The risk to UK dairy of an EU-US trade war

Published 4 June 18

Global trade tensions are rising as the US moves to impose tariffs