By Josh Zumbrun and William Mauldin
WASHINGTON -- President Trump rolled out a $16 billion plan to
help farmers hit by the trade conflict with China and suggested on
Thursday that Huawei Technologies Co. could potentially be a
bargaining chip in settling the dispute.
The developments came as financial markets fell again amid
uncertainty over the fate of the trade talks, with the Dow Jones
Industrial Average dropping 286.14 points, or 1.1%.
At a White House event with farmers, Mr. Trump said a deal with
China was a "good possibility" but declined to give details. He
said the U.S. campaign against Huawei could be up for negotiation,
while also calling the telecom giant a "very dangerous" threat to
national security.
"It's possible that Huawei would be included in some kind of a
trade deal," he said.
The $16 billion farm plan, which won't require congressional
approval, largely consists of direct payments to U.S. farmers hit
hard by Chinese tariffs on crops. The payments echo a similar
program last year that was funded at $12 billion.
The action comes as prices for commodities such as soybeans,
corn and sorghum, already mired in a yearslong slump and hit by
flooding and wet weather, fell last week to their lowest level in
more than 10 years.
"Farmers themselves will tell you they'd rather have trade than
aid," said Agriculture Secretary Sonny Perdue, but in the absence
of a deal "they'll need some support."
Talks with China broke off May 10 after months of hopeful signs
for a deal, and no further negotiations have been scheduled. The
U.S. is insisting China change its laws to ensure it complies with
the accord, but Beijing has resisted that demand as a challenge to
its sovereignty.
Prospects for a deal were further clouded last week following
the Trump administration's decision to put Huawei on a blacklist on
grounds its telecommunications gear could be used for Chinese
espionage. The order bars U.S. companies from supplying Huawei,
although the administration later said it plans to grant temporary
exemptions.
Mr. Trump's statement that Huawei could be a factor in a trade
deal echoed similar comments made last year when he indicated that
U.S. sanctions against telecom giant ZTE Corp. could be eased as
part of negotiations with China.
U.S. Trade Representative Robert Lighthizer has told U.S.
lawmakers the initiative to resume talks rests with Beijing, Sen.
Chuck Grassley (R., Iowa) said Thursday.
"Lighthizer is ready to go at the drop of a hat to Beijing,"
said Mr. Grassley, who leads the Senate Finance Committee. "Is
there going to be an invitation? We don't know."
Businesses stung by the fight are hoping Mr. Trump and President
Xi Jinping of China can rekindle talks at the Group of 20 leading
world economies in late June, similar to when the two men restarted
stalled negotiations at last year's G-20 in Argentina.
But Mr. Xi has also indicated that China is digging in, warning
the country of hardships akin to Mao Zedong's "Long March,"
according to Chinese state media.
With the farm-aid program, which would send cash payments
beginning this summer, the White House is preparing for a
potentially long battle.
Mr. Trump has said the program will be funded by tariffs on
imports. In fact, tariffs are part of the government's general
revenue which is spent via congressional appropriations.
"Legally, you can't direct tariff payments into agriculture,"
said Mr. Perdue. Even so, he said, "the president feels like China
is paying for this program" via the collection of tariff
revenue.
Some farm groups cheered the new aid package, saying it would
help cushion the blow. "We thank President Trump for recognizing
that our patriot farmers have borne the brunt of China's trade
retaliation," said David Herring, a North Carolina pork producer
and president of the National Pork Producers Council.
Mr. Herring said U.S. pork producers were also anxious to reopen
trade with China to take advantage of an "historic sales
opportunity," referring to the deadly virus that has decimated
China's hog herds and prompted buyers there to purchase more meat
from U.S. producers.
Others remained critical of trade conflicts that they said have
exacerbated existing problems in the Farm Belt, namely excess
production of agricultural goods that have driven commodity prices
lower.
"Our ongoing trade wars have destroyed our reputation as a
reliable supplier and have left family farmers with swelling grain
stores and empty pockets," said Roger Johnson, president of the
National Farmers Union.
Illinois farmer Martin Stahl said he was doubtful the U.S.-China
trade dispute will end well for U.S. farmers.
"These things last forever and you lose market share. That's
inevitable, " he said. "Why would China want to buy from us when
they can get [commodities] some place else? You don't treat your
customers like that."
In last year's program, farmers received a different payments
for different crops. Under this year's program, the money will be
distributed based on USDA's estimate of the economic damage
inflicted on different counties.
"What would help my farm even more was if we had an endgame for
the trade war," said Sen. Jon Tester (D., Mont) whose farm produces
wheat and other crops. "This is a problem that was created by the
president, and now the U.S. taxpayer is going to fork out $16
billion to try to make things OK."
While the payments are intended to relieve trade-related
pressures in the Farm Belt, they also will provide relief for
farmers who have struggled with high debt, record flooding in the
Midwest and growing competition from other agricultural powerhouses
such as Russia and Brazil.
Soybeans are the biggest crop export to China. Before the
conflict, the U.S. shipped $10 billion to $12 billion a year of
soybeans to China; over the past year, that has fallen to about $2
billion.
The Commodity Credit Corp. that will distribute the money was
created in 1933, and has standing authority to draw $30 billion a
year from the U.S. Treasury and spend it on programs that support
American farmers.
"USDA is unique among agencies, in having a permanent automatic
$30 billion annual spending authority," said Jessica Wasserman, a
partner in the international and government relations practice at
Greenspoon Marder LLP. "This is why agriculture and not other
sectors are given funding to counter the tariffs."
The farm aid program is the second move in the past week by the
administration to soften the blow on U.S. farmers from
trade-conflict impacts.
On May 17, the Trump administration struck a deal with Canada
and Mexico, in which the U.S. agreed to drop the steel and aluminum
tariffs imposed on those countries a year ago. In exchange, Canada
and Mexico dropped their retaliatory tariffs on about $15 billion
of U.S. goods, which had fallen heavily on agriculture.
--Michael C. Bender in Washington and Jesse Newman in Chicago
contributed to this article.
Write to Josh Zumbrun at Josh.Zumbrun@wsj.com and William
Mauldin at william.mauldin@wsj.com
(END) Dow Jones Newswires
May 23, 2019 19:45 ET (23:45 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.