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Secretary Perdue Appeases Aggrieved Farmers

08/22/2018

Faced with increased tariffs and embargoes on U.S. agricultural commodities including soybeans, Secretary of Agriculture Dr. Sonny Perdue commented on the longer-term issues in a recent television interview. He characterized the retaliatory tariffs imposed by China and the E.U. as “a little bit like weight loss…it’s kind of painful to start with, but you’re healthier at the end.”

The Administration has offered $12 billion to compensate farmers for losses on exports but no details have been provided as to how the one-time payment will be made and when farmers will receive compensation. It is not known whether the $12 billion offered will be adequate to make up the difference between anticipated revenue and what will be obtained from the 2018 crop due to be harvested in October.

Recent discussions at sub-cabinet level suggest that there is some movement towards resolution of what must be regarded as a tariff war, but again no specifics on resolution are in sight.

Let us hope that Dr. Perdue finds common cause with his constituency in a weight-loss program. Both he and farmers are experiencing the pain, but by the end of the year, we hope that farmers’ bank accounts will be fatter and the Secretary leaner.

On August 23rd, a 10 percent tariff was imposed on $200 billion in imported Chinese goods covering 6,000 product lines. Not only has this action elicited a proportional response from China, but the net effect of increased duties will be to escalate costs of domestic production which will be passed on to consumers, adding to rising inflation.