punish hard-working families and endangers their long-term access to overseas markets, but it would be even worse if they picked and chose who got aid based on the political map,” Murray said in a statement. “The workers in Washington state are no less impacted by the president’s reckless policies than anyone else.”
There is no bailout mechanism for a host of other firms losing cash from the trade battle: grain elevators that store soybeans, Midwestern farm equipment vendors that report a slowdown in sales, or even workers — including some at the same farms getting bailout checks — who could be hurt by the industry-wide slowdown. Ocean carriers have also reduced trips between Asia and the West Coast, while shipping companies like FedEx are bracing investors for the trade war.
Other farmers have complained that the Agriculture Department’s bailout plan unfairly favors soybean producers, with wheat, corn and cherry farmers arguing their payments should be significantly higher based on their losses.
“We’re not seeing anywhere near the volumes we’re used to,” said Clabaugh, president of the longshoremen’s union at the Port of Vancouver in southwestern Washington State. “This bailout money may help big farmers, but will it trickle down to the truck driver who takes it to the railroad station? Or the rail driver who takes it out west? Or the longshoreman who loads it onto the ships?”
The USDA did not return multiple requests for comment about whether other businesses directly hurt by the trade war deserve help under the bailout. A White House spokeswoman also did not respond to questions about whether the program had an uneven impact.
The losses appear likely to mount as the trade spat broadens. Trump last month threatened to add tariffs on an additional $267 billion on Chinese imports — part of an ongoing escalation that saw Beijing slap 25 percent tariffs on U.S. soybeans in July.
Soybeans are a major U.S. export, particularly to China. But the tariffs have made Chinese demand “anemic,” according to an analysis earlier this month by the Agriculture Department. U.S. soybean exports to China fell from more than 2.5 million tons in September 2017 to 67,000 tons in September 2018, the USDA analysis found.
Dock workers on the West Coast appear to have been hit particularly hard, as soybean exports to China at many ports have slowed to a trickle.
At Washington state’s Port of Kalama, the outgoing volume of soybean exports to China fell by 95 percent from last year, according to federal data analyzed by Jock O’Connell, an international trade economist at Beacon Economics. The port processed about $1.62 billion in soybean exports in 2017, which amounted to 48 percent of the port’s export trade business.Like the Port of Vancouver, the Port of Longview in August shipped no soybeans to China, down from shipments worth $24 million the August before.
Most of the bailout money is expected to compensate soybean farmers, including the bulk of the first $4.7 billion in direct payments to farmers. The three-pronged aid package includes direct cash payments to farmers, a $1.2 billion program to purchase farm goods and distribute them to food banks, and a $200 million program to promote exports in foreign markets. The size of farmers’ payments is determined by a USDA formula that accounts for the “severity of the trade disruption” facing their commodity, as well as the volume of their production.
The bailout program, not approved by Congress, was created unilaterally by the White House under a little-known program that dates back to the Great Depression.
Brandon Seidl, who has worked at a grain elevator in Longview, Wash., for about 20 years, said a number of co-workers have begun reining in their spending. Whereas there are typically seven days’ worth of work at the grain elevator, he said, the most recent months have only seen three days of available work.
“Soybeans have been one of the big fall crops, and we’re not moving them,” Seidl said.
Jared Smith, 38, a Vancouver longshoreman, has been struggling to work the required hours to secure benefits for next year after having shoulder surgery and missing the beginning of 2018. He’s optimistic he can work enough hours by December, but the dramatic slowdown in soybean shipments has left him feeling unsettled.
Smith expressed frustration that payments would go to sections of the country that frequently support Republican candidates, but would leave out workers in Democratic strongholds such as Washington State.
“People are worried and people are scared — and they are scared because there’s no answers or plans to know that this will be over at a certain point,” said Smith, who drives the crane that loads soybeans and wheat onto the ships. “Trump knows who is voting for him, and he knows it’s not longshoremen — the farmers are voting for him so he has to pay them to keep their vote.”
Some in the industry say they’re optimistic Trump’s trade gambit will yield results, including Rick Hawbaker, operations manager of Van Wall Equipment in Iowa. Hawbaker said customers that have been buying less and more frequently opting for half-priced used options, but he added he’s hopeful for the future.
If the trade tensions abate soon, the damage done to these supply chains is likely to be temporary. Firms along the supply chain are more likely to be able to survive a relatively shorter downturn in business.
But many in the industry fear a prolonged tariff battle could lead Chinese customers to permanently shift their supply routes, by either shifting purchases to other markets or by reducing their dependence on U.S. farm products, said Peter Friedmann, executive director of the Agriculture Transportation Coalition.
“Once you shift a source and establish a new supply chain to feed you, it takes a long time to ever get that back,” Friedmann said. “The Chinese can start buying their hay from New Zealand and their soybeans from Brazil, and all that work in the middle will be lost.”