Uncertainty for cheesemakers after Mexico responds to U.S. tariffs

A top Wisconsin cheesemaker says uncertainty reigns after Mexico has responded to the recent U.S. metals tariffs with tariffs of its own on multiple American-made products, including cheese.

Jeff Schwager, president of Sartori Cheese Company, told WisBusiness.com he’s expecting as much as a 15 percent drop in revenue as a direct result of this decision. Canada and Mexico are the two biggest export destinations for the Plymouth-based company, which specializes in aged cheeses that must be produced well before they’re sold and consumed.

“There’s uncertainty with how long are [the tariffs] going to be there? Do we continue to make product for Mexico a year out?” Schwager said. “It’s putting a lot of us in the cheese business in real uncertain times.”

Mexico is Wisconsin’s second biggest market for exports, with $412 million in 2017. That’s up 14 percent from 2016. And according to Green Bay-based Edge Dairy Farmer Cooperative, Mexico buys nearly 25 percent of all U.S. dairy exports, amounting to $1.3 billion last year.

Wisconsin cheese production hit a record 3.37 billion pounds in 2017, accounting for over 25 percent of total U.S. cheese production.

The state’s fourth biggest agricultural export category includes cheese along with honey, eggs and other dairy products like milk and whey. The value of this category was $297 million in 2017, up from $248 million in 2016.

Tom Vilsack, president and CEO of the U.S. Dairy Export Council, says Mexico’s decision to enact tariffs on U.S. cheese could “eliminate, potentially, our competitive advantage that we have in that market… that’s our number one market.”

He says most U.S. executives believe there’s a moderate to serious risk of declining export sales across the board because of the U.S. tariffs on steel and aluminum.

“We have to keep our fingers crossed that at the end of the day, this all gets worked out,” Vilsack said.

–By Alex Moe