Trade was a big part of the discussions that occurred last week at the 2024 MILK Business Conference, especially on how things could change with the incoming Trump administration. Dairy producers are keeping a keen eye on what potential tariffs could mean for top dairy trading partners. U.S. Farm Report host, Tyne Morgan, explains more.
“It’s amazing how quickly rhetoric can change,” Morgan says. “Last year here at the MILK Business Conference, the focus was on the lack of attention on trade with the current administration. Today, we’ve put the focus back on trade and what the Trump administration could mean for ag both in terms as to what’s at risk and what dairy could possibly gain.”
In the latest Farm Journal Ag Economists’ Monthly Monitor, Morgan asked this question:
“No surprise, 63% said China,” Morgan says. “But 37% says it’s Mexico.”
The National Corn Growers Association and the American Soybean Association recently conducted analysis just looking at China and what Trump’s possible 60% tariff on China could mean.
“In that type of situation, we’re looking at a 60% tariff on U.S. corn and soybeans, [which] translates to a 13 cent per bushel drop in corn price in the projection modeling that [National Corn Growers] did,” says Krista Swanson, lead economist at National Corn Growers Association. “But that doesn’t account for Mexico. And if we have a situation with Mexico, that’s a whole different ballgame because over 40% of our corn exports have gone to Mexico this year. They are a really critical trading partner for corn.”
According to Morgan, there is another big wild card when it comes to trade.
“During the first Trump administration, the U.S. struck a trade deal with China. Much of that created new and more demand for many U.S. ag goods. We actually had record corn exports to China as a result of Phase 1. But will Trump pick up where he left off? If so, that could actually be good for U.S. ag trade,” Morgan says.
Canada and U.S. Dairy
While Canada may not top the list as the biggest concern for agriculture if trade hiccups emerge, it is a big issue for U.S. dairy. And the potential for conflict is already stirring as U.S. dairy leaders question Canada’s commitment to the United States Mexico Canada Agreement (USMCA) signed during the last Trump administration.
According to the International Dairy Foods Association (IDFA), members have yet to receive the full range of dairy access promised by Canada under the agreement.
“Clearly the contract that we wrote isn’t fully being abided by,” says Mike North, president of producer division at Ever.Ag. “So, if we are going to spend some time to review this and revisit the language around dairy, I don’t know that we need to change it, but from a behavior standpoint we just need to get execution of the language that already exists.”
How big is this market? According to the USDA, from 2010 to 2021, U.S. dairy product exports to Canada (adjusted for inflation) rose 48% from $466 million in 2010 to $691 million in 2021.
