-
Dairy Farmers Face Uncertain Future With New Tariffs (video)
By USDEC June 30, 2018- Tweet
USDEC President and CEO Tom Vilsack says new tariffs will remove a competitive U.S. advantage in Mexico while making it harder to sell dairy products to fast-growing China.
U.S. dairy exports got off to a sunny start this year, with record volumes in April. That gave dairy farmers hope for a brightening future. But tariffs announced this month by Mexico and China have brought clouds into the forecast.
What follows is a recap of what has happened and what the U.S. Dairy Export Council is doing to mitigate damage to its farmer-funders and the rest of the U.S. dairy industry.
June 1 salvo, with Mexico returning fire
On June 1, the U.S. imposed steel and aluminum tariffs on Mexico, Canada and the European Union.
It didn't take long for Mexico to respond with new tariffs on U.S. products, including tariffs that will soon reach 20 to 25 percent on U.S. cheeses. The first wave of those Mexican tariffs was implemented on June 5 and U.S. cheeses are now facing duties of 10 to 15 percent as a result.
Prior to that action, U.S. dairy exporters paid no tariffs when their cheeses crossed the border into Mexico, in accordance with terms of the North American Free Trade Agreement.
NAFTA has been a boon to U.S. dairy. It helped make Mexico our No. 1 cheese export market with $391 million in sales last year and a 75 percent share of Mexico’s cheese imports.
"We had a competitive advantage in that market," U.S. Dairy Export Council President and CEO Tom Vilsack said on Iowa Public Television’s "Market to Market" show. "All we have now is a logistical advantage."
China strikes back
In a similar point-counterpoint scenario, the U.S. announced 25 percent tariffs on a list of Chinese products on June 15. China retaliated the same day by announcing tariffs of 25 percent on hundreds of U.S. imports, including a wide range of dairy products.
Both sets of new tariffs are scheduled to take effect July 6.
China is an important growth market. In 2017, the U.S. sold $577 million in dairy products to China, an increase of 49 percent over the previous year.
"This is going to create a real problem," said Vilsack on the nationally syndicated "Market to Market" show. "We won't be as competitive in China as we could have been."
It is likely to take time for this international chess game to play out and the endgame is not yet in sight.
Casting a summer shadow
The tariffs put a summer shadow over what Vilsack described as "a very good start to the year."
In the first four months, exports were equivalent to 16.8 percent of milk solids produced—well above the historical average. In April, single-month exports equated to 18.8 percent of milk solids produced—a new record.
Broad and robust economic growth has been driving global demand, making now the best time to expand sales.
That’s what “The Next 5%” is all about. USDEC’s aim through this program is to increase U.S. dairy exports from 15 percent of annual U.S. milk production to 20 percent.
Even with the challenge of tariffs, USDEC remains committed to the ambitious goal.
More than 60 dairy companies sign letter to Trump
In an effort led by USDEC, more than 60 companies and organizations representing U.S. dairy farmers and cheese makers sent a letter Tuesday to President Trump.
The letter asked the president and his administration to work collaboratively with Mexico by suspending the steel and aluminum tariffs until negotiations for a modernized NAFTA have been concluded. USDEC worked with other dairy organizations to make sure the message was widely disseminated.
The letter also expressed industry appreciation for President Trump’s insistence that Canada end market-distorting pricing schemes and open its market to more Made-in-America dairy products.
Unlike Canada, Mexico has long been a model for dairy trade.
The letter concluded this way:
"Our industry recognizes that the U.S. must be resolute in ensuring our trading partners uphold their end of the bargain with us. We trust that your Administration’s skilled staff can find a way to resolve this issue, given Mexico’s strong commitment to working with the U.S. to further improve U.S.-Mexican trade. Not all countries have shown this same willingness."
In addition to the communiqué to the president, USDEC gave its members materials to provide clarity on the new dynamic in Mexico as well as resources when they communicate with members of Congress and their Mexican buyers.
On "Market to Market," Vilsack was asked what farmers should be looking for as they follow future developments. "They need to pay attention to whether this is escalating or if there is a genuine effort to de-escalate," said Vilsack.
To watch 1-minute clip including analysis from Tom Vilsack, click video below.
In a trade disagreement between the U.S. and China, a 25 percent tariff has been proposed on a wide array of U.S. dairy products. This has led to uncertainty for U.S. dairy farmers, and USDEC’s Tom Vilsack offered helpful insight today on Iowa Public Television’s Market to Market pic.twitter.com/smgPelnVL1
— U.S. Dairy Exporter (@USDairyExporter) June 23, 2018Information resources for farmers
USDEC has several resources helping farmers follow trade policy developments affecting dairy. Unlike some USDEC members-only content, a login is not required to:
- Access the U.S. Dairy Exporter Blog, the publication you are now reading, for market analysis, research and news on trade policy and other issues. Subscribe to get updates in your inbox.
