In response to the trade war unleashed by the United States, foreign governments have hit back by imposing retaliatory tariffs on products seen as important in states President Donald Trump won in the November election.
Kentucky bourbon, Harley-Davidson motorcycles made in Wisconsin and Pennsylvania, and farm products across the Midwest have all been subjected to new levies.
In swing-state Pennsylvania, one treasured sector now closely watching the global tariff tit-for-tat is the dairy industry, which accounts for one of the state’s top agricultural exports and supports 52,000 jobs.
Celebrated every year at the Pennsylvania Farm Show in Harrisburg — which features a 1,000-pound butter sculpture — dairy farmers make for a ripe political target as foreign countries try to make Trump’s base feel pain from his policies. Analysts say that could increase pressure on Republicans in the GOP-led Congress to heed calls from their constituents to dial back the trade war.
“I’ll be honest, a large majority of the farmers voted for Trump. It wasn’t like this was a secret. He wasn’t quiet about this,” said Rob Barley, 55, a third-generation farmer in Lancaster County. “So we’re kind of, wait and see what it looks like on the other side. Understanding there may have to be some pain in the short term to open up some markets and so on in the long term.”
Trump has pledged to lift that pause in April, raising the specter that Mexico and other trading partners may punch back. “We have been ripped off for decades by nearly every country on Earth, and we will not let that happen any longer,” Trump, a Republican, said in a speech to Congress this month. He added that his trade policy will be “great for the American farmer.”
As financial markets and consumer confidence have tumbled, the president has declined to rule out the possibility of a recession and acknowledges that tariffs will cause “a little disturbance.”
Second-most dairy farms in the country
Pennsylvania has about 5,000 dairy farms, second-most in the country behind Wisconsin, according to the Harrisburg nonprofit Center for Dairy Excellence. The state’s 468,000 cows produce about 1.2 billion gallons of milk a year, the center says.
Dairy farmers in Pennsylvania and across the country depend on access to foreign markets. Pennsylvania exported $364 million of dairy products in 2023, according to the most recent data compiled by the U.S. Agriculture Department.
Mexico accounted for the biggest share of dairy produced in the Keystone State last year — 18% — followed by Chile and Canada, according to separate U.S. Census data.
“One day’s worth of milk production out of every six is destined for international consumers,” Krysta Harden, president and CEO of the U.S. Dairy Export Council, said earlier this month. Sales to Mexico, Canada, and China account for 51% of U.S. dairy exports, she said.
To be sure, some in the dairy industry have their own complaints about trading partners, accusing Canada, for example, of enacting protectionist measures. But they say a prolonged dispute will not help American farmers.
The industry suffered amid Trump’s first-term tariffs on Chinese imports, as retaliatory measures from Beijing led to about $2.6 billion in lost dairy farm revenues from 2019 to 2021, according to the export council, a nonprofit membership organization that represents producers, processors, and cooperatives.
The stakes may be bigger this time, as the second Trump administration has taken a more aggressive posture on trade — even upending the North American trade deal he negotiated during his first term — that experts say has no modern precedent.
In response, Canada on March 4 imposed 25% tariffs on $21 billion worth of U.S. goods, including chocolate, coffee, and dairy products. The country later announced another set of tariffs on heavy machinery and other goods.
China, for its part, has placed a new 10% tariff on agricultural products, including dairy. Most of those products already faced retaliatory levies dating back to Trump’s first term, according to the American Farm Bureau Federation. Butter, for example, has been subject to a 25% tariff since 2020.
Reuters reported in January that Mexico has been planning to target pork, cheese, and bourbon, among other products. Those were chosen “because they have a big impact on regions that voted overwhelmingly for Trump,” a source with knowledge of Mexico’s plans told the news organization. Mexico’s embassy in Washington did not respond to a request for comment.
“They’ve picked products that they feel put some political pressure on the administration to change our tariff policies,” Terrence Guay, a professor of international business at Pennsylvania State University, said of U.S. trading partners.
“Countries are smart about this, and they try to pick products that are in politically sensitive states, and Pennsylvania is clearly one of them,” he said.
Gov. Josh Shapiro, a Democrat and potential White House contender in 2028, has highlighted the issue, accusing Trump earlier this month of “jacking up costs for farmers and for manufacturers.”
Lower prices
“It is too early to measure the full impact on American agriculture of the retaliatory tariffs currently in place,” Betty Resnick, an economist at the farm bureau, wrote in a March 18 analysis. But, she said, tariffs “will certainly decrease demand for U.S. products” in top agricultural export markets.
“Farmers do not get to set their own prices and are subject to the whims of these markets,” she wrote.
Reduced demand in international markets could reduce domestic prices, said Guay, the Penn State professor. “Which may be good for consumers who want to buy cheaper cheese and ice cream and milk, but it’s going to be problematic for dairy farmers who are going to see the prices of their raw milk could go down,” he said.
Alternatively, American farmers could try to sell their products in other markets around the world — but Trump has floated tariffs on a wide array of countries, which could respond with the same playbook as Canada and China, Guay said.
“So depending on how this plays out in the coming months,” he said, “it’s going to be very tricky for dairy farmers to figure out how much to produce and where to sell it.”
Barley, whose family owns Star Rock Farms in Lancaster, said most of his milk is sold domestically. But one of his big customers, the national cooperative Dairy Farmers of America, also exports to foreign markets.
“At this point I don’t think it has affected the market a whole lot,” Barley said of the trade war. He is watching to see what happens with Mexico, which he said has been an “excellent trading partner.”
“I’m giving President Trump the benefit of the doubt,” Barley said. “Let’s see how it works. I would not be really happy if … we end up getting reciprocal tariffs from Mexico.”
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