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Trump Spends Billions in Taxpayer Dollars to Fix a Problem He Created: Taxpayer Subsidies Thrown at U.S. Agriculture Are a Huge Waste

July 24, 2018 in Economics

By Simon Lester

Simon Lester

President Trump has been imposing tariffs left and right, on
close allies and on budding rivals, and on steel and aluminum from
everywhere and on everything but the kitchen sink from China. The
predictable response from U.S. trading partners was to impose
retaliatory tariffs on U.S. exports. Now, in response to that
retaliation, the Trump administration is proposing to counter the retaliatory tariffs with
to the agriculture sector, which has been
particularly hurt by these tariffs. Next up, presumably, is more
subsidies by other governments, as the market distortions escalate
and proliferate.

Agriculture subsidies are nothing new. The U.S. agriculture
sector is already heavily subsidized, which has long been an
irritant for many U.S. trade partners. When Trump complains about
high Canadian tariffs on dairy products, Canada responds with
complaints about U.S. dairy subsidies. These new subsidies just add
to the problem. The Trump administration’s proposed agriculture
subsidies will be carried out through the Commodity Credit
Corporation Charter Act, a Depression-era funding program. That is
appropriate somehow, as the Trump administration’s trade war
harkens back to the Smoot-Hawley tariffs of the same era.

The question many people are asking is, where does this end?
Will we reach a new status quo in which all tariffs on goods
imported and exported from the United States are subject to
significantly higher taxes? And what will that do to the economy?
The economy has stayed strong so far, but the amount of trade
subject to tariffs is still small.

Trade policy is going in
the wrong direction, and the pace is picking up.

As the amount of trade covered grows, the impact on the economy
will become more apparent. We are already seeing reports of lost jobs, and as publicly listed
companies feel the pain, the effects are likely to spread to the
stock market. Perhaps that will be enough to sway Trump?

One way to put an end to this destructive trade policy is for
Congress to step in. Congress has the Constitutional power over
trade, and all of these tariffs are taken pursuant to authority
Congress had delegated by statute. Congress can and should revisit
the statutes, and rein in Trump’s actions on tariffs.

It should also step in to stop the agriculture subsidies. Back
in the 1990s, a Republican-led Congress passed the Freedom to Farm Act, in order to reform and
reduce farm subsidies. If the Republicans want to be the party of
free markets and limited government, they should act like it.

At the same time U.S. trade policy is mired in protectionism,
the rest of the world is …read more

Source: OP-EDS

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