Retaliatory tariffs put in place by Mexico and China in 2018 and a taste for foreign cheese are causing U.S. cheeses like American and cheddar to pile up unsold.
What are the details?
The current stockpile of unsold U.S. manufactured cheese amounts to roughly 1.4 billion pounds worth of the product, the largest in U.S. history.
This is due in part to retaliatory tariffs that China and Mexico have put on U.S. dairy import in response to protectionist tariffs put into place this year by the United States. By September, cheese exports to Mexico had dropped by 10 percent for the year, while cheese exports to China had dropped by 63 percent.
In addition to tariffs, U.S. cheese is also becoming harder to sell domestically. Americans have been getting more adventurous with their cheese eating, choosing to purchase foreign cheeses instead of U.S. products like cheddar or American cheese. American manufacturers also increased production just before the tariffs went into effect, exacerbating the problem.
This shrinking market has led to a drop in the price of U.S. manufactured cheese. According to reporting by the Wall Street Journal, the price of a 40-pound block of cheddar has dropped by 25 percent compared to 2014, while the price of a 500-pound block has dropped by 28 percent.
In June, more than 60 dairy associations and cheese makers, including the National Milk Producers Federation, the International Dairy Foods Association, and the U.S. Dairy Export Council, wrote a letter to President Donald Trump asking him to suspend tariffs on Mexico in order to prevent retaliatory tariffs from taking effect. Before the tariffs, Mexico was responsible for purchasing 25 percent of all U.S. dairy exports.
While Mexico has since signed the USMCA trade deal with the United States, China and the U.S. have still not resolved their ongoing trade dispute. As part of the USMCA, Canada has agreed to increase its quotas of how much of certain dairy products can enter its country before being hit by tariffs. However, these changes will go into effect incrementally over a 13-year period and do not even have to begin for until year six of the deal.
Cheese isn't the only U.S. product to be hurt by retaliatory tariffs put in place in response to Trump tariffs. In October, the American Farm Bureau Federation reported that U.S. soybean exports had dropped off by 97 percent compared to 2017. Desperate soybean growers have even resorted to selling their merchandise in Iran at a discount. The usually billion-dollar industry of U.S. sorghum exports to China has also taken a substantial hit