Impact of United States Tariffs on Australian Dairy
The South Australian Dairyfarmers' Association (SADA) is calling attention to the ongoing trade tariff developments between the United States, Canada, and Mexico, and the potential implications for Australia’s dairy market, trade, and industry.
As the peak industry body representing dairy farmers in South Australia, SADA is dedicated to promoting and advancing the interests of the dairy industry at both state and national levels. The escalating tariff war involving the US, Canada, and Mexico, could have significant consequences for the Australian dairy sector, and present both opportunities and risks.
US Trade Tariffs and their Global Impact
In February, President Donald Trump announced a 25% additional tariff on all imports from Canada and Mexico, which both Canada and Mexico have responded with imposing retaliatory tariffs upon the United States.
The effect of this is a significant increase to the cost of Canadian and Mexican imported products for consumers in the US, and conversely an increase in cost of US products for consumers in Canada and Mexico.
“These developments are reshaping global trade dynamics and have far-reaching implications for industries worldwide, including the Australian dairy sector”, said SADA President, Robert Brokenshire.
Opportunity: Expanding Australian Dairy Exports to Mexico
The ongoing US-Mexico trade war creates a potential opportunity for Australian dairy brands to enter the Mexican market. Historically, the United States has dominated Mexico’s dairy import market due to its proximity and cost competitiveness. However, as tariffs increase the price of US dairy products, Mexican consumers and distributors are expected to seek more affordable alternatives.
Australia’s dairy sector is well-positioned to capitalise on this shift.
Although Mexico has not traditionally been a major destination for Australian dairy exports, changing trade dynamics could provide an opportunity to establish a foothold in this market.
“With US dairy products becoming less competitive in this market, Australian dairy brands have a unique chance to expand their international presence and secure a share in this new export market”.
Threat: US Cheese Dumping in the Australian Market
“While the tariff war may open doors for Australian dairy exports, SADA is deeply concerned about the ongoing practice of US dairy suppliers flooding the Australian market with imported cheese at significantly lower prices than locally produced brands.”
“This apparent market dumping undermines the competitiveness of Australian dairy producers and threatens the long-term sustainability of the local industry.”
The influx of cheap US cheese exerts downward pressure on domestic market prices making it increasingly difficult for local Australian dairy businesses to compete fairly with US product, forcing lower retail prices and lower farmgate prices for local dairy producers. This pricing pressure affects profitability across the supply chain and can lead to business closures, job losses, and a decline in the availability of high-quality Australian dairy products.
“With decreased demand from Mexico, supply from the US may instead be redirected to Australian markets. An escalation in dumping would further depress prices and exacerbate unhealthy market competition.”
A Call for Action
The current trade environment presents both an opportunity to expand Australian dairy exports to Mexico and a significant threat to the domestic market due to aggressive US dumping practices.
“SADA is eager to collaborate with policymakers to ensure that the Australian dairy sector remains competitive and resilient in the face of these global trade challenges while also exploring strategies to capitalise on emerging opportunities.”
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Media Contact: Andrew Curtis | 0419 037 569