- Retaliatory trade tariffs in China and Mexico have cut demand for American-made cheese in those countries.
- Milk and cheese prices are down sharply from a 2014 peak.
- American tastes are also changing, with processed cheese becoming less popular and European varieties selling more.
Cheese is set to get much cheaper in the near future as a result of the ongoing trade war, presenting a wonderful Christmas gift for cheddar-loving consumers, but an unsavory reality for many dairy farmers. The cheese stockpile in America — 1.4 billion pounds of cheese currently in cold-storage warehouses — is the highest level ever recorded since the metric started getting tracked over 100 years ago. It’s the result of cheesemakers ramping up production immediately prior to seeing demand fall sharply due to trade tensions and changing tastes at home.
Here’s what’s happening with one of America’s favorite foods in this trade war.
This Is Not Gouda for Cheesemakers: Cheese Prices Are Down
Cheese prices are already down sharply — Wisconsin extra-sharp down, even. The spot price for a 40-pound block of cheddar is off 25 percent from where it was in 2014, similar to the 28 percent decline of 500-pound barrels typically used for processed cheese. With cheese losing value when it’s stored for more than a couple of weeks, the producers currently storing their wares in hopes of better prices in the future are clearly taking a calculated risk.
The biggest issue appears to be major retaliatory tariffs on American dairy products from Mexico and China, both major consumers of American cheese. September shipments to Mexico were down 10 percent year-over-year, and shipments to China have fallen off by a massive 63 percent.
Making matters worse is the fact that many dairy farmers appear to have expanded their herds to address the peaking market from 2014, when milk prices were 40 percent higher. As such, they’re currently dealing with higher production capacity and paying for that expansion even as prices have suddenly dropped and exports are down.
The Feta of American Cheese Doesn’t Appear to Brie Strong: What Else Is Hurting Cheesemakers
Although the trade war is a major driver of falling demand, another issue appears to be that American cheesemakers aren’t catering to the tastes of their closest customers. Americans consumed a record 37 pounds of natural cheese per person last year, but much of that is coming in the form of imported cheeses from Europe.
The taste for processed or lower-quality cheese is on the decline, and that means many cheese producers are struggling to find a market for their cheaper products. That has meant that foreign companies are investing in local production centers even as retailers are expanding their selection and including more diverse varieties with more imports.
Click through to see the 12 states getting hit hardest by Trump’s tariffs.
More on the Economy
- Trump Declares Trade War Victory, but Americans Will Still Pay More
- Trump’s Tariffs Are Killing More Than 450,000 Jobs
- What Trump’s New South Korea Deal Means for You
- Watch: Best and Worst States for the Middle Class
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