On to Wisconsin: RealEcon Visits the Badger State

The RealEcon team at the Council on Foreign Relations (CFR) continues to travel around the country as part of the initiative’s listening tour to better understand Americans’ views on trade, foreign investment, and other international economic topics. Listening not only provides different perspectives on policy but also highlights how international economic policies personally affect people across the United States. After our visit to Florida in March, we made a trip to Wisconsin in April.

We first spent a busy two days in the state’s capital, Madison. There we met with leaders from the Wisconsin Economic Development Corporation, the state’s department of agriculture, the Wisconsin Cheesemakers Association, and the Wisconsin Center for Manufacturing and Productivity, along with the founder and CEO of a major cosmetics company. We sat down with lobbyists for small and large Wisconsin businesses, as well as two state senators, a legislative assistant for a local assemblyman, and a former executive director of the state Republican Party. At the University of Wisconsin (UW)–Madison, we spoke with professors in the political science department and had a lively discussion over mac-and-cheese pizza with a group of undergraduate students. We also met with local journalists.

From Madison, we drove north to Plover to visit a Del Monte vegetable-canning facility, and then made our way further north to Stevens Points, where we spent a couple of hours with a thoughtful group of students at the UW campus there. We met with local council and school board members and observed a local political debate among congressional candidates.

Finally, we made our way to up to Marathon County, a largely rural county and the state’s largest geographically. There we met a group of retired teachers for doughnuts and coffee at a local church, as well as the former mayor of the county seat, Wausau, and the Wisconsin secretary of state. We also visited a ginseng farm and later had a discussion at a dairy farm with a group of local farmers, a county conservationist, a maple syrup producer, and a leader from the county’s large Hmong community.

While manufacturing is Wisconsin’s largest sector economically, the state prides itself on its agriculture, which extends well beyond the dairy industry. In addition to cheese, whey, and other milk by-products, Wisconsin produces green beans, peas, potatoes, corn, soy, cranberries, and other fruits and vegetables. Over 90 percent of U.S. ginseng—a native North American plant—is produced in Marathon County.  

We repeatedly heard that Wisconsin faces three main economic challenges: a lack of workers, expensive childcare, and deteriorating rural communities. One person estimated that even with a 3 percent unemployment rate, Wisconsin still has around 100,000 unfilled jobs. Agriculture is labor intensive, and the farmers we met explained that without workers, fruit would be left to rot on trees and cows would die in the field. Seasonal workers are one solution for many Wisconsin farmers, but using migrants comes with its own challenges, as the legal process can be costly and time-consuming. The lack of affordable childcare in the state is keeping many people from jobs. Recent legislative efforts to address childcare costs have been unsuccessful to date.

We also heard about the struggles facing people in rural Wisconsin. As businesses move their operations or close, there are fewer jobs in rural communities. Most young people move away in search of employment, leaving an aging demographic behind. Families leave and take their children with them, causing schools to consolidate to cut costs. Those areas also lack grocery stores with fresh produce, and often the only store for miles is a Dollar General.

An important part of our Wisconsin trip was listening to personal accounts of how trade policies and foreign investment have impacted local communities and businesses. Export-driven industries, like agriculture, are very sensitive to trade policies. Despite general support for trade, some people are concerned that current trade policies fail to prioritize the sustainability of local communities. Instead, they believe trade policy is driven by the interests of large multinationals, often to the detriment of local communities.

One vivid example of the impact of trade policy on local businesses came at a visit to the second-largest ginseng producer in Marathon County. William Hsu is the president of Hsu’s Ginseng, an enterprise started in Wausau by Will’s father in 1974. Will explained that China’s retaliatory tariffs on U.S. ginseng in response to the Donald Trump administration’s broad-based tariffs on China in 2018 were a major blow to the Wisconsin industry, as China had been the main importer of the state’s ginseng. China’s 20 percent tariff increase made it impossible for many Wisconsin ginseng farmers to be competitive, especially as Canada stepped in to supply China. U.S. ginseng prices dropped by about 30 to 40 percent, and the funds flowing from foreign buyers to the local economy decreased significantly.

We also heard from Del Monte Foods, a major food-processing company, about how steel tariffs and quotas benefit overseas canned-good producers and harm U.S. producers and consumers. Del Monte, like most canned-food processors, uses tinplate steel to can fruits and vegetables. When the Trump administration imposed tariffs on imported steel—not just from China but also Japan, Korea, and Europe—the price for tinplate rose. The price increase made some canned goods from Thailand and other countries, which face no tariffs, cheaper for consumers than canned goods grown and processed in the United States.

As we drove north to Stevens Point along the Wisconsin River, a distinct smell filled the countryside. We learned from locals that this smell comes from the papermill. Twenty years ago, papermills dotted the banks of the river. Now, many of those mills have closed. Some attribute the closures to outsourcing and international competition, blaming the federal and state governments for not investing in the industry to save jobs. However, a student at UW-Stevens Point noted that the paper industry is in overall decline as technological advancements change consumer preferences.

Our impression was that people in Wisconsin are generally not concerned about who owns a company if it invests in the community and offers high-paying jobs. Foxconn, a Taiwanese technology company, is often cited as a negative example of foreign investment. In 2017, Wisconsin lawmakers offered billions of dollars in subsidies to entice Foxconn to come to the state. The company initially said that it planned to build large LCD screens, which would have created around 13,000 jobs. In the end, Foxconn decided to assemble servers and other small electronic products instead, which only employs around 1,000 people.

In contrast, Kikkoman, the Japanese soy sauce producer, has been in Wisconsin since 1973 and has a reputation of being a great employer and a respected investor that helps the local community, in part by giving money to UW. Recently, Kikkoman announced that it intends to expand its operations in Wisconsin, investing around $800 million in the state and adding another eighty-three jobs.

In Wisconsin, the RealEcon team not only picked up invaluable insights about the Badger State’s economy, but also gained important Midwestern perspectives on trade, tariffs, and foreign investment. For the next part of the listening tour, the RealEcon team is planning to visit industrial cities in the northeast.