(Originally published in The Dispatch)
We are all seeing how tariffs damage economies by raising prices, distorting markets, and encouraging foreign retaliation against our export industries. What we see less of is the swamp-infested cronyism that tariffs encourage: When tariffs are enacted, as with the 2018 steel and aluminum tariffs, lobbyists rush to seek exemptions for individual businesses.
By my colleague Judge Glock’s count, those 2018 tariffs prompted 425,000 requests for exemptions, 200,000 of which have been approved based largely on political donations and connections. These individual business carve-outs, however, pale in comparison to the budget-busting tariff bailouts likely headed back to the farmers of deep-red America.
During President Donald Trump’s first term, farmers received $24 billion on top of their regular farm subsidies to compensate for the loss of access to foreign markets resulting from Trump’s trade war, such as China’s 25 percent retaliatory tariff on American soybeans. Then, in 2024, even as candidate Trump promised a more aggressive trade war that could cripple the farm economy, rural voters nonetheless preferred Trump to Kamala Harris by a 30-point margin. Trump earned a staggering 78 percent of the vote in the 444 counties most heavily dependent on farming.
In short, farm country voted overwhelmingly to unleash a new trade war. And now these same farmers and their political leaders want taxpayers to finance another round of bailouts to protect them from the consequences of their own votes. Congress already approved $10 billion in “emergency” payments to farmers during President Joe Biden’s final days, and now Trump has reportedly told Agriculture Secretary Brooke Rollins to “have some programs in place that would potentially mitigate any economic catastrophes that could happen.” Congress and the farm organizations are already discussing how to structure such a taxpayer bailout.
Another farm bailout should infuriate taxpayers. Consumers and businesses who paid $16 billion in tariff costs last month are not receiving any federal taxpayer bailouts. Other American export industries that will suffer from a prolonged trade war—such as software, electronics, pharmaceuticals, and energy—are not receiving any broad-based federal bailouts (just those lobbyist-negotiated individual carve-outs). Yet farmers—who actively endured an earlier Trump trade war and then provided overwhelming vote margins to return Trump to the White House to unleash an even more destructive trade war—are now set to receive special taxpayer protection from the consequences of their own votes.
What happened to the Republican belief in individual accountability? Republicans love to lecture low-income voters that poverty is a moral failing, and they argue that shielding poor families from the consequences of their poverty-inducing decisions will undermine the necessary incentives to change their behavior. Apparently, such tough-love approaches do not apply to Republican voters, who are always quick to explain why their own taxpayer bailouts and welfare payments are different.
“Farm country voted overwhelmingly to unleash a new trade war. And now these same farmers and their political leaders want taxpayers to finance another round of bailouts to protect them from the consequences of their own votes.”
True economic conservatives (all eight of us remaining) will not be surprised to learn that such bailouts make little economic sense as well. Most of the 2018-2019 assistance payments were paid from the Market Facilitation Program (MFP). In calculating the bailout formulas, the USDA vastly overestimated the forthcoming farmer losses to tariffs, leading it to significantly overcompensate affected farmers. U.S. food exports in 2018 and 2019 fell only slightly, and soybean revenues—expected to bear the brunt of those retaliatory tariffs—temporarily dipped by 11 percent before surging 60 percent above pre-tariff levels by 2022 after the trade war had died down.
Moreover, those earlier farm bailouts were egregiously tilted toward the wealthiest agribusinesses. A study by the American Enterprise Institute notes that “the largest 10 percent of farms, with average annual gross farm incomes of $2.14 million, received average subsidies ... of $230,700 per farm” in 2018 and 2019 from the MFP and crop insurance program. By contrast, owners of midsize farms received an average of $18,000, and smaller farms received virtually nothing.
These bailout payments not only exceeded farmer losses from the trade war, they were also duplicative. Washington already distributes $20 billion in annual farm subsidies that are paid out even during boom years. And when the farm economy dips, the aforementioned federal crop insurance program already compensates farmers at taxpayer expense. Receiving regular farm subsidies, crop insurance payments, and tariff bailout payments means essentially triple-dipping on government farm welfare.