The U.S. and China signing a phase one trade agreement is certainly good news for agriculture, but for the U.S. dairy industry to recover from double-digit declines of exports to China, Tom Vilsack, president and chief executive officer of the U.S. Dairy Export Council (USDEC), said the country’s retaliatory tariffs on U.S. dairy products and ingredients need to be lifted.

"These are important deliverables that USDEC has been pressing China for over the course of the last few years,” Vilsack said in a joint news release with the National Milk Producers Federation (NMPF). “We need to continue to work with our government, China’s government and our customers to finish the job by lifting the remaining Chinese retaliatory tariffs against our exports.”

According to USDEC, China's retaliatory tariffs have contributed to a 47% drop in U.S. dairy exports to China over a 12-month period. From December 2018 to November 2019, U.S. dairy exports to China totaled $377 million in sales. However, USDEC said retaliatory tariffs on U.S. dairy products have steeply disadvantaged the U.S. industry compared to its competitors and contributed to the nearly 50% decline in U.S. exports to China over that same period.

“America’s dairy farmers have been disproportionately harmed by China’s retaliatory tariffs, and we cannot ask our farmers to continue operating under this financial uncertainty,” said NMPF chairman Randy Mooney, a dairy farmer from Rogersville, Mo., who joined President Donald Trump and Administration officials at the White House signing ceremony on Wednesday.

He continued, “We appreciate the hard work invested by both the U.S. and Chinese governments, but we urge China to swiftly lift all retaliatory tariffs against U.S. dairy products and work with U.S. suppliers to fulfill their purchasing commitment.”

Phase one potential

China has committed to streamline the timelines and procedures for registering U.S. facilities and products and to provide regulatory certainty and market stability for products like fluid milk and dairy permeate powder. The U.S. estimates that the dairy and infant formula commitments could result in an additional $250-300 million in annual dairy and infant formula exports to China above current levels.

“Over the next decade, China represents a $23 billion market opportunity for U.S. dairy, and it is essential to our producers and companies that we have a trade relationship with China that further levels the playing field for American dairy and provides expanded market access for our growing industry. In addition to purchases of U.S. agriculture products, including dairy, the deal includes commitments by the Chinese to reduce non-tariff barriers affecting infant formula and extended shelf-life milk — an important concession achieved by the U.S. Administration,” Dr. Michael Dykes, president and CEO of the International Dairy Foods Assn. (IDFA), said.

IDFA reported that U.S. dairy export value to China peaked in 2017 at $576 million, fell 13% to just over $499 million in 2018 and stood at $343 million through November 2019 — a 26% drop from 2018. Until 2019, China had become the leading market for U.S. whey and was a growing customer for U.S. cheese.