The United States will provide dollar assistance to farmers affected by tariffs

On the afternoon of December 8th local time, US President Trump announced at the White House that the US federal government will provide a $12 billion bailout to American farmers to deal with the "counter-effect" of US tariff policies on agriculture. The bailout includes direct cash subsidies and industry support funds. The main distribution work is expected to be completed by the end of February 2026. The specific allocation details have not been announced. It is known that the Trump administration implemented a large-scale tariff increase policy in early 2025, which led to chaos in the global trade order and hindered US agricultural exports. The prices of soybeans, corn, etc. were low, and the costs of fertilizers and agricultural machinery rose, causing farmers to be in an operating predicament. The American Agricultural Association criticized that farmers needed the market rather than subsidies, and after the $12 billion was distributed among 4 million farmers, each received only $3,000, which was insufficient to cover production costs. Some farmers welcomed the bailout plan, believing that it brought much-needed assistance. However, some farmers were reserved about the aid, hoping that the government could provide a free trade environment instead of using aid to make up for the losses caused by the tariff policy.

The US provided a $12 billion bailout to farmers affected by tariff policies, and its impact was particularly significant in the economic field. Firstly, the short-term impact was that the tariff policy led to the obstruction of US agricultural exports, with the prices of major crops such as soybeans and corn being low, and the costs of fertilizers and agricultural machinery rising. Farming operations fell into losses. The $12 billion bailout funds provided short-term cash flow support to farmers through direct subsidies and food purchases, helping them cover some production costs and avoid large-scale bankruptcies. In the similar plan in 2018, some farmers received only a small amount of subsidy, but it still alleviated their urgent needs. The bailout plan sent a signal of government support to the market, helping to stabilize the agricultural supply chain. After receiving funds, farmers might continue to invest in production, avoiding land abandonment or crop switching due to broken capital chains, thus maintaining agricultural output scale and reducing the impact on domestic food prices.Agricultural states are important voting blocs for the Republican Party, and the bailout plan was launched before the midterm elections to retain the support of farmers damaged by tariffs. Through "blood transfusion" style subsidies, the government attempted to balance the negative impact of trade policies on specific groups and maintain its political foundation.

Secondly, the long-term impact was that the $12 billion bailout was far from the actual losses of farmers. It was estimated that the tariff policy could cause US agriculture to lose over $20 billion annually, and the bailout funds could only cover one-third of the short-term losses. At the same time, the bailout funds came from the US Department of Agriculture's Commodity Credit Corporation, which had limited borrowing capacity (up to $30 billion). If trade disputes continued, the government might need to continuously increase subsidies, exacerbating fiscal pressure. In the similar plan in 2018, the actual disbursed funds were far below the promised amount, and due to plan flaws (such as non-farm workers also receiving subsidies), the efficiency was low, and the future implementation effect was questionable. In the long run, farmers still needed to face the difficulties of shrinking export markets, low prices, and high costs, and the bailout plan could not reverse the trend of agricultural decline. Government intervention might distort market signals and delay agricultural structural adjustment. For example, subsidies might encourage farmers to continue growing low-yield crops instead of switching to high-value-added products or exploring new markets. Moreover, the bailout plan might trigger further countermeasures from other countries against US trade protectionism, forming a vicious cycle. US agriculture has long faced problems such as rising production costs, credit crunch, and corporate monopolies. The tariff policy was only a catalyst. The bailout plan did not touch upon these structural contradictions, and farmers still needed to rely on government subsidies to maintain their operations, making it difficult to improve agricultural competitiveness.

In conclusion, the $12 billion bailout plan is a temporary measure taken by the Trump administration to deal with the adverse effects of tariffs. It can alleviate the plight of farmers and stabilize market sentiment in the short term. However, in the long run, its insufficient scale, market distortion risks, and fiscal sustainability issues may undermine the policy's effectiveness. If trade disputes persist, the U.S. agriculture may fall into a vicious cycle of "subsidy dependence - competitiveness decline - more subsidies", ultimately harming the long-term healthy development of agriculture.