Few Americans associate cheddar cheese with its ancestral home: Cheddar, in Somerset County, Britain. The name Cheddar, originally designating a unique geographic location, evolved into a generic description as the cheese was produced all over the world. And therein lies the heart of a modern trade dispute over “geographical indications,” or GIs for short.
American cheesemakers are having a harder time finding an outlet for production through exports. China, Canada, and Mexico are three of the most important destinations for U.S. cheese. But in reaction to U.S. steel tariffs, these trading partners raised their tariffs on cheese. Getting caught in the crosshairs isn’t new for cheesemakers. It’s a sacred cow for many countries (pardon the pun) and therefore a popular pain point to exploit in trade disputes.
For the two-thirds of Americans who drink at least one cup of coffee per day, it’s nearly impossible to be a true locavore. More than three-quarters of U.S. coffee imports come from just four countries: Brazil, Colombia, Vietnam, and Honduras, countries that have the right climate for growing it.
Production limits and price-setting means Canadian milk drinkers pay significantly more than they would in a free market. Conversely, for certain lucrative and in-demand dairy product ingredients, Canadian dairy boards have set prices at or below international market prices. U.S. and other global dairy farmers have argued this offers Canadian exports an advantage in third markets, while driving global prices and farm receipts down. Will NAFTA 2.0 change any of this?
The implementation of NAFTA has allowed U.S. beef trade to flourish, and the efficient supply chains developed under NAFTA have also helped the U.S. beef industry become more competitive in Asia.
The biggest chunk of tariffs in the Great Tariff War of 2018 is between the United States and China, beginning with two rounds of tit-for-tat tariffs worth around $50 billion against one another. The United States just raised on the ante by another $200 billion. China will not fold; they will go “all in” in this poker game, but we don’t know what that means yet as they hold their cards close.
Farmers are price takers. For years, the export opportunities created by market opening policies have been positively reflected the price they get for their corn. But as we spoke about current trade policy with its frequent tariff announcements, the farmers were checking the current price of corn. “We’re down to 3.6!” a farmer from Michigan interjects as we talk about China.
There is plenty of collateral damage in a tariff war because the one-upmanship spills over beyond the sectors named in the original complaint (steel for example), sweeping in producers like farmers for maximum political effect. The other dirty little secret in tariff wars is that they provide cover for governments to protect the producers of products facing normal market competition. That’s what might just be motivating our closest trading partners to put American whiskey on their lists for tariff retaliation.
In early April, China announced $3 billion worth of tariffs on 128 U.S. goods including fruit, wine, nuts – and the type of American ginseng grown in Marathon, Wisconsin. With a new 15 percent tariff on their ginseng, Wisconsin growers worry they will lose sales to Canadian producers who compete for the same customers in China.
Farmers markets are a great way to shop fresh and seasonal, but if you can’t get there, you can still find an increasingly impressive selection of tomatoes at your local grocery store. To meet year-round demand, the business of the heirloom tomato has grown global.