Column: Trump’s $16-billion farm bailout means you’re paying for his tariff war twice


We’ll say this for President Trump: When he misunderstands something, he misunderstands it more than anyone else in creation.

Take the business of tariffs. Trump is unshakably convinced that his tariffs are a tax on China. He repeated this grossly erroneous claim just Thursday, during his announcement of a new $16-billion bailout for farmers harmed by, yes, his tariff war.

“Just so you understand,” he said, “these tariffs are paid for largely by China. A lot of people like to say by ‘us.’ ”


Well, the people who say that are economists and other experts who have done the math, and found that the tariffs Trump has imposed on imports from China cost American consumers $68.8 billion last year, though some of that spending got funneled back to some domestic producers in the form of higher prices (which their customers, of course, paid).

The noose is getting tightened a little bit more than it was before.

— Jim Byrum, Michigan farm spokesman

But our main topic here is that $16-billion bailout, and what it says about who pays for Trump’s trade war and how much. The newly announced bailout comes on top of $12 billion in emergency farm aid he announced last year, aimed heavily at soybean farmers whose exports to China have fallen to zero, thanks to the trade war.

As Jordan Weissmann observes in Slate, the $28-billion total is “about what the U.S. spent last school year on Pell grants for college students.” That raises doubts about Trump’s priorities.

To get a sense of where these expenses fall, it’s worthwhile to follow the money. The $68.8-billion tariff cost estimated by a team of economists led by Pablo D. Fajgelbaum of UCLA is reflected in the prices of imports, which are passed through almost entirely to U.S. consumers.

The money is paid by importers to the U.S. government, which can redistribute it to the direct victims of the trade war, such as farmers, if it wishes. But that’s a narrow recompense.


It doesn’t help collateral victims, such as the buyers of foreign-made washing machines, the median price of which rose to $835 from $749 after tariffs were imposed on the appliances (at the behest of Whirlpool, a domestic manufacturer). It won’t help the estimated 40,000 beer industry workers who have lost their jobs, in part because of tariffs on the aluminum used to make cans, according to industry reports. Nor will it help others who lose their jobs if the tariffs foment a general economic slowdown.

Nor are the agricultural bailouts evenly distributed within the farm sector. They’re heavily concentrated among Midwestern growers, including soybean farmers, leaving dairy farmers and others wanting. It’s proper to note that the pain in this sector isn’t a direct result of U.S. tariffs, which at least return some money to the Treasury: It’s the result of retaliatory tariffs from China and other trading partners, which destroys foreign demand for U.S. production. No one pockets any gains from these tariffs; they’re simply a deadweight loss to international trade.

As farmers are well aware, the bailouts won’t compensate them for the longer-term damage to their export prospects. Soybean farmers can’t count their losses simply in terms of lower annual exports while the tariffs are in effect; they’re fearful, rightly, that when former customers such as the Chinese turn to other countries for their supplies, they may never come back. “The noose is getting tightened a little bit more than it was before,” Michigan farm spokesman Jim Byrum said a couple of weeks ago.

So U.S. consumers are paying a tax to the U.S. government in the form of higher prices for imported goods. Some of those funds are circulated back into the economy as emergency aid — but it’s not going back to all the consumers who paid the tariffs. Nor is it certain that the tariff revenue is actually going to the trade war victims: The government is running a deficit, caused in considerable part by the tax cuts enacted in December 2017, which largely benefited corporations and the wealthy. Arguably, it’s their tax breaks, not the losses of soybean farmers, that are being subsidized by Trump’s tariff revenue.

Moreover, because the farm losses are due to foreign, not domestic, tariffs, no revenue at all is coming to the United States as a result. The bailouts are our expense, completely. That’s another way in which the tariffs are paid not by China but by “us,” Mr. Trump. See how it works?

Keep up to date with Michael Hiltzik. Follow @hiltzikm on Twitter, see his Facebook page, or email

Return to Michael Hiltzik’s blog.