Thread by @JGodiasMurphy

DAIRY DISASTER: US trade policy is inflicting substantial harm on US dairy producers. It’s a perfect storm spawned in large part by tariffs unleashed in Washington.

THREAD /1

Mexico is the top export market for US dairy products: Mexicans bought nearly $400 million of US dairy products last year. The US is the largest dairy supplier to Mexico, and Mexico accounts for about one-quarter of US dairy exports (see letter signed by 60+ dairy groups). /2

The US Dairy Export Council has these amazing stats on just how important the Mexican market is to US dairy farmers. /3 dairyherd.com/article/mexica…

But Mexico last week placed tariffs as high as 25% on US dairy products in retaliation for US steel and aluminum tariffs. /4 wsj.com/articles/take-…

This comes at a bad moment for US dairy farmers. Per @WSJ: “Milk prices crashed to less than $14 a hundredweight, or 100 pounds, earlier this year from a peak of more than $24 a hundredweight in 2014.” Other dairy prices are down too. /5 wsj.com/articles/take-…

@WSJ The hits keep coming: “René Fonseca, general director of Mexico’s National Milk Industries’ Chamber, said Mexican processors are pushing U.S. producers to lower their prices to make up for the tariff.” /6 wsj.com/articles/take-…

@WSJ Further, Mexico and the EU in April reached a deal to substantially update and expand their 2000 trade agreement, which will provide duty-free access to the Mexican market for a host of European dairy products. /7 reuters.com/article/us-eu-…

@WSJ In the deal, Mexico also agreed to geographical indications for 340 European food and drink products, including many cheeses. This means US-produced cheeses will no longer be permitted to be sold under those names once the agreement is implemented. /8 politico.eu/article/mexico…

@WSJ Fonseca says Mexicans “are looking for alternative suppliers for cheeses such as Gouda in the European Union…. Mexican companies that find a new supplier likely won’t revert to their old US trade partner if tariffs are removed.” /9 wsj.com/articles/take-…

@WSJ To recap: US dairy products now face stiff tariffs in their largest export market; Mexico is simultaneously opening its market to EU dairy producers; meanwhile, domestic prices are way down.

It’s a perfect storm spawned in large part by tariffs unleashed in Washington. /END