Thanks, Trump: Wisconsin Cheese Edition

Mr. Trump has stated his intention of raising tariffs on steel and aluminum, based on national security grounds. See this post on the specious aspects of this argument, and this recent EconoFact column on the hits to the economy that would result from steel tariffs. The EU has hinted at striking at Wisconsin cheese in retaliation (Wisconsin is the second largest state exporter). This makes perfect sense from a strategic perspective – agriculture is America’s comparative advantage, and Wisconsin’s Representative Paul Ryan is Speaker.

Figure 1: Total cheese production in billions of pounds, for California (blue), Wisconsin (red), and rest-of-US (teal). Source: USDA NASS and author’s calculations.

To place in perspective, quoting from Wisconsin’s DATCP:

If Wisconsin were a country, it would rank 4th in the world in cheese production, behind the rest of the U.S., Germany and France

More on the vulnerability of US agriculture to retaliation and/or exit from Nafta, here.

Usually, I don’t think of trade policies measurably affecting the overall macroeconomy sufficiently to induce a recession. But I’m willing to change my mind, if higher import costs impact downstream production, profits, and employment, and we have heightened policy uncertainty associated with the possibility of retaliation. See today’s stock market reaction, here.

23 thoughts on “Thanks, Trump: Wisconsin Cheese Edition

  1. pgl

    Wisconsin outdoes California in cheese?! Yea but California owns the strawberry market. Champagne on ice or a good beer?!

    1. noneconomist

      Ah, but California exports more dairy products ($1.63Billion) than it does wine ($1.5Billion)! Value of Dairy exports is about 5X that of strawberries.
      Second ah. Local strawberry fields are looking promising and should be ready in another month.

  2. 2slugbaits

    And the tariff on steel is bad news for the gun industry. Oh wait. Things are already bad. Colt went belly-up a couple years ago. Remington filed for bankruptcy a couple weeks ago. And just today trading for American Outdoor Brands (i.e., the old Smith & Wesson) had to be halted because the company announced a YUGE drop in year over year sales. Note: astute readers might recall that a couple weeks ago (in an exchange with CoRev) I casually mentioned that a major gun manufacturer had one foot in the grave even before the Valentine’s Day Massacre in Florida. Stay tuned…more to come.

    1. pgl

      Maybe we should put up high excise taxes on gun production and use the proceeds to subsidize Alcoa production!

      1. 2slugbaits

        I see. So those increased sales would explain why Colt and Remington went bankrupt during the so called boom times. And that would explain why American Outdoor Brands saw their stock trades halted today after they reported a 32.6% drop in 3rd qtr year-over-year sales. And that would explain why several gun manufacturers were pressuring gun dealers to not sell new guns at a discount even though gun dealers were complaining about weak sales. What the numbers show is that during the Obama years gun sales rose because the NRA convinced gun nuts that the government was going to seize their guns. And several gun manufacturers expanded production…in some cases dramatically under the assumption that the good times would continue to roll; but then the bottom fell out of the market after Trump won. That overproduction (which is what your link shows) did not translate into final retail sales. That’s why gun dealers were having to sell guns at steep discounts, which upset manufacturers. And since a lot of steel goes into the production of guns, the first order effect of Trump’s tariff will be to increase costs for manufacturers.

          1. Beeker25


            The Republicans and the NRA used Obama as a punching bag to say that Obama will confiscate your gun when he did not do such thing. When you throw red meat, nothing gets people going without thinking. In the past, I have been in gun shops and see tons of discount on guns and they have pamphlets on NRA membership and the like. You get the sense of salespeople trying to push the sale.

            The article trace the sale to the 2016 period when Obama was President. As the quote stated in the linked article: Gun sales surged shortly after President Obama’s election in 2008, and continued to grow despite his efforts to enact stricter purchasing requirements.

          2. PeakTrader

            Beeker25, Americans are concerned the government will impose more gun restrictions and drive-up the price of guns. Government cannot effectively enforce existing gun laws and law-abiding Americans are concerned they can’t protect themselves, their children, and their property. Criminals don’t care about laws. Why punish non-criminals? Americans have the right to own guns, including for deterrence or protection against mass civil unrest or a coup d’état. The United States was created from a revolution.

        1. CoRev

          2slugs, please comment on subjects of which you have some knowledge. Remington is in bankruptcy, but not out of business. As is Colt, which came out of bankruptcy early in 2016. Strangely, it was your views and those of your fellow travelers which caused the recent resurgence in guns:
          “The company, and indeed the entire industry, thrived with President Barack Obama in the White House as firearms enthusiasts foresaw crackdowns. It was poised to continue its lucrative run under a Hillary Clinton administration. Instead, Donald Trump, a self-proclaimed “true friend” of guns, won the 2016 election and the urgency to purchase faded. Sales fell, and retailers found themselves holding unsold inventory.”

          Can you guess which is the largest gun manufacturer for 2017?

          1. noneconomist

            CoRev, your disputacioius attitude–as well as your aversion to reality– continues to cloud/hinder your common sense.

          2. pgl

            I see – the NRA exists to boost incompetent business people who struggle to make a profit even when their sales rise. I guess this makes mass murder AOK.

          3. pgl

            “please comment on subjects of which you have some knowledge.”

            Excuse me? If you followed your own advice – we would be spared all further comments from you.

          4. CoRev

            Pgl, if you have nothing to add, just don’t comment. If it wasn’t for your bad behavior you’d have nothing.

          5. noneconomist

            CoRev, please comment on subjects of which you have some knowledge. Yes, that does mean this blog isn’t for you. But there are plenty of others where your drivel—and disputatious attitude —-will fit right in.

        2. Moses Herzog

          Playing the part of Shawn Kemp in this sports drama will be 2slugbaits. The part of Alton Lister, with very poorly written dialogue, will be played by CoRev. in a walk-on part, “Slow White Guy #13” will be played by Community Theater favorite PeakIgnorance, with no speaking lines.

  3. Moses Herzog

    Menzie mentioning Wisconsin’s local fav, the cheese industry, isn’t as “cutesy” as it first appears. He’s actually hit on something many people miss. You don’t have to strike a very broad or “expansive” amount of America’s exports to inflict major pain. Similar to the way a boxer can hit certain parts of a person’s body and render them incapacitated. Think about “the swing vote” in Florida and the orange juice industry. Would you like to explain on the Florida campaign trail (national election or state election) why they can’t sell orange juice in Canada?? How would you like to be Mitch McConnell and explain to the local bumpkins in Kentucky why Chinese no longer purchase bourbon??? You sucker punch somebody hard in their “family jewels” and body stamina just doesn’t mean what it meant about 30 seconds ago.

    1. pgl

      “How would you like to be Mitch McConnell and explain to the local bumpkins in Kentucky why Chinese no longer purchase bourbon???”

      I guess that means more bourbon for us!

      1. Moses Herzog

        I know you’re having fun with this comment. I got a smile out of it. And as someone who enjoys bourbon and cheap liquors (when the female Gestapo of my house allows it), I’m certainly not against it. Presumably it would raise domestic supply and lower the cost of a bottle. But if you are employed by the producers/distillers of bourbon in Kentucky, you’re probably giving a thumbs down on that one.

  4. noneconomist

    The Trumpers are always yapping about being pals of small businesses. Of course, that’s exactly who will be hurt most by a trade war.
    In California, according to the National Association of Manufacturers, small businesses comprise over 95% of all exporters.
    Top destinations for these small businesses? Mexico, Canada, China, Japan, Hong Kong.
    There are about 1.25 million Californians employed in manufacturing, many obviously by small businesses.

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