- Follow USDEC on Twitter: @USDairyExporter.
- Read USDEC trade policy news releases.
- Follow Next 5% developments on our new usdec.org page devoted to our ambitious goal. We tried to make the address easy by naming it Next5percent.org (Note: Next5%.org, using percentage symbol, will not work).
- Go to GotDairyJobs.org to get the numbers, faces and graphics you need to understand and tell dairy's positive economic impact story. This includes state-by-state fact sheets on dairy exports.
Mark O'Keefe is vice president of editorial services at the U.S. Dairy Export Council.
Learn more:
- April U.S. Dairy Exports Surge to All-Time High
- U.S. Dairy Exports Up 14% in 2017
- What Dairy Farmers Need to Know About Increasing Exports to "The Next 5%"
Subscribe to the U.S. Dairy Exporter Blog
The U.S. Dairy Export Council fosters collaborative industry partnerships with processors, trading companies and others to enhance global demand for U.S. dairy products and ingredients. USDEC is primarily supported by Dairy Management Inc. through the dairy farmer checkoff. How to republish this post.
10 Most Recent Posts
Most Popular Posts in Past Year
Index of Posts by Topic
- #GotDairyJobs (4)
- About USDEC (65)
- Africa (6)
- Australia (4)
- Blog (8)
- Brazil (4)
- Canada (20)
- Central America (1)
- Cheese (58)
- Chile (1)
- China (54)
- Common food names (7)
- Company News (17)
- Consistent Supply (1)
- Crisis Management (3)
- Cuba (2)
- Dairy (6)
- Dairy checkoff (8)
- Dairy Ingredients (5)
- Dairy Management Inc. (2)
- Dairy Resources (1)
- Dairy Supply Chain (1)
- Dairy Trends (5)
- Documentation (3)
- EU (24)
- Experts on Dairy Exports (4)
- Exporter of the Year (2)
- Exports (24)
- Farming (38)
- Food Aid (8)
- Food Safety (8)
- Foodservice (3)
- Free trade agreements (34)
- Geographical Indications (GIs) (10)
- Global Marketing (87)
- Global Shipping Crisis (1)
- Got Jobs? (9)
- Indonesia (1)
- Innovation (17)
- Japan (17)
- Krysta Harden (1)
- Market Access (25)
- Market Conditions (253)
- Member Services (17)
- Mexico (40)
- Middle East (10)
- Middle East & North Africa (3)
- Middle East/North Africa (10)
- Milk (4)
- Milk Protein Concentrate (MPC) (2)
- New Zealand (11)
- Next5% (20)
- Nonfat Dry Milk/Skim Milk Powder (8)
- Nutrition (18)
- Product Innovation (6)
- Protein (4)
- Regulations (5)
- Research & Data (311)
- Russia (3)
- Singapore (10)
- South America (8)
- South Korea (10)
- Southeast Asia (25)
- Strategic Insights (1)
- Supply (1)
- Sustainability (25)
- Technology (2)
- ThinkUSADairy (5)
- TPM23 (1)
- TPP (13)
- Traceability (8)
- Trade Barriers (5)
- Trade Data (7)
- Trade Policy (72)
- TTIP (5)
- UHT Milk (7)
- USMCA (2)
- Vietnam (4)
- Whey (6)
- Whey Ingredients (2)
- Whey products (10)
- Whole Milk Powder (WMP) (3)
- World Dairy Expo (1)
- World Milk Day (1)
- Yogurt (1)
Index of Posts by Date, Author
- June 2021 (13)
- March 2015 (12)
- September 2015 (12)
- March 2014 (11)
- April 2015 (11)
- December 2015 (11)
- February 2015 (10)
- October 2015 (10)
- October 2014 (9)
- June 2015 (9)
- July 2015 (9)
- November 2015 (9)
- March 2016 (9)
- October 2019 (9)
- September 2013 (8)
- May 2015 (8)
- August 2015 (8)
- January 2016 (8)
- February 2016 (8)
- March 2017 (8)
- December 2018 (8)
- May 2019 (8)
- December 2019 (8)
- June 2014 (7)
- November 2016 (7)
- May 2017 (7)
- May 2018 (7)
- July 2020 (7)
- June 2023 (7)
- July 2016 (6)
- August 2018 (6)
- October 2018 (6)
- November 2018 (6)
- February 2019 (6)
- June 2019 (6)
- August 2019 (6)
- March 2020 (6)
- April 2020 (6)
- June 2020 (6)
