Will Tariffs Result In Dairy Slowdowns?

It doesn’t take much movement in the milk markets to shake up the dairy economy.  Sarah Dorland, dairy economist with Seattle-based Ceres Dairy Risk Management, said a slight shift in the supply of dairy can move the markets in one direction or the other.

"A little bit of shift, like last year, having highly pathogenic avian influenza, or HPAI, tightened our supply up just enough so that it raised prices for a time," Dorland said.  "Having a limited heifer and cow inventory reduces our supply, and it can keep things rather tight. The flip side of that is also demand, right? That's the second part of our equation. If our supply is tight and our demand relaxes, we can accommodate things a little bit better. Last year, we kind of had a combination of the two - tighter supply, greater demand - and that resulted in some several months of higher prices.”

What impact could tariffs and retaliatory tariffs have on demand and the industry as a whole in 2025?

“Yeah, I think people have been preparing for that since the result of our presidential election. That was something that President Trump had campaigned on, and certainly, he makes good on a lot of his campaign promises," Dorland noted.  "We saw what similarly happened back in 2018 when steel and aluminum tariffs resulted in retaliatory tariffs on our dairy products. So that created some challenges and direct payments to farms to somewhat right the ship. So, certainly, folks have been gearing up. That's actually been good for our trade data so far. We're moving a lot more product because folks don't want to be out of U.S. products during these times.”

While the dairy industry is shipping a lot of products now, that could change drastically in the near future.

"The concern is either A, we do get tariffs and things slow down, or B, we don't get tariffs, and everybody's bought ahead and things slow down, so it creates quite a bit of uncertainty," Dorland said.  "I think there are a lot of questions about the overall economies in these countries and if we push them a little bit too far or our consumers slow down on buying. So, I guess I would say right now, I think we're getting a little bit of the benefit of it, but down the road, there could be a swing back.”

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