The funds will be used for farmers to meet costs of disrupted markets following retaliatory tariffs placed on agricultural goods from the likes of Mexico, Canada, Russia and China.
The move was directed by US President Donald Trump, who told USDA secretary Sonny Perdue to construct a short-term relief strategy to protect agricultural producers while the President comes up with a long-term plan to open up more markets and help farmers compete on a global scale.
The $12bn fee will exceed the estimated $11bn impact of the retaliatory tariffs, with a large amount of the tariffs being targeted towards farmers, as well as the pork and beef industry.
“The President promised to have the back of every American farmer and rancher, and he knows the importance of keeping our rural economy strong,” said Perdue. “Unfortunately, America’s hard-working agricultural producers have been treated unfairly by China’s illegal trading practices and have taken a disproportionate hit when it comes illegal retaliatory tariffs. USDA will not stand by while our hard-working agricultural producers bear the brunt of unfriendly tariffs enacted by foreign nations.”
Trump’s tariff hike on steel and aluminium imports, as well as washing machines and solar panels imports, has caused major disruption among the international meat industry, sparking the beginning of the trade war.
Russia and China were two of the first key international markets to disagree with Trump’s decision and targeted the US’ agricultural sector.
After months of disagreement and no resolution, Russia’s federal government authorised a bill to end all Russia-US trade in agriculture, while China has also had long-running frictions with the US.
Recently China imposed 25% retaliatory tariffs on 545 US products, including beef, in response to the US’ increased levies on Chinese goods.
The US faced further retaliations from Mexico and Canada on pork and beef respectively.
Mexico announced a tariff increase on US pork by 10%, which later doubled to 20%, while Canada slapped tariffs on $170m worth of US beef products.