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Trade War with China Deepens, Worsening Economic Damage to Dairy

June 11, 2019

U.S. negotiations with China faced a serious setback in May, pushing off the prospect of a resolution in long-running U.S. efforts to reform a myriad of Chinese policies that harm U.S. interests.

The new tariffs that took effect June 1 included hikes by China of tariffs on lactose and infant formula. Still, greater damage to dairy is coming from prolonging the standoff that’s deeply damaged U.S. dairy exports to one of the world’s largest dairy markets, crimping U.S. sales while competitors take advantage of the impasse.

Tariffs erected in 2018 have proven to be a catastrophic blow for the U.S. dairy industry in its third-biggest overseas market. China’s dairy imports grew by 13 percent in the first quarter of 2019 compared to the same period last year; over the same period U.S. dairy exports fell by more than 40 percent, reversing the 10 percent annual growth the U.S. had seen in the Chinese over the past decade. Resulting losses in U.S. dairy farm revenues may reach $4.8 billion by 2020.