"What is the future for us?" dairy farmers ask if U.S., Canada start trade war

CAMBRIDGE, Wis. -- President Trump on Tuesday fired the first round in what may become a trade war with America's second biggest trading partner. The Commerce Department proposed a 20 percent tax on Canadian lumber. It is one of Canada's biggest exports and goes into a lot of American homes. The Trump administration says government subsidies make Canadian lumber artificially cheap. 

A trade war could be costly because the U.S. sells as much to Canada as it buys. Just ask American dairy farmers.

Tina Hinchley's Wisconsin farm has 130 cows producing 1,000 gallons of milk every day.

Hers is one of the more than 9,000 dairy farms in this state which contribute some $43 billion to Wisconsin's economy. And this spring there's been a gusher of American milk.

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More than 9,000 dairy farms in Wisconsin contribute some $43 billion to the state's economy

CBS News

"We've had more milk from the same amount of cows than ever before," Hinchley said.

But that's a problem. And according to the president, our neighbors to the north are making it worse.

"Canada, what they've done to our dairy farm workers, is a disgrace. It's a disgrace," Mr. Trump said. 

The Canadian dairy industry's decision to lower prices on certain kinds of dairy products has undermined American dairy and boosted Canadian farmers whose product is now cheaper.

For years, American farmers exported their dairy products to Canada tax-free and were counting on exporting their record-high commodity to their usual Canadian customers. But now -- they're stuck.

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Canada's decision to lower prices on certain kinds of dairy products has undermined American dairy and boosted Canadian farmers whose product is now cheaper. 

CBS News

"I think we're afraid," Hinchley says. "We have a surplus of milk ... A lot of us farmers are worried. What is the future for us?"

Grassland, a big dairy processor here, has lost more than $150 million in the last year, and 75 family farms have shuttered or are in trouble. John Litza's is one of them. He's called dozens of other processors for help.

"It was just, 'No. We've got too much milk. Too much milk. Too much milk,'" Litza said.

On Tuesday morning, Mr. Trump tweeted: "We will not stand for this. Watch!"

Well, whatever he intends to do, the farmers here are hoping he's not just crying over spilled milk.

Correction: This story was updated to clarify it was the Canadian dairy industry, not the government of Canada, which lowered prices.

  • Dean Reynolds

    Dean Reynolds is a CBS News National Correspondent based in Chicago.