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August 6, 2018

Tariffs Could Cost You $1.65/cwt For the Rest of Year

 |  By: Jim Dickrell

Retaliatory tariffs placed on U.S. dairy exports to Mexico and China could cost you $1.65/cwt for the rest of the year, says Shawna Morris, vice president of trade policy for the U.S. Dairy Export.


The total impact could be some $1.8 billion out of dairy farmer pockets, according to analysis done by economists with the National Milk Producer Federation. Morris made her comments in written testimony to the U.S. House Ways and Means Committee’s Subcommittee of Trade last week. Those comments are summarized here.


She notes that over the past 15 years, dairy exports have contributed $36 billion to the bottom lines of dairy farmers. “U.S. dairy exports grew to $5.5 billion by the end of 2017, and represent nearly 15% of domestic production,” she says.


“[But] since Mexico’s initial retaliatory tariff announcement May 31, dairy futures have sharply declined,” she says. And with the imposition of more tariffs by China in early July, NMPF estimates an all-milk price drop of $1.65/cwt over the second half of 2018, which could cost farmers a total $1.8 billion.


Morris acknowledges the U.S. government “took an important step in providing assistance on July 24 when it announced a $12 billion tariff-relief package for America’s farmers and ranchers.”


But she also says: “No amount of assistance can replace the hard-fought markets that are being lost every day that retaliatory tariffs remain in place. Moreover, the longer tariffs persist the more difficult it will be to retain markets as our competitors work to seize the opportunity to expand their market share.”


She notes that Mexico has finalized a trade agreement with the European Union (EU) in April which will lower barriers for EU dairy sales and impose new restrictions on a variety of common-name U.S. cheese products.


Retaliatory tariffs from China pose similar risks, allowing competitors such as the EU, Australia and New Zealand to scoop up sales of cheese, milk powder, whey and other dairy products. She notes that the U.S. sold nearly $600 million in dairy products to China last year and was “showing explosive growth potential.”


“…we believe increased sales throughout Asia are key to our future success, and we are deeply worried that the current trade situation threatens to up-end the positive momentum not just this year but also in years to come,” she says.


Again, you can read her complete blog, “U.S. Dairy’s Momentum in China Threatened” here.

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