With President-elect Donald Trump’s promise of tariffs on foreign imports, many in U.S. agriculture are concerned about retaliatory tariffs on U.S. exports.

“Looking back at 2018-2019, Mexico did impose a 10% to 25% retaliatory tariff on U.S cheese, but the export volumes remained largely unchanged. However, U.S. cheese prices were generally lower during that period,” Marin Bozic, an agricultural economist with the University of Minnesota, said of conditions during the first Trump administration.

If Mexico wants to hurt the U.S., it will have to change its trade relationship with New Zealand and Europe because neither currently enjoy duty-free dairy access to Mexico, he said during the latest Dairy Stream podcast.

“So it’s not just a … Mexico-U.S. relationship, they’re going to have to rebalance a broader strategy than they currently have,” he said.

Income compensation

Even if U.S. dairy takes a direct hit on exports, Bozic believes some additional measures will be taken to compensate dairy producers, such as a temporary change to the premiums on Tier II for Dairy Margin Coverage or an increase in subsidies for Dairy Revenue Protection.

“There’ll be some ways that the administration will find … to make their farmers whole even if dairy exports do go down,” he said.

And he’s not concerned about the impact of tariffs on dairy trade long term, he said.

On the other hand, with a lot of new cheese plants coming online, the U.S. will have a lot more cheese ready to be exported, he said.

“Dairy tariffs plus new cheese processing capacity is certainly not a very tasty cocktail,” he said.

Other considerations

U.S. agriculture also needs to consider what followed the tariff events in Trump’s first term, said Mike North, president of the producer division at Ever.Ag.

The Phase I deal was able to move exports into China at a pace never seen before. On the other side of those 19 months of pain was a trade volume the U.S. has never been able to touch, he said.

“While we may have to endure some pain on the front end, it could yield some … really big opportunities on the back end because it’s not that the goal is to shut down agricultural trade. The goal is to move into greater trade but under a better set of terms,” he said.

“Ultimately, that’s where the opportunity lives, and I think we have to keep that on the forefront of our mind as we endure some of the immediate pain that comes potentially with the announcement of any tariff,” he said.

Geopolitical reshuffling

Marin agreed, saying tariffs would ultimately lead to greater market access for U.S. agriculture.

“This is all part of a big geopolitical reshuffling where for half a century or longer, we … agreed to very asymmetric market access policy,” he said.

The U.S. would grant folks access to the U.S. market without asking as much access to their market in order to shore up allies to fight off some archnemeses.

“We’re in a new world. We’re building new alliances. We are repositioning our country,” he said.

“Ultimately the goal here isn’t to export less, the goal is to open new markets for U.S. products and long term, U.S. agriculture will benefit,” he said.