USA: Potential Dairy Crisis Looms as Tariffs and Deportations Threaten Industry
The U.S. dairy industry is on the brink of significant financial upheaval following potential governmental policies announced by President Donald Trump. This crisis could erupt if Trump proceeds with proposed tariffs on goods fr om China, Canada, and Mexico, and initiates the mass deportation of undocumented immigrants, according to Charles Nicholson, an adjunct associate professor in the School of Integrative Plant Science at the College of Agriculture and Life Sciences, Cornell University.
Speaking at the 2025 Dyson Agricultural and Food Business Outlook conference, Nicholson estimated a staggering $6 billion loss for U.S. dairy farmers over the next four years. The scenario arises from a mix of tariffs, deportations, and possible cuts in food and nutrition spending. "If you pick a trade fight with our major export destinations – Mexico, Canada, and China – and they decide to retaliate, that has some substantive negative implications for dairy farms and processors," Nicholson reported.
The anticipated tariffs are set to levy 25% on imports from Mexico and Canada and 10% on goods from China, commencing from February 1, immediately following the presidential inauguration on January 20.
Besides engaging in trade conflicts, Trump’s promise to deport millions of undocumented workers poses a direct threat to the dairy industry, wh ere an estimated 50% of workers are migrants.
Furthermore, pertinent discussions at the conference included the U.S. agricultural economic outlook, agricultural labor challenges, and directions of ESG (environmental, social, and governance) principles within U.S. agriculture.
Nicholson, also an associate professor at the University of Wisconsin, Madison, pointed out the potential adverse effect of cuts in food and nutrition programs by Congress, impacting programs like school lunches that use approximately 8% of the milk produced.
The expected economic strain from changes in policy could force dairy farms to shutter, according to Christopher Wolf, the E.V. Baker Professor of Agricultural Economics at the Charles H. Dyson School of Applied Economics and Management. Wolf emphasized the crucial role dairy farms play in local economies through employment and service needs.
Incomes projected to drop
Adding to these challenges, new milk pricing regulations, effective June 2025 under the Federal Milk Marketing Orders, will reduce farm milk values. These changes, approved after a federal referendum involving milk producers, reflect new costs in manufacturing dairy products.
With California, a leading dairy state, witnessing a 9% drop in milk production due to bird flu, the USDA has initiated a new testing strategy to mitigate virus transmission. This development could influence the broader industry if not contained.
However, there’s a potential silver lining as tariffs affecting soybean exports might lower feed costs for dairy cows, noted Nicholson.
