July 16, 2019

How Retaliatory Tariffs Have Hurt Dairy Exports

 |  By: Jim Dickrell

The U.S. Dairy Export Council (USDEC) estimates U.S. dairy exports would have reached 17% of production in 2018 instead of 15.8% without retaliatory tariffs from Mexico and China. That loss of export sales represents more than 2 billion pounds of milk equivalent, which has backed up on domestic markets.

Mexico has lifted its retaliatory tariffs on U.S. dairy products, those penalties remain on shipments to China.

“While talks between China and the United States are continuing, we are less than optimistic that we will see Chinese tariffs lift soon,” say Margaret Speich and Mark O’Keefe. Speich is senior vice president of communication and membership and O’Keefe is VP of editorial services with USDEC.

“Tariffs as high as 45% on U.S. dairy products and ingredients are having a negative effect,” they say.

July 2019 marks the 13th month of Chinese tariffs. From July 2018 through May 2019, Chinese imports have dropped 43% compared to the same period prior to the establishment of tariffs. Skim milk powder sales have declined 70%, whey is down 49% and cheese is down 45%.

Compounding this impact is African Swine Fever, which has decimated the pork industry in both China and Vietnam. Both countries had been importing whey products as hog feed. With the outbreak, there is less demand for whey.

The good news is that world dairy prices are rising. As a result, the value of U.S. exports rose 1% to $1.93 billion January through April, report Speich and O’Keefe.

For more information on U.S. exports, click here.