Agriculture, dairy workers and farm and construction equipment manufacturers, some of Wisconsin’s top industries, fear a possible recession triggered by President Donald Trump’s international trade war.
In a reaction to Trump's tariffs, Canada and China have placed retaliatory tariffs, increasing the cost of goods from the United States, therefore potentially decreasing exports. As Wisconsin is ranked 11th in food and agricultural exports, this could hurt the state's economy. Additionally, U.S. tariffs on other countries could increase costs for materials like steel and aluminum inturn reducing the number of manufacturing jobs.
Despite some domestic growth and demand for dairy products, most of the growth that has allowed the expansion of milk production in Wisconsin comes from exporting products outside the United States, Chuck Nicholson, an associate professor in Animal and Dairy Sciences and Agricultural and Applied Economics, told The Daily Cardinal.
“Our top three main trading partners in 2024 were Mexico, Canada and China. We sent about 40% of the value of U.S. dairy products, including products from Wisconsin, to those three countries last year,” Nicholson said.
As of March 4, Trump’s 25% tariff on imports from Canada and Mexico went into effect, though goods falling under the U.S.M.C.A trade pact are exempt from tariffs. Trump also doubled down on his previous tariff on imports from China to 20%.
As a retaliatory tariff against “unjustified U.S. tariffs,” the Canadian government imposed a 25% tariff on $155 billion worth of imported goods, beginning with a list of goods worth $30 billion.
Equipment manufacturers now face this 25% tariff. China’s retaliatory tariff went up from 34% to 84% on April 10 as well.
“President Trump’s tariff taxes are a disaster,” Gov. Tony Evers said in a social media post Monday. “This will hurt Wisconsin’s farmers and producers, our manufacturing industries, and cause prices for working families to go up on everything from groceries to gas to cars. And Republicans in Congress are doing nothing to stop him.”
U.S. tariffs on other countries' goods could hurt Wisconsin’s manufacturing industry by raising the cost of inputs, like steel and aluminum. Some economists estimated in 2020 that steel tariffs may have led to an increase of roughly 1,000 jobs in steel production. But increased costs of inputs facing U.S. firms likely resulted in 75,000 fewer manufacturing jobs in steel or aluminum-reliant industries.
When countries like Canada or China put tariffs into place, it significantly raises the cost of products from the United States relative to other products from different places. This can have an impact on the amount of products the United States will be able to sell.
It could also drop the prices for dairy products — due to increased domestic supply — inside the United States, which could be beneficial for consumers, Nicholson said.
“We also pay farmers in the United States for their milk based on a formula that links the product prices to what they get paid at the farm level,” Nicholson said. “That would also have a pretty significant impact on farm milk prices and the profitability of dairy farms.”
Although the U.S. consumers would see significant decreases in the dairy product prices as a result of the tariffs, farmers would be paid less per gallon, causing an estimated $1 to $2 billion worth of lost income in Wisconsin for dairy alone, according to Nicholson.
Additionally, programs in which the government gives income for people to buy food, like Supplemental Nutrition Assistance Program, have been on the brink of being cut. As Wisconsin gives a lot of products to these kinds of programs, cutting them will also cut demand, Nicholson said.
With economic uncertainty, a second concern for the agriculture sector is labor.
A large portion of the labor force in the agriculture industry — particularly the dairy industry and processing facilities — is immigrant labor, Nicholson said.
“If we do some things to negatively affect the availability of labor for those farms and processing businesses that could have a negative impact by raising their costs, forcing them to train new people, recruit new people,” Nicholson said.
Additionally, if there is significant reduction in the profitability of farms and the demand for products reduces, there is likely to be a negative impact on labor, Nicholson said.
Roughly 298,600 Wisconsinites work jobs in the agriculture sector, with Wisconsin being the top state affected by these retaliatory tariffs, according to the New York Times.
More than 460,000 people work in manufacturing, making Wisconsin susceptible to further damage. Wisconsin exported $26.3 billion worth of manufacturing products in 2024.
Clara Strecker is a copy chief for The Daily Cardinal. She also covers state news.
