China is on pace to become the largest global cheese importer in the next few years as demand for the dairy product has soared more than seven-fold to nearly 100,000 metric tons over the last 10 years, according to USDEC.
The tariff decrease on cheese is part of a broader set of cuts on food and consumer goods coming into China that were announced last week.
USDEC said that cheese was included due to the dairy organization’s China Dairy Tariff Initiative established in 2014, which focused on working with Chinese authorities to unilaterally lower its tariffs on certain dairy products exported to China.
In addition to four HS Codes covering cheese, the Chinese tariff changes also reduced duties on two product categories containing dairy ingredients – hydrolyzed protein formula for people with special nutritional needs (HS 2106.90.90) was lowered from 20% to zero, and prepackaged infant foods (HS 1901.10.90) was lowered from 15% to 2%.
“These types of international relationships will be critical to future US dairy export growth and to achieving The Next 5%,” Vilsack said.
The Next 5% is USDEC’s industry-wide effort to grow US dairy exports from 15% of annual U.S. milk solids to 20% by 2021.
US at a ‘tariff disadvantage’
Despite the booming demand for dairy products in China over the past decade, US dairy suppliers have been losing market share in the Asian country due to higher tariff rates compared to other countries.
“We are very pleased with China’s decision because it will help US cheese exporters and manufacturers chip away the tariff disadvantage with other competitors,” Tom Vilsack, president and chief executive officer of USDEC, said.
“We took a proactive response to address the competitive disadvantage our exports were facing,” Jaime Castaneda, USDEC senior vice president of trade policy, said.
“USDEC recognizes that the US remains at a disadvantage not only in China but in other countries when it comes to tariffs due to lack of US free trade agreements. We are committed to finding ways to recoup that competitive disadvantage.”
USDEC added that it will continue to work with Chinese officials to further reduce tariffs on cheese as as well as other dairy products.