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Thursday, May 2, 2019

Trump’s Trade War Is Crushing Dairy Farmers

Stung by Trump’s trade wars, Wisconsin’s milk farmers face extinction.

LishaBora2017 [CC BY-SA 4.0 (]

From the New York Times article “Stung by Trump’s Trade Wars, Wisconsin’s Milk Farmers Face Extinction“:

Wisconsin is known as “America’s Dairyland,” but the milk makers who gave the state its moniker are vanishing, falling prey to a variety of impediments, including President Trump and his global trade war. Over the past two years, nearly 1,200 of the state’s dairy farms have stopped milking cows and so far this year, another 212 have disappeared, with many shifting production to beef or vegetables. The total number of herds in Wisconsin is now below 8,000 — about half as many as 15 years ago. In 2018, 49 Wisconsin farms filed for bankruptcy — the highest of any state in the country, according to the American Farm Bureau Federation.

Mr. Trump’s trade approach has pushed many of Wisconsin’s already struggling dairy farmers to the edge. Milk prices have fallen nearly 40% over the past five years, the byproduct of economic and technological forces that have made milk easier to produce and state policies that ramped up production and sent prices tumbling. That has coincided with Mr. Trump’s sweeping tariffs on foreign steel and aluminum, which were intended to help American manufacturers but have set off retaliatory tariffs from Mexico, Canada, Europe and China on American dairy products. Most painful for Wisconsin’s dairy farmers has been a 25% tariff that Mexico placed on American cheese, which is made with a significant volume of the state’s milk production.

Mr. Trump has insisted that any short-term pain from his trade war will pay off in the long run through improved access to foreign markets. And he has tried to mitigate the effect by providing federal aid to farmers whose products have been hurt by the trade war. But the crumbling of Wisconsin’s flagship dairy industry has some farmers questioning whether Mr. Trump’s promises will come true in time to save their farms.

It’s really unfortunate that there is no academic discipline that has studied international trade, trade policy, and protectionism for hundreds of years and has had the opportunity to accumulate mountains of empirical evidence on the effects of trade wars that could have predicted these inevitable adverse outcomes from protectionism.

This article is republished from the American Enterprise Institute.

  • Mark J. Perry is a scholar at the American Enterprise Institute and a professor of economics and finance at the University of Michigan’s Flint campus.