US dairy anxiously awaits 'liberation day'

The problem for the American dairy industry is that the sector has become increasingly dependent on exports in recent years and that Trump's actions will only make it stronger. For example, by eliminating the subsidized school lunch, an even larger part of American milk production must find another destination. In itself, that could easily be done via cheese exports. These have been on the rise in recent years. Last year, more than 508.000 tons crossed the border. But then Trump should not provoke a backlash with his additional import tariffs. That risk does exist.

 By the way, two US states - Tennessee and North Dakota - are trying to maintain the supply of school milk and circumvent the ban on subsidies, but that is difficult. 
At first glance, it seems like a blessing in disguise that US milk production has not increased in the last two years, for whatever reason. In fact, the number of kilos of milk has decreased, especially in 2024. But that’s only part of the story. The fat and protein content have increased significantly in the meantime. The average fat content has increased from 4% in 2021 to 4,23% in 2024, while the protein content is also increasing, to 3,29% last year.

With a more or less stable milk supply, there will be a lot more product. That has to go somewhere. Canada does not seem to be a major growth market in the current circumstances. Mexico is already the largest export market for American dairy, but if Trump imposes high tariffs on Mexican exports to the US, the Mexican market could also become more difficult for the US.

Last week, the US dairy industry did sign a new agreement with Guatemala, but this is not a market that can really handle large volumes of dairy. China is now the third largest market for US dairy, but Trump’s tariff war seems to be largely focused on China. That country will not let this pass quietly either.

It is fortunate that the US dollar has become quite weak due to Trump's actions. Perhaps something like that will help to tap into new export markets somewhere. It remains to be seen whether the American president will not undo such a windfall with an awkward statement or a politically uncoordinated action in another area.