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US Dairy’s Top Three Export Markets Increase Tariffs

Jul 11, 2018

Fulfilling their promises to retaliate against tariffs imposed by the U.S. administration, Mexico, Canada and China last week began enforcing increased tariff rates on a wide variety of U.S. dairy products.

“These new tariffs will have a significant impact on IDFA members who export their products to these countries,” said Beth Hughes, IDFA director of international affairs. “We’re taking these new developments very seriously. We’re conducting frequent discussions with administration officials to promote equitable trade and continually communicating IDFA members’ concerns to top trade officials.”

Mexico is the largest market for U.S. dairy exports and last year imported nearly $1.31 billion worth of U.S. dairy products, with cheese representing nearly $400 million in sales. Canada, purchased $637 million worth of U.S. dairy products last year ahead of China, dairy’s third-largest market abroad, which purchased more than $576 million.

Exports to Mexico No Longer Duty Free

The United States placed tariffs on steel and aluminum imports from Mexico on June 1. On June 5, Mexico implemented tariffs on U.S. cheeses ranging from 10 to 15 percent, and last week increased them to a range of 20 to 25 percent. Until last month, U.S. dairy exports to Mexico were duty-free under the North American Free Trade Agreement (NAFTA).

The new Mexican tariffs apply to all U.S. cheese exports except for processed and blue-veined cheeses. For a breakdown of types and tariff levels, see the chart below.

Cheese Types

As of June 5

As of July 5

Fresh cheese (unripe), including that of whey, and cottage cheese.

15 percent duty

25 percent duty

Cheese of any kind, grated or powder.

10 percent duty

20 percent duty

Grana or Parmegiano-reggiano, with a fat content by weight less than or equal to 40 percent, with a water content by weight, in non-fat material, less than or equal to 47 percent;Danbo,Edam, Fontal, Fontina, Fynbo, Gouda, Havarti, Maribo, Samsoe, Esrom, Italic, Kernhem, Saint-Nectaire, Saint-Paulin or Taleggio, with a fat content by weight of less than or equal to 40 percent, a content by weight of water, in non-greasy matter, greater than 47 percent without exceeding 72 percent.

10 percent duty

20 percent duty

Other cheeses

15 percent duty

25 percent duty

 

Canada Targets Dairy Products and Foods

On June 1, the United States placed tariffs on steel and aluminum imports from Canada. On July 1, Canada imposed a 10 percent tariff on U.S. exports of yogurt, pizza and quiche. Until that date, the country imposed no tariffs on pizza and quiche. It also allows 332 metric tons of yogurt to enter the country duty-free each year, but will impose the additional 10 percent tariff on products once the quota is filled.

See the chart below for a breakdown on the new tariffs.

Product Impacted

Current Tariff

As of July 1

Yogurt

In quota: none

 

In quota:

10 percent

Out of quota: 237.5 percent

Out of quota:

247.5 percent

Pizza and Quiche

none

 10 percent

 

China Retaliates with Second Layer of Tariffs

On July 6, the United States imposed a 25-percent tariff on $34 billion worth of Chinese imports, including dairy machinery, milking machines and their parts. China immediately retaliated by adding another layer of tariffs on U.S. imports, including an additional 25-percent tariff on various milk, cream, yogurt, whey, butter and cheese products.

Products affected by Chinese retaliatory tariffs are listed in the chart below.

Description

Current Tariff *

As of July 6

Milk & Cream, <1 percent Fat

15 percent

 


 

 

 

 

 

 

 

 

+25 percent

Milk & Cream, <6 percent Fat

15 percent

Milk & Cream, 6 percent-10 percent Fat

15 percent

Milk & Cream, >10 percent Fat

15 percent

Nonfat Dry Milk (NFDM) <1.5 percent Fat

10 percent

NFDM, >1.5 percent Fat

10 percent

Dry Milk & Cream, >1.5 percent

10 percent

Concentrated but unsweetened non-solid milk and cream

10 percent

Concentrated and sugared non-solid milk and cream

10 percent

Yogurt

10 percent

Buttermilk

20 percent

Whey Modified

2 percent

Natural Milk Products, Not Elsewhere Specified or Indicated

20 percent

Butter

10 percent

Dairy spreads

10 percent

Milkfats/Oils, Not Elsewhere Specified or Indicated

10 percent

Fresh milk cheese, condensate

12 percent

Grated or powdered cheese

8 percent

Other processed cheese

8 percent

Blue cheese

8 percent

Other cheese

8 percent

 

ª World Trade Organization, Tariff Download Facility

 

U.S. officials said the administration plans over the next two weeks to impose more 25-percent tariffs on Chinese exports worth $16 billion in sales.

In addition, administration officials announced plans on Tuesday to impose 10-percent tariffs on an additional $200 billion worth of Chinese goods and asked for stakeholder feedback before August 30. The administration will announce a final decision to move forward with the tariffs and the date they would become effective after the comment period closes.

IDFA is closely monitoring these actions and continuing conversations with U.S. trade officials. Members facing trade disruptions are encouraged to contact Hughes at bhughes@idfa.org.

 
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