Markets have seen a significant drop off of sales into Mexico and China

Earlier this year the U.S. was hit with retaliatory tariffs from Mexico and China. Mexico, our largest trading customer, put tariffs on U.S. cheese while China placed tariffs on other, mostly powder-based dairy products.Since the tariffs went into effect in July, markets have seen a significant drop off of sales into Mexico and China. According to Nate Donnay, director of dairy market insight with INTL FCStone, on a milk equivalent bases exports of U.S. dairy products affected by the retaliatory tariffs were down 33% from last year.“Keep in mind that not all of the decline in affected products should be attributed to the tariffs,” Donnay says. “U.S. exports of dry whey to China were starting to slow even before the tariffs were announced.”However, that drop was offset by exports of unaffected products which were up 33% on a year-over-year basis.The U.S. has been able to keep product moving to other markets. According to Donnay, lower Chinese whey product sales have been offset by more product going to Southeast Asia. The drop in cheese exports to Mexico has been replaced by strong nonfat dry milk shipments to Mexico.Strong export markets have come at a time when prices in Oceania have weakened, says Donnay, making U.S. products less competitive on the global market.