Effective Dec. 1, 2017, China is unilaterally lowering its cheese tariffs from 12% to 8% -- a move the U.S. Dairy Export Council (USDEC) said will immediately boost U.S. export competitiveness in China and help U.S. suppliers play a larger role in meeting the country’s booming cheese demand.
“We are very pleased with China’s decision because it will help U.S. cheese exporters and manufacturers chip away the tariff disadvantage with other competitors,” USDEC president and chief executive officer Tom Vilsack said. “We are even more pleased that the process that yielded the decision helped to further cultivate trust and build critical relationships between the U.S. dairy industry and Chinese official institutions, the nation’s dairy industry and customers.”
The reduction is part of a broader package of tariff cuts for food and consumer goods that China announced last week to bolster consumer choice. Cheese was included among those products, however, only because of three years of bridge-building efforts led by USDEC, the group said.
USDEC’s China Dairy Tariff Initiative, which began in early 2014, focused on working with Chinese authorities to analyze the mutual benefits that would result from China unilaterally lowering its tariffs on certain dairy products.
Over the last decade, China’s cheese imports soared more than seven-fold to nearly 100,000 metric tons. Already a top 10 cheese buyer, it is on pace to become the largest cheese importer in the world in the coming years.
At the same time, U.S. suppliers have been losing market share, in part due to unfavorable tariff rates versus competitors.
“We took a proactive response to address the competitive disadvantage our exports were facing,” said Jaime Castaneda, USDEC senior vice president of trade policy. “USDEC recognizes that the U.S. remains at a disadvantage not only in China but in other countries when it comes to tariffs due to lack of U.S. free trade agreements. We are committed to finding ways to recoup that competitive disadvantage.
In addition to four HS Codes covering cheese, the Chinese tariff changes also reduced duties on two categories of products containing dairy ingredients. Hydrolyzed protein formula for people with special nutritional needs (HS 2106.90.90) was lowered from 20% to zero, and prepackaged infant foods (HS 1901.10.90) was lowered from 15% to 2%. Moving forward, USDEC plans to continue working with China to further reduce tariffs on cheese as well as other dairy products.
“These types of international relationships will be critical to future U.S. dairy export growth and to achieving 'The Next 5%,'” Vilsack said.
The Next 5% is USDEC’s name for the industry-wide effort to expand U.S. dairy exports from the equivalent of about 15% of annual U.S. milk solids to 20%.