Trade was always going to be a closely-followed policy during Donald J. Trump’s second presidency.
Trump’s first term was marked by his trade war with China and a shift towards bilateral trade agreements. Mexico – the biggest export market for US dairy – narrowly avoided tariffs on all imports in 2019 when Trump vowed to use tariffs as a lever to reduce illegal immigration.
Less than a month since winning a second term, Trump threatened the US would ‘charge Mexico and Canada a 25% tariff on all products’ coming into the US until illegal immigration is tackled. Charging China ‘an additional 10% tariff, above any additional tariffs, on all of their many products’ imported to the US was also on his to-do list, he said.
We spoke to US Dairy Export Council (USDEC) trade policy director Tony Rice and Joseph Glauber, a senior research fellow at the International Food Policy Research Institute, to find out what Trump’s hard line stance on trade policy and immigration could mean for the US dairy industry – from export opportunities to labor.
More of the same?
“The first Trump administration pursued an ‘America First’ trade policy that yielded mixed results for US dairy exporters throughout much of the Administration,” opened Tony Rice, USDEC trade policy director. “Yet, by the end of that term, had advanced US dairy market access new opportunities.”
For example, China retaliated against US-imposed tariffs by hitting US cheese, whey products, infant formula, butter and milk powders with cumulative tariffs of 25% to 27.5%; and lactose and whey protein concentrates – with tariffs of 5% - 10%.
US dairy export data
US dairy exports through September 2024 by value are $6.2bn, slightly above 2023 YTD exports. Cheese exports are up 19%; dry whey products are up 9% when compared to 2023; while nonfat and skim milk powder exports are down 6%.
“But the negotiation of the China Phase One Agreement tackled non-tariff barriers for dairy [such as restrictive regulatory requirements for imported dairy and infant formula products], and the Japan Phase One Agreement has helped US dairy exporters maintain tariff parity in some products versus other suppliers to that market,” Rice explained.
“In addition, shortly after the Phase One Agreement, China instituted an application-based process for retaliatory tariff waivers, which has resulted in suspension of them in most cases – although the threat of re-application lingers over trade.”
A second Trump administration is expected to adopt a similar tariff-based approach, Rice added – likely spurring further negotiations with China an Europe.
“However, as under Trump’s first term, retaliation from trading partners is a possibility.
“It is our hope that further talks can ultimately lead to better terms for US dairy while also providing opportunities to address persistent trade barriers, including illegitimate Geographical Indicators (GIs) that have become an important barrier to eliminate.”
The on-going dispute between the US and Canada over Canada’s dairy import quotas would be another pain point to address.
As for emerging markets, the first Trump administration had started negotiating with the UK and Kenya, but it is unclear if these talks would resume now.
“It is also possible the administration may take a narrower, more targeted approach to trade deals – drawing more on the precedent set in the Japan Phase One Agreement’s more limited product scope,” Rice added. “In addition to the UK, USDEC also continues to prioritize Southeast Asian markets – particularly Indonesia and Vietnam – as key targets for expanding market access opportunities.”
‘A lot of action on trade’ in 2025
What would be the key policy events that could shape US dairy trade in the year to come? “We’re likely to see a lot of action on trade in the coming year and it’s tough to forecast what all that might entail,” Rice told us.
“The passage of a farm bill is critically important for US dairy exporters. USDEC has worked with Congressional allies to advance bipartisan legislation to increase agricultural trade promotion initiatives like the Market Access Program and Foreign Market Development program-funding that USDEC invests to promote US dairy products globally.
“Also included in draft farm bill text is the USDEC-led Safeguarding American Value-added Exports (SAVE) Act, a bill that directs the US government to proactively protect the ability for US exporters to use common food names like ‘parmesan’ in international markets.
Another major trade policy issue will be preparations for the review of the US – Mexico – Canada agreement (USMCA) in 2026; with key parts of that process kicking off in 2025.
‘Any hitch could send prices down’
DairyReporter spoke with Joseph Glauber, a senior research fellow at the International Food Policy Research Institute, on November 22, three days before Trump threatened on social media to place tariffs on some of the US’ biggest trading partners.
We discussed trade with China, Mexico and Canada, and whether a reform in US immigration policy could solve the dairy industry’ reliance on undocumented labor.
“Dairy, like a lot of commodities, could potentially be affected by the incoming administration,” Glauber told us. “I suspect we will see high tariffs on China pretty much right away – that’s at least what the Trump administration has indicated. “China will likely retaliate against agricultural products, among other things, but dairy was hard-hit during the last trade war.”
“Trump’s also talked about a 10% across the board tariffs. It’s a little unclear what that means: raising all tariffs to 10%, or adding an additional 10% to every tariff? No one really knows for sure how it could be implemented, what authorities he would use.”
Glauber suspects tariffs would be used transactionally – to force concessions from other trading partners, such as the EU. Any loss of marketshare in China – which the US supplies with whey, lactose and SMP – would be ‘concerning’, he added.
“We are shipping skim milk powder to the rest of the world and that’s been a very important and growing market for the dairy industry for some time now. So any hitch in that market could send prices down,” he predicted.
“I would be more concerned about Trump putting tariffs on Mexico; that then that would start then the retaliations there.
“The North American market is so well-integrated; to disrupt that now would mean pulling apart some of the supply chains that have grown to help those industries both sides of the border. It could potentially be very disruptive.”
“It’s just a ‘brave new world’. There’s some potential real potential for changes and an overall contraction in trade. Which is a scary thought.”
Is US dairy facing a labor shortage under Trump?
Dairy's reliance on immigrant labor
According to National Milk Producers Federation research, immigrants make up more than half (51%) of dairy labor - and dairies that employ immigrant labor produce 79% of the US milk supply.
Eliminating immigrant labor would reduce the US dairy herd by 2.1 million cows; milk production - by nearly 50 billion pounds, and the number of farms - by more than 7,000.
This would cause retail milk prices up by around 90.4% while reducing the US economic output by $32.1bn and employment – by more than 200,000 jobs.
Besides trade, immigration policy is another significant concern for US dairy under a Trump-led government. The incoming president has made no secret of his desire to deport undocumented immigrants from the country – but doing so could risk creating labor shortages in meat, dairy and other agrifood sectors.
“Immigrants supply at least half of fired labor for the dairy industry,” Glauber told us. “Most of these workers may be undocumented, and that could cause a real issue.
“And unfortunately, dairy doesn’t qualify for some of the temporary worker programs that are set up, because they are designed to bring in foreign labor for harvest purposes; a time-limited task. Dairy requires labor year-round.”
This means immigration reform is needed to create visa programs for year-round workers. But such reform is unlikely to come easily, if at all.
“Immigration reform has been very contentious,” Glauber explained. “There was a big push during the last Bush administration to have immigration reform and people have thought that they were close at getting some reform during the Biden administration.
“Early on, there was some immigration reform being discussed, but there’s a lot of opposition within the Democratic Party and within the Republican Party. It’s all been complicated by Homeland Security issues; and then in just in general, it’s been a thorny, thorny issue. And the dairy industry is a small part of that.
“It’s not so much that people are opposed to reforms in the temporary worker program – they just want a larger, standalone piece on immigration; not a piece on a specific industry. That’s been part of the problem of getting any sort of compromise through in the past.”
A crackdown on undocumented immigrants also has the scope to sour the atmosphere for all immigrants, Glauber warned; making the US a less desirable destination and risking a wage increase that could put pressure on producer income.
“As much as nine to 10% of total operating costs of a dairy is hired labour,” he told us. “If those costs have to go up because of immigration reform, that could be very, very difficult.”