After the government shutdown ended, Trump announced that he was preparing to unveil a long-delayed agricultural subsidy plan totaling $12 billion, mainly to appease farmers who had been caught in the double whammy of low crop prices and tariff wars in recent years.

Up to $11 billion of the funds will be distributed in a lump sum to farmers who grow crops through a newly designed farmer bridging grant program. The remaining funds will be provided to crops not covered by the program. This money is seen as a long-awaited lifeline for farmers, as China's slow purchasing progress this year is one of the retaliatory measures against Trump's tariff policies.

This wave of subsidies is actually a replay of the 018' agricultural subsidies during the 2025 trade war. Back then, Trump issued $28 billion in subsidies to farmers, which, while stopping the bleeding in the short term, also led China to gradually turn to importing soybeans from Brazil, leaving long-term consequences.

Now that the US and China have reached a new round of soybean purchase agreement at the end of October, although China's purchases have rebounded, there is still a long way to go to reach the promised target of 12 million metric tons. Crop prices are still hovering at low levels since 2020, while costs such as fertilizers continue to rise, and the pressure on farmers has not been truly relieved.

This $12 billion subsidy, in addition to being an economic relief measure, also clearly carries a strong political connotation. It aims to stabilize the agricultural voter base, pave the way for next year's midterm elections, and pay the price for the internal damage caused by the tariff war.... #ChinaTrade #MarketUpdate