The $12 Billion Farm Bailout Is Only the Latest Cost of Tariffs

“You reap what you sow,” goes the biblical adage. It’d be hard to find a more literal application of it than the White House’s trade policy.

In one of the least surprising developments of the year, the president is offering farmers an enormous bailout after his tariff policies left them unable to compete on a level playing field. As another (one-time) New Yorker said, it’s déjà vu all over again.

During the president’s first term, an ill-advised tariff scheme invited foreign retaliation that battered American farms and led to bailouts that cost taxpayers more $20 billion. The tab for the latest round will be $12 billion, and it may not be the last.

Farmers are being hurt in two main ways. First, they’re paying more for machinery, equipment, fertilizer and other essential products, eating into their margins. Second, they’ve lost much of their customer base as a result of retaliation and boycotts by other countries, including China. In October, the president said he’d struck a deal with China to resume purchases of US soybeans, but there was never any guarantee it would hold. Sure enough, the administration has already been forced to backtrack on its terms.

Combined with several years of unusually big harvests, these government-imposed obstacles — rising costs and reduced demand — have left farmers facing falling crop prices and collapsing profits, leaving many of them struggling to survive. Farm bankruptcies have risen this year. Some are calling it a “blood bath.”

By and large, farmers would much rather keep their customers than accept a government check. Yet the White House is effectively turning them into wards of the state, while trying to convince taxpayers that someone else is footing the bill. The president says that the $12 billion bailout will be funded by tariffs. In fact, the money will come from a discretionary fund at the Department of Agriculture.

One might argue, as the administration does, that money is fungible and tariff revenue can more than offset such costs. But where has that revenue come from? Not from foreign businesses, as the president claims, but almost entirely from US consumers and businesses. A tariff is a sales tax on imports paid by domestic buyers. Companies pass most of the costs off in the form of higher prices, while absorbing the rest, lowering profits. By one estimate, the tariffs will result in an average surcharge of $1,100 per US household this year, and higher still next year.

No less important is a general principle about free enterprise: Government tax policy shouldn’t be based on cutting the legs out from under essential industries with one hand while handing them a crutch with the other. There’s a word for such a program — socialism — and Republican presidents once recognized its harms.

Agriculture is hardly the only industry that has been hobbled by tariffs, which are fueling inflation and unemployment, stressing family budgets, and hurting businesses. Farmers are the first to require a bailout, but — barring action by Congress or the Supreme Court — they may not be the last.

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