Trade frictions dampen exports of dairy products

WASHINGTON - The ongoing trade frictions initiated by the United States have had a significant impact on US dairy product exports, a US dairy industry expert said.

If the disputes do not end soon, the US will lose more than $1 billion as well as a lot of farmers, Jaime Castaneda, senior vice-president of the US Dairy Export Council, said in a recent interview.

The US dairy industry, which has become increasingly dependent on foreign markets after years of shrinking domestic consumption, has been stung by the trade disputes provoked by Washington.

The Trump administration's new tariffs on many countries, including Mexico, Canada and China, major destinations for US milk products, have prompted retaliatory actions.

Retaliations from Mexico and China, two vital export markets for the US, have damaged US dairy farmers and companies, said Castaneda, who has been in the industry for more than 19 years.

Mexico, accounting for roughly one-fourth of total US dairy exports, has recently added as high as 25-percent tariffs on US-made cheeses as a punishment for US steel and aluminum tariffs. China has also imposed extra tariffs on imports of milk, butter, cheese and other products from the US.

According to the US Chamber of Commerce, the Mexican tariffs could affect as much as $578 million worth of US dairy goods and China's tariffs could affect $408 million of cheese, whey and other products.

The impact has already been felt. Milk futures have dropped "in a significant way", Castaneda said.

"We are calculating that farmers may be losing between $1 billion to $2 billion just in the next few months."

"At this moment, I don't think we're going to lose a lot of exports, but what we are going to lose are a lot of farmers," he said.

According to Castaneda, if the trade tensions are not eased soon it will cause a significant problem.

To voice their concern, more than 60 companies and organizations representing US dairy farmers and cheese makers wrote a letter to US President Donald Trump in late June, urging the administration to reconsider the imposition of new tariffs on Mexico.

US farmers are "hard working individuals and normally they don't complain", Castaneda said.

"What they are asking now more than ever is to allow us to actually export our products," he said.

Castaneda said that the Trump administration's trade policy may boost the steel and aluminum industry in the US, but the agricultural prices will surely be influenced negatively.

"You cannot choose one industry over another. We are manufacturing too," he said.

Castaneda pointed out that as US dairy farmers and companies have already invested heavily in overseas expansion, it will be difficult to reverse the trend.