UPDATED 11:49 a.m. Eastern Time, August 23, 2019

USDEC members: The U.S. Dairy Export Council is closely monitoring trade developments between the United States and China. If breaking news occurs that requires action by members, we will issue a "member alert" by email and also post it on usdec.org here. 

To get ongoing updates, come back to this members-only page in our "Hot Topics" section. A login is required to access.

MAJOR DEVELOPMENTS

Friday, August 23: New Chinese tariffs on selected dairy products will become effective on September 1. The additional tariffs will be imposed on shipments based on the date of Customs declaration in the port of entry, giving no grace period for shipment on the water. The tariffed products include milk, cream, cheese and yogurt. USDEC market access staff have reviewed the announcement and identified key facts affecting USDEC members. Read a more detailed "member alert" here. Download the summary of key facts here. All new tariffs are highlighted.

Monday, May 13: New Chinese tariffs on selected dairy products will become effective on June 1, according to China's Taxation Committee Announcement No. 3 of 2019. The additional tariffs will be imposed on shipments based on the date of Customs declaration in the port of entry, giving no grace period for shipment on the water. The tariffs will be imposed on all dairy products except those of Chapter 4. Read a more detailed "member alert" here. Download the announcement in Chinese here. See Volume 1 of the Export Guide for the full listing of new Chinese tariffs.

Friday, May 9: The Office of the U.S. Trade Representative published a notice in the Federal Register stating: "In accordance with the direction of the President, the U.S. Trade Representative has determined to modify the action being taken in this Section 301 investigation by increasing the rate of additional duty from 10 percent to 25 percent for the products of China covered by the September 2018 action in this investigation." The action encompasses $200 billion in Chinese goods imported by the United States and is effective May 10, 2019. Trade talks in Washington end.

Sunday, May 5: As trade talks with China were about to resume in Washington, President Trump announced he would order another round of tariffs on China on top of tariffs already imposed. 

USDEC STAFF RESOURCES 

USDEC's Trade Policy Team is closely monitoring the situation and will keep members posted as the issue evolves. If members have trade policy questions, they should contact Jaime Castaneda (jcastaneda@usdec.org) or Shawna Morris (smorris@usdec.org). 

For any technical questions, members should contact Jonathan Gardner (jgardner@usdec.org).

At this time (Friday morning, May 10), USDEC does not plan to distribute a news release but will respond to media inquiries on request. If members receive media inquiries they'd like USDEC to address, they should contact Margaret Speich (mspeich@usdec.org) or Mark O'Keefe (mokeefe@usdec.org). 

IMPACT OF 2018 TARIFFS ON U.S. DAIRY EXPORTS

After China implemented two rounds of retaliatory tariffs, in July and September 2018, U.S. dairy products have been assessed tariffs as high as 45%. That tax is at least 25% higher than it is for goods from U.S. dairy competitors exporting to China. This gap tilts the playing field, reducing the ability of U.S. dairy companies to compete on price.

Data tells the story of what has happened.

U.S. dairy sales to China increased 49 percent from 2016 to 2017 - thanks in part to industry investments in education, customer development, partnerships and infrastructure. But since the first round of new tariffs went into effect in July 2018, U.S. dairy volume to China has plummeted, a drop of 43% through March, as compared to the same period a year earlier (see table below).

There is also an opportunity cost. As U.S. sales to China fell, China overall dairy imports grew by 13% in the first quarter of 2019 compared to the same period a year ago, according to data reported in Global Trade Atlas. U.S. dairy exporters have mostly watched this spending spree from the sidelines because the tariffs eroded their ability to compete.