US-China tariffs creating a ‘barrier’ for American dairy

A back-and-forth trade war between the U.S. and China has been detrimental to the American dairy business and could curtail any momentum in the Asian market, according to the CEO of the U.S. Dairy Export Council.

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“The reality is we had momentum in this market,” Tom Vilsack said during an interview on Thursday with FOX Business’ Liz Claman. “And these tariffs have created a barrier to that momentum.”

Already, in a brewing trade war between the world’s two largest economies, President Trump slapped 25 percent tariffs on $34 billion of Chinese imports in July and another $16 billion last month. The U.S. is poised to impose another round of tariffs on $200 billion worth of goods this week.

In a tit-for-tat retaliation, the Chinese government imposed an additional 25 percent tariff on a number of American dairy products, including milk, cream, yogurt, whey, butter and cheese products in early July. China's tariff rates on dairy products, starting July 1, will range from 2 to 20 percent.

In 2017, the U.S. exported more than $577 million worth of dairy to China, making it the third-largest market for American dairy exports. Whey accounted for about $236 million.

According to Vilsack, the tariffs have affected some sectors more harshly than others, but he warned that tariffs will ultimately make it very difficult across the dairy board.

“From the folks who are in the business of low-commodity powder sales, basically the tariffs have made it very difficult for them to continue doing business in the Chinese market,” said Vilsack, the former secretary of agriculture under President Obama. “For the folks who are focusing on the higher-end products, they are essentially buying down the tariffs in the hopes that this eventually gets resolved by the end of the year.”