And a politically favored sector at that. Many industries and companies have been hurt by the tariff wars (many more than the relative handful of intended beneficiaries, such as steel and aluminum companies). Yet, so far, the president has singled out only agriculture for a massive bailout. The reasons are obvious: American farmers are, indeed, being damaged financially by a policy they opposed, but they are also a vital constituency in the president’s reelection effort, strategically concentrated in red America. Other small businesses, meanwhile, are being left to fend for themselves.
To be sure, farm relief could be defensible as a short-term measure, to prevent collapse of an export-oriented sector of the economy caught up in hardball negotiations between two countries ultimately determined to make a deal. If Mr. Trump and Chinese President Xi Jinping manage to resolve bilateral economic differences within the next few months, then this year’s special spending for farmers, which came on top of last year’s $12 billion package, may go down in history as the price of progress.
However, indications are that positions are hardening on both sides and that Mr. Trump regards protectionist tariffs as desirable in and of themselves. Announcing the farm package on May 23, he implied it was only the beginning of a tariff-cum-bailout policy for agriculture: “We’ll be taking in, over a period of time, hundreds of billions of dollars in tariffs and charges to China. And our farmers will be greatly helped,” he said. “We want to get them back to the point where they would have had if they had a good year.”
The long-term threat is that temporary bailouts morph into permanent entitlements, as was the case with the original New Deal farm programs. To the extent U.S. agriculture has been able to wean itself off direct-payment subsidies in recent years, it is partly because of exports, which have accounted for about a fifth of farm production in the 21st century. The taxation of imports coupled with subsidization of domestic producers, by contrast, is the policy that weakened the competitiveness of countries such as Mexico and Argentina in the mid-20th century. What a tragic irony if the same country that once helped them escape that mercantilist trap were to blunder into it now.