U.S. dairy industry braces for impact as new tariffs threaten exports

USA – The recent tariffs imposed by President Trump on goods imported from key trading partners are sending shockwaves through the U.S. dairy industry. 

With 25% tariffs on most goods from Mexico and Canada, and 10% on goods from China, U.S. dairy farmers are facing an uncertain future. 

The new policies, introduced in early February, are expected to have profound consequences for dairy exports and the financial stability of farmers.

Charles Nicholson, an adjunct associate professor at Cornell University, warns that the combination of these tariffs, deportations, and potential cuts in food and nutrition spending could result in a staggering US$6 billion loss for U.S. dairy farmers over the next four years. 

“If you pick a trade fight with our major export destinations – Mexico, Canada, and China – and they decide to retaliate, that has some substantive negative implications for dairy farms and processors,” Nicholson said.

Mexico, Canada, and China are essential to the U.S. dairy export market, accounting for over half of the country’s dairy exports by value each year. 

The impact of trade instability is not new; retaliatory tariffs from China alone led to a loss of approximately US$2.6 billion in revenues for U.S. dairy farms from 2019 to 2021. 

The current situation brings further risks of lost revenues, especially as key dairy products like milk, cream, and butter are targeted by Canadian tariffs.

Mike North, president of Ever.Ag, highlighted the volatility these tariffs could bring to the market. “Predictably, this will add volatility to demand that may overshadow the ongoing focus around supply,” North said.

 “Only small changes can have large impacts on price. Producers are well advised to brace for the disruption that these tariffs will likely create.”

While Mexico has temporarily delayed its tariffs, Canada has already released a list of products affected by its new tariffs, signaling a challenging road ahead for U.S. dairy.

Krysta Harden, President and CEO of the U.S. Dairy Export Council, emphasized the importance of dialogue to resolve the issues surrounding the tariffs. 

“Yesterday, President Trump signed three Executive Orders imposing 25% tariffs on most goods from Mexico and Canada and 10% tariffs on goods from China, all of which are set to go into effect on Tuesday, Feb. 4,” she stated.

 The White House cited the ongoing flow of illicit drugs into the United States as the primary reason behind the imposition of tariffs. 

“While this legitimate concern needs to be swiftly addressed, we urge discussions between all countries involved to resolve the issues in a manner that preserves the livelihoods of dairy farmers and manufacturers in rural America,” stated.

The International Dairy Foods Association (IDFA) also responded to the tariffs, expressing concern about the potential unintended consequences.

 “We know the Administration understands that robust market access to Canada, Mexico, and China—our three largest trading partners—is critical to the future of U.S. dairy,” said the IDFA in a statement. 

The organization has called for proactive negotiations to minimize the impact of these tariffs on U.S. dairy farmers and processors.

The dairy industry now faces a turbulent future as these trade policies unfold.

 The stakes are high, and the outcome will depend on how effectively stakeholders engage in dialogue and seek solutions to protect the livelihoods of dairy farmers in rural America. 

The road ahead will be challenging, and the actions taken in the coming months will shape the future of the U.S. dairy industry.