Cato Scholar: Forthcoming U.S. Farmer Bailout Caused by Federal Policy

The Trump administration is preparing to bail out American farmers hit by a perfect storm of rising costs and falling prices  even though federal policies predictably created the problem. As Cato’s Scott Lincicome told The New York Times, the situation is “a slow-motion trainwreck six years in the making.”

Tariffs Are Driving Up Costs 

Farmers depend on stable and predictable production costs, but new tariffs have increased the cost of fertilizer, farm machinery, and other needed goods. Farmers have been “in a state of confusion since the tariff rollout,” reports Lincicome, and labor costs are up too because immigration raids have depleted the agricultural workforce.

Retaliation Is Driving Prices Down 

Meanwhile, U.S. trade policy is driving crop prices down. China, “historically the biggest buyer of U.S. soybeans, hasn’t inked a deal for a single cargo from this year’s harvest,” reports Lincicome, while “foreign buyers are turning to lower-cost suppliers like Brazil and Argentina.” Less demand for U.S. farm products means lower prices for farmers – and higher storage costs for what they can’t sell.