The US dairy industry has long relied on exporting products to China, an agreement that’s been strained since Trump first kicked off trade tensions last summer. In May he raised tariffs to 25% on $200bn worth of imported Chinese goods.
Each blow causes China to retaliate with its own set of tariffs on US exports, often including dairy products like lactose, whey and milk powders. According to Tom Vilsack, president and CEO of the USDEC, US dairy exports to China declined by 54% in the first half of 2019.
In the wake of Trump’s latest move taking effect, a 15% increase on $112bn worth of Chinese goods, Vilsack visited China for meetings with officials. USDEC said he went “to deliver a message that the US dairy industry remains committed to this high-potential market despite the challenge of retaliatory tariffs.”
China responded to Trump by raising tariffs on $75bn worth of US products, also taking effect over the weekend.
Vilsack said, “We want an ongoing relationship with China. We are in this for the long haul. We want to be here 10 years from now, 20 years from now and 50 years from now.
“At some point, our governments will figure out these trade issues and when they do we want to be in the best position possible for our member companies and farmer-funders.”
Vilsack met with China’s Ministry of Commerce, US Ambassador Terry Branstad, and officials with the China Chamber of Commerce for Import & Export of Foodstuffs, Native Produce and Animal By-Products during his seven-day trip.
USDEC reported that since trade tensions began between the US and China in July 2018, the volume of US dairy products fell 43% compared to the previous 12 months. The latest retaliatory tariffs will tax US dairy exports to China by as much as 45%.
China is still proving to be a solid dairy market, however, as its consumption of milk and cheese are up. Last week Costco opened its first Shanghai location to immediate success, and USDEC said US cheeses from Belgioioso, Sartori, Tillamook, Pacific Cheese, Saputo, Schuman Inc. and Lactalis were all on display at the store.
USDEC said it facilitated that partnership, and senior VP Ross Christieson said, “It’s an accomplishment that we have kept 50% of our business here in China.
“The people we have met with have been surprisingly positive. It has been a tough year for us in China, but I am feeling extremely positive about the long-term future for us here.”