China’s tariffs disrupt global lactose, whey trade

CHINA – China’s recent imposition of reciprocal tariffs on U.S. goods, escalating to 125% from 84%, has sent ripples through the global dairy market, particularly affecting lactose and whey trade.

The trade tensions, intensified by U.S. tariffs on Chinese imports reaching 145%, threaten to reshape supply chains and increase costs for dairy exporters worldwide.

The U.S., a major supplier of whey and lactose to China, faces significant challenges as these tariffs make American dairy products less competitive. 

China, a key market for U.S. dairy exports valued at over US$500 million annually, is now looking to alternative suppliers.

  “We’re seeing a shift toward European and New Zealand suppliers to fill the gap,” said Maria Chen, a Beijing-based dairy analyst. 

This could lead to a surplus of U.S. dairy products, potentially driving down prices domestically and impacting farmers’ livelihoods.

European dairy exporters, while positioned to benefit, are cautious. The European Dairy Association noted that increased demand from China could strain supplies, raising prices globally. 

A report by Bloomberg highlighted that whey prices have already risen by 10% in recent weeks due to market uncertainty. 

Meanwhile, New Zealand, another major dairy exporter, is ramping up shipments to China, with exports projected to grow by 15% this year, according to trade data.

The tariffs stem from broader U.S.-China trade disputes, with both nations retaliating over perceived unfair trade practices. 

The U.S. imposed its tariffs to address a US$300 billion trade deficit, while China’s response aims to protect its domestic industries. 

“These tariffs are a necessary step to safeguard our economy,” a Chinese Commerce Ministry spokesperson stated. 

However, the dairy sector, heavily reliant on open markets, is caught in the crossfire.

Developing nations are also feeling the impact. Countries like India, which rely on affordable whey imports for food processing, face higher costs as global supply chains adjust. 

Analysts indicated that smaller economies could see dairy import prices rise by up to 20%. 

This could exacerbate food inflation in regions already grappling with economic challenges.

Industry leaders are urging dialogue to mitigate the fallout. 

“We need both sides to negotiate before this spirals further,” said John Dairy, CEO of a U.S. dairy cooperative. 

For now, the global lactose and whey market remains volatile, with exporters and importers bracing for prolonged uncertainty as trade negotiations loom.

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