By Dairy Dimension Editorial Team
April 11, 2025
As geopolitical tensions between the United States and China intensify, the ripple effects are beginning to shake up global dairy trade—particularly for highly traded commodities such as dry whey, whey permeate, and lactose. With China standing as one of the largest importers of these byproducts, the latest round of retaliatory tariffs could reshape dairy export flows, commodity pricing, and trade relationships for years to come.
🚢 A Trade Route Under Stress
On April 2, the U.S. government announced an 84% tariff on imports from China, escalating the ongoing trade dispute. In retaliation, China imposed a 34% tariff on U.S. dairy products entering its market. Just a week later, the U.S. introduced a 90-day pause on new tariffs for all countries—except China—while increasing Chinese-specific tariffs up to 125% on certain goods, including key dairy ingredients.
This escalation comes at a time when U.S. dairy exports are highly exposed. In 2024 alone, the U.S. exported:
- 409,000 metric tons of lactose (58% of the global market),
- Of which 110,000 metric tons went to China—43% of China’s total lactose imports,
- With U.S. dry whey and permeate exports also heavily reliant on Chinese demand.
“The intensifying trade conflict could lead to significant shifts in lactose and whey trade,” says Mary Ledman, Global Dairy Sector Strategist at Rabobank. “While U.S. lactose may retain some market due to its cost advantage, dry whey and permeate exports are poised to decline sharply.”
đź“Š What Dairy the U.S. Sends to China
Estimated U.S. Dairy Exports to China by Product Type (2024)
| Product Type | Estimated Export Share (%) | Estimated Volume (Metric Tons) | Estimated Value (USD Million) |
|---|---|---|---|
| Whey | 38% | 152,000 | 190 |
| Skim Milk Powder | 32% | 128,000 | 320 |
| Lactose | 18% | 72,000 | 90 |
| Cheese | 8% | 32,000 | 160 |
| Fluid Milk/Cream | 4% | 16,000 | 40 |
Notes:
- Total Volume: Assumes ~400,000 metric tons of U.S. dairy exported to China in 2024, a reasonable estimate based on 2022–2023 trends (e.g., USDA reported ~$600M in value for 2022).
- Shares: Derived from historical data where whey and skim milk powder typically account for ~60–70% of exports. Cheese and fluid milk have smaller shares but are growing.
- Values: Rough estimates using approximate 2024 prices (e.g., ~$1,250/ton for whey, ~$2,500/ton for SMP, ~$5,000/ton for cheese, adjusted from global dairy price trends).
- Source Context: Based on patterns from U.S. Dairy Export Council reports and USDA trade data up to 2023, with no confirmed 2024 breakdown available in my knowledge.
From yogurt and fermented milk to casein, cheese, butterfat, and whey—the U.S. dairy portfolio shipped to China is broad, but some categories may now face economic headwinds due to tariff-driven pricing shifts.
🧮 Competitive Pricing May Offer Temporary Cushion
Despite the new tariffs, U.S. lactose still has a pricing advantage. It averages $834 per metric ton, compared to European prices ranging from $1,183 to $1,918 per metric ton. While this could preserve some trade volume, analysts caution that tariffs could still erode margins for U.S. exporters.
“Some buyers may front-load shipments or absorb costs temporarily,” notes Phil Plourd, Head of Insights at Ever.ag. “But at 84–125% tariffs, that strategy has a short shelf life.”
đź” A Pattern Repeating?
This isn’t the first time trade disputes have rattled dairy. During the 2019 U.S.-China trade war, a 25% tariff on whey products led to:
- 55% decline in dry whey and permeate exports
- 33% drop in lactose shipments
- 35%+ price reduction in U.S. whey markets
Today, with tariffs significantly higher and U.S. production capacity expanding, the downside risk could be even steeper.
🌍 A Global Opportunity—or Risk?
With U.S. dairy facing access barriers, exporters from Europe, Oceania, and South America may find new entry points into China’s lucrative market. However, not all will be able to compete on price or supply scale.
Meanwhile, Chinese importers and end users, particularly in the livestock and infant nutrition segments, may face higher costs or shortages in critical dairy-based ingredients.
đź“Ś Conclusion: What to Watch
- Global Supply Chain Disruption: Expect rerouting of whey and lactose trade.
- Pressure on U.S. Producers: Potential for falling domestic prices and slimmer margins.
- Rising Role for Competitors: EU and Latin American exporters may gain ground in China.
- India’s Window of Opportunity? With stable production and improving processing capacity, Indian exporters could explore regional trade partnerships.
As the tariff war unfolds, dairy stakeholders worldwide must adapt swiftly—balancing risk management with trade diversification strategies.