- June 2022 (6)
- February 2014 (5)
- June 2016 (5)
- August 2016 (5)
- September 2016 (5)
- December 2016 (5)
- February 2017 (5)
- July 2017 (5)
- October 2017 (5)
- January 2018 (5)
- April 2018 (5)
- June 2018 (5)
- July 2018 (5)
- September 2018 (5)
- January 2019 (5)
- March 2019 (5)
- April 2019 (5)
- July 2019 (5)
- September 2019 (5)
- November 2019 (5)
- January 2020 (5)
- August 2020 (5)
- October 2020 (5)
- April 2021 (5)
- January 2022 (5)
- May 2013 (4)
- September 2014 (4)
- April 2016 (4)
- May 2016 (4)
- October 2016 (4)
- January 2017 (4)
- April 2017 (4)
- June 2017 (4)
- August 2017 (4)
- September 2017 (4)
- December 2017 (4)
- February 2018 (4)
- February 2020 (4)
- May 2020 (4)
- February 2022 (4)
- September 2022 (4)
- April 2023 (4)
- December 2023 (4)
- November 2017 (3)
- March 2018 (3)
- September 2020 (3)
- December 2020 (3)
- February 2021 (3)
- May 2021 (3)
- August 2021 (3)
- December 2021 (3)
- March 2022 (3)
- April 2022 (3)
- May 2022 (3)
- October 2022 (3)
- December 2022 (3)
- May 2023 (3)
- July 2023 (3)
- November 2023 (3)
- March 2011 (2)
- June 2011 (2)
- September 2011 (2)
- March 2012 (2)
- June 2012 (2)
- July 2012 (2)
- March 2013 (2)
- July 2013 (2)
- November 2020 (2)
- January 2021 (2)
- March 2021 (2)
- July 2021 (2)
- September 2021 (2)
- October 2021 (2)
- November 2021 (2)
- July 2022 (2)
- August 2022 (2)
- January 2023 (2)
- March 2023 (2)
- October 2023 (2)
- January 2024 (2)
- February 2024 (2)
- April 2024 (2)
- June 2024 (2)
- July 2024 (2)
- January 2010 (1)
- February 2010 (1)
- March 2010 (1)
- April 2010 (1)
- May 2010 (1)
- June 2010 (1)
- July 2010 (1)
- August 2010 (1)
- September 2010 (1)
- October 2010 (1)
- November 2010 (1)
- December 2010 (1)
- January 2011 (1)
- February 2011 (1)
- April 2011 (1)
- May 2011 (1)
- July 2011 (1)
- August 2011 (1)
- October 2011 (1)
- November 2011 (1)
- December 2011 (1)
- January 2012 (1)
- February 2012 (1)
- April 2012 (1)
- August 2012 (1)
- September 2012 (1)
- October 2012 (1)
- November 2012 (1)
- December 2012 (1)
- January 2013 (1)
- February 2013 (1)
- April 2013 (1)
- June 2013 (1)
- August 2013 (1)
- October 2013 (1)
- November 2013 (1)
- December 2013 (1)
- January 2014 (1)
- April 2014 (1)
- May 2014 (1)
- November 2022 (1)
- February 2023 (1)
- August 2023 (1)
- September 2023 (1)
- March 2024 (1)
- May 2024 (1)
- August 2024 (1)
- September 2024 (1)
- USDEC (183)
- USDEC Staff (146)
- Alan Levitt (119)
- Tom Suber (41)
- Margaret Speich (22)
- Marc A.H. Beck (15)
- Vikki Nicholson-West (11)
- Angélique Hollister (11)
- Tom Vilsack (8)
- Jaime Castaneda (7)
- Matt McKnight (7)
- Véronique Lagrange (7)
- Margaret Speich and Mark O'Keefe (7)
- Ross Christieson (7)
- Paul Rogers (6)
- Shawna Morris (5)
- William Loux (5)
- Alan Levitt and Marc Beck (5)
- Krysta Harden (4)
- USDEC Communications (3)
- Kristi Saitama (3)
- Marilyn Hershey (3)
- Brad Gehrke (3)
- Tom Quaife (2)
- Jim Mulhern (2)
- Alan Levitt and William Loux (2)
- Kara McDonald (2)
- Luke Waring (2)
- Merle McNeil (2)
- Andrei Mikhalevsky (1)
- Rodrigo Fernandez (1)
- Nick Gardner (1)
- Dermot Carey (1)
- Jeremy Travis (1)
- Annie Bienvenue (1)
- Ross Christieson and Shawna Morris (1)
- Paul Rogers and Tom Quaife (1)
- Rick Ortman (1)
- Tony Rice (1)
- Barbara O’Brien (1)
- Paul Rogers and Mark O'Keefe (1)
- Dalilah Ghazalay (1)
- Amy Wagner (1)
- Mitchell Bowling (1)
- Brad Scott (1)
- Amy Foor (1)
- Scott Lantz (1)
- Sandra Benson (1)
- Errico Auricchio (1)
- Jaclyn Krymowski (1)
- Krysta Harden, USDEC President and CEO (1)