Donald Trump, accompanied by US farmers and ranchers, speaks from the White House, May 23, 2019

Facing the economic damage of his trade war with China, Donald Trump tries to buy off US farmers with $16 billion in Government handouts.

Flanked by farmers and ranchers in cowboy hats at the White House, Trump declared, “Farmers have been attacked by China.” He insisted that — despite his top advisors admitting costs to farmers, manufacturers, and consumers in a trade war — “we’re winning it big”.

The bailout will consist of $14.5 billion in direct payments to producers; a $1.4 billion program to purchase surplus commodities and distribute them to food banks, schools and other programs for the poor; and $100 million towards development of new export markets.

Trump deceptively said that the $16 billion was coming from tariffs on Chinese imports, having raised the duty from 10% to 25% on $200 billion of Beijing’s goods on May 9.

In fact, the cost of the tariffs is likely to be borne by US importers, and by consumers who pay higher prices — an effective tax.

US farming has been badly damaged already by Trump’s tariffs and China’s retaliatory measures. Soybean sales have been almost wiped out, and sectors from corn to pork have been damaged. Having fallen in 2018 by $9 billion — 12% of production — farm revenues were down almost another $3 billion in the first quarter of 2019.

Global markets immediately fell after Trump’s announcement on Thursday. The US S&P 500 dropped 1.2%, and benchmark indexes in China, German,y and France sank. The yield on the 10-year Treasury note fell to 2.29%, a sign that investors expect lower levels of growth.

With US-China talks suspended and Trump threatening tariffs on the remaining $350 billion of Chinese exports to the US, economists projected that US GDP could suffer a relative fall of 1.3%.

This week China signaled readiness for a long-term conflict, despite damage to its own economy. President Xi Jinping called for the Chinese people to begin a modern version of the 4,000-mile year-long “Long March”, led by Mao Zedong in 1934 as the Chinese Communist movement resisted the Nationalist government.

A New “Long March”: China Prepares for Trump’s Trade War as Talks End

Bolstering the tariffs, the Trump Administration has blocked Huawei, the world’s second-largest manufacturer of smartphones, from access to American chips and software. Companies such as Google, which provides Android upgrades for Huawei phones, said they are breaking links.

The Administration is threatening to impose restrictions on Hikivision, China’s leading manufacturer of surveillance equipment.

The measures sank US semiconductor stocks by 1.7%, but Trump said Thursday he is content with an indefinite trade war.

I remain hopeful that at some point we’ll get together with China. If it happens, great. If it doesn’t happen, that’s fine. That’s absolutely fine.

Trump indicated Huawei, which has also provoked concerns among US agencies over theft of technology and sanctions-busting, is being held hostage: “If we made a deal, I can imagine Huawei being included in some form or some part of a trade deal.”