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What does the Argentine peso have to do with the price of soybeans in China?
A lot, as it turns out, for American farmers suffering as a result of the trade spat between Washington and Beijing and wondering why the US government is helping Argentina, a competing soybean producer.
If that seems like a lot of dot-connecting, it’s not. The bottom line is that US taxpayers could be looking at two bailouts in the near future:
Rescue #1: $20 billion to save the political career of a foreign ally of President Donald Trump. The US is putting up $20 billion for a currency swap to prop up the Argentinian peso ahead of elections there this month, with the aim of bolstering Argentine President Javier Milei, a Trump ally.
Rescue #2: $10-14 billion for US farmers. Many could need help, but especially those who have been unable to sell soybeans in China.
Farmers lost a market in the trade war
US farmers are struggling in large part because of Trump’s trade war. China has responded to Trump’s tariff offensive in part by effectively boycotting American soybeans since May.
In a social media post Tuesday, Trump called China’s boycott an “Economically Hostile Act” and threatened to respond by “terminating business with China having to do with Cooking Oil, and other elements of Trade, as retribution.”
“We can easily produce Cooking Oil ourselves, we don’t need to purchase it from China,” Trump wrote.
American farmers sell about $24 billion in soybeans each year, and in recent years, China has accounted for about half of those sales — more than $12 billion, far more than any other country.
Farmers are also dealing with labor shortages due to the administration’s mass deportations as well as rising costs, high interest rates and lower prices. That confluence of events that is pushing some farmers to the brink, according to a September CNN report that told the story of a soybean farmer in Indiana.
Federal Reserve Chairman Jerome Powell has said the Fed would have begun cutting rates earlier had it not been for the uncertainty of US tariff policy.
Expect a rescue plan for farmers
In a repeat of his first-term bailout for farmers hurt by tariffs, Trump has said farmers will likely need help from the government, and CNN has reported that a rescue package could exceed $10 billion. Treasury Secretary Scott Bessent had said details would be released in early October, but those plans may have been slowed by the government shutdown.
CNN reported there are two potential sources of funds to support farmers: Either tapping into tariff revenue or raiding a so-called “slush fund” at the US Department of Agriculture. The government already made direct payments to farmers back in March.
Senate Majority Leader John Thune said on NBC in September that he expects some kind of support for farmers hit by the trade war.
“At the end of the day, our farmers are probably going to need some financial assistance this year,” Thune said, pointing to tariff revenue as a likely source.
Farmers would rather sell their crops.
“I want trade, not aid. I need a market,” said Scott Brown, an Arkansas soybean farmer who appeared on CNN last week. Watch his remarks.
But he said help for farmers would be necessary or many could go bankrupt.
Brown pointed to the first Trump term, when the trade war also led to a cratering of soybean prices similar to what farmers are seeing now.
“The farmer can’t continue to produce a crop below the cost of production, and that’s where we’re at,” he said.
There’s already a rescue plan for Argentina
The anger of soybean farms had been simmering, but it exploded for some when the US government recently announced it would open up a $20 billion lifeline to Argentina, whose economy and currency are struggling, but whose leader is an ally of Trump.
Milei was chummy with Trump at a White House lunch Tuesday. Trump and Bessent said they see the lifeline — critics call it a bailout — as a way to bolster a government they support in South America. The Trump administration is also looking for ways to facilitate more private investment in Argentina, according to Bessent.
The frustration of farmers was evident in a text message Bessent received last month from Agriculture Secretary Brooke Rollins, which was captured by an AP photographer.
“We bailed out Argentina yesterday and in return, the Argentine’s (sic) removed their export tariffs on grains, reducing their price to China at a time when we would normally be selling to China,” the message said.
Sen. Charles Grassley of Iowa told reporters in his state Wednesday that the US and Trump should have used soybeans as leverage before offering Argentina the bailout.
“Argentina taking their export tax off of their export of soybeans … it seems to me that we should have been putting pressure on Argentina not to take the export tax off if they were going to get the help from us,” Grassley said, according to the Ottumwa Courier.
Grassley said he was skeptical that Trump would be able to solve the problem in forthcoming trade talks.
The trade war with China extends far beyond the agriculture sector. It reignited this week as China announced new controls on rare earth materials and Trump responded with a threat to ratchet up tariffs on all Chinese goods.
The two countries have been locked in trade talks for months, and Trump is supposed to meet with Chinese President Xi Jinping later this month in Seoul.