The U.S. trade war with China continues despite recent comments from President Donald Trump and members of his administration that suggest the U.S. could cut its current 145% tariff rate on goods from China by 50% or more. While these comments buoyed markets initially, an official from China’s Commerce Ministry called on Trump to eliminate tariffs altogether if he wants to negotiate with China.
Sarina Sharp, analyst with the Daily Dairy Report, says, “the damage high tariffs can do is very real. In the dairy complex, whey and lactose prices could be hardest hit. In fact, tariffs are having a chilling effect on both international and domestic whey sales. China is already turning to other suppliers for whey and lactose.”
In 2024, China bought 38% of all U.S. dry whey product exports and 25% of U.S. lactose exports, according to data from USDA. While early in the trade war, China granted tariff exemptions for U.S. lactose and some whey products, Beijing allowed those exemptions to lapse on Feb. 28. Today, China’s tariff on whey remains at 127%. Tariffs on food-grade whey protein concentrate are 140% and taxes on U.S. lactose products range between 130% and 135%.
“Any product that left the United States before April 9 and arrives in China before May 13 will not face these punitive border taxes, so it could take time for monthly trade data to confirm a setback in U.S.-China dairy trade volumes,” Sharp says. “Ahead of the tariffs, Chinese buyers stepped up imports of American whey products, and in March, Chinese imports of U.S. whey reached a nine-month high.”
Damage from the trade war has extended far beyond imports. Relations between Chinese buyers and American suppliers have soured, Sharp says.
“Amid growing anti-American sentiment, Chinese hosts have rescinded invitations to trade shows, and even the least patriotic buyers will eschew U.S. dairy products under the new tariff rates,” she adds.
China has turned to Europe as an alternative supplier, and as a result, European whey prices have been climbing, while U.S. prices have weakened. USDA’s Dairy Market News recently noted that U.S. buyers of whey feel a general lack of urgency to purchase whey because they are, “aware of the potentiality of more dry whey loads remaining,” in the U.S. In other words, buyers believe the steep slowdown in sales to China will provide plenty of opportunities to snap up whey at cheaper prices down the road, Sharp says.
The loss of whey exports is already having a negative impact on U.S. dairy producers’ milk checks, according to Sharp.
“Some dairy producers are buying liquid whey from cheese plants at steep discounts to feed to their cattle,” she adds. Before the tariffs, that whey was dried and shipped to China.
“As cheese and whey production climb, the U.S. dairy industry will need to maintain or grow exports to keep inventories in check,” she says. “If the U.S.-China trade war drags on, exports will suffer and whey and lactose values will likely drop again.”
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