Farm and construction equipment manufacturers started the year with high hopes for the economy, bolstered by President Donald Trump’s campaign promises to cut taxes on domestic producers and slash government regulations.
But that optimism has given way to fears of a possible recession, sparked by Trump’s international trade war, said Kip Eideberg, senior vice president for the Association of Equipment Manufacturers, a national trade group based in West Allis.
“If we are dragged or pushed into a recession as a result of the tit for tat tariffs, that’s a whole ’nother level of pain,” he said. “That’s the biggest fear right now.”
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Equipment manufacturers are facing possible retaliatory tariffs from Canada — their top export market — on many of the things they make, like tractors, combine harvesters and excavators, Eideberg said.
His members are already experiencing a slowdown, he said.
“We’ve seen inventory levels spike,” Eideberg said. “We’ve seen member companies draw down production to adjust to bearish market conditions, put any announced hiring on hold, hold off on [research and development] … and generally spend less.”
It isn’t the only industry expected to be caught in the crossfire. Wisconsin workers may be among the most at risk in the nation as other countries begin to impose retaliatory tariffs.
China, Canada and the European Union plan to hit Wisconsin’s two largest industries, agriculture and manufacturing, with retaliatory tariffs. The moves come in response to Trump’s tariffs on steel and aluminum and his broader threats and use of tariffs.
Almost 10 percent of Wisconsin’s jobs — or nearly 300,000 — were in industries those countries are targeting. That’s the largest share of any state in the country, according to an analysis from The New York Times.
“We are extremely concerned about the health and the future of our workforce here in Wisconsin,” said Amy Pechacek, secretary for the state Department of Workforce Development.
That’s because manufacturing and agriculture are the state’s top two industries, she said. Wisconsin agriculture accounts for around 353,900 jobs annually, while more than 460,000 Wisconsinites work in manufacturing. Both are “particularly susceptible to retaliatory tariffs” because they export a lot of goods across the globe, Pechacek said.
Just last year, the state exported $26.3 billion worth of manufactured products, according to the U.S. Trade Representative’s office. Wisconsin also ranked as the country’s 13th largest agricultural exporting state as of 2022.
In response to Trump’s second-term tariffs on Chinese goods, China is imposing between 10 to 15 percent tariffs on American farm products and agricultural machinery.
Canada is applying 25 percent tariffs on a total of around $60 billion worth of American goods as payback for the metal tariffs and threats of broader tariffs on Canadian goods, according to the Canadian Broadcasting Corporation. Canada is also holding back on plans for tariffs on another $100 billion worth of goods that could go into effect next month.
And the European Union is planning countermeasures that could apply to $28.6 billion worth of U.S. goods, which could be in force by mid-April.
Hiring slowdowns have already started
The trade war has left many businesses looking at “significantly reduced profit margins,” Pechacek said. Tariffs on imports make it more expensive for them to buy parts from overseas, while other countries’ duties on American exports make it harder to sell products globally.
“The uncertainty and the chaotic nature in which some of these economic policies have been communicated, threatened, pulled back [and] re-threatened has chilled consumer confidence and business confidence,” Pechacek said.
If trade barriers and economic uncertainty persist, she said businesses may be forced to slow hiring, conduct layoffs and pass on higher costs to customers. Pechacek said tariffs may have already had a “chilling effect” on the economy, with hiring nationally down by 10 percent from last year.
“We are anticipating our businesses having higher construction costs [and] higher energy costs,” Pechacek said. “All of these things really significantly impact the health and vibrancy of their continued economic growth.”
Eideberg said the administration’s shifting approach to North American trade has already led to a slowdown in hiring for equipment manufacturers.
“When you cannot plan with any certainty for more than maybe a week at best, but sometimes day to day, that’s an environment in which you are not going to make decisions like expanding your labor force [or] investing in your manufacturing operations,” he said.
While they haven’t taken effect yet, the European Union’s planned tariffs could affect Milwaukee-based Harley-Davidson, an iconic American company. The EU listed motorcycles on the list of possible products it could target.
Sales in the Europe, Middle East and Africa market accounted for nearly 17 percent of Harley’s sales in 2023, according to Statista. It was Harley’s second biggest market behind U.S. sales, which accounted for 60 percent.
Harley-Davidson didn’t immediately respond to a request for comment. During an earnings call last month, CEO Jochen Zeitz said the company would “fight aggressively” against tariffs on its products and “call for reciprocal treatment for all motorcycles imported into the U.S.”
Wisconsin’s agricultural economy saw over $3B in exports last year
Wisconsin’s agricultural economy exported more than $3 billion worth of products last year, according to a report from the University of Wisconsin-Madison Extension.
The state’s farmers exported $593.8 million in products to 58 countries in 2024, the report said. The state’s food processors exported $2.57 billion worth of products to 133 countries, with dairy products accounting for $668.9 million of those processed exports.
Canada was the largest buyer of Wisconsin’s food processing products last year, buying $1.03 billion worth of goods, the report said.
But Wisconsin’s agricultural exporters may have a harder time selling their products to foreign markets in the face of retaliatory tariffs, said Jeff Hadachek, assistant professor of agricultural and applied economics at the University of Wisconsin-Madison.
“At a very basic level, it means there will be a glut of food and food products that can no longer leave or leave the country at a higher cost than they previously did,” he said. “That means lower prices at the farm gate and lower prices for the food processors as well.”
As part of Canada’s response to Trump’s tariffs, America’s neighbors to the north are imposing 25 percent tariffs on fresh fruit, dairy products, poultry and rice, according to the American Farm Bureau Federation. Likewise, the Farm Bureau says China has placed tariffs on American chicken, wheat, corn, cotton, soybeans, pork, beef, fruits, vegetables and dairy products. Europe also included milk, cream, poultry and meat products on its list of products it may tariff.
Hadacheck also said the trade war comes at a time when farmers are already facing “pretty slim” margins across the country.
“Producers were already facing pretty low prices,” he said. “They were already in a state of contraction and managing those margins. This doesn’t provide a ton of confidence or optimism about that.”
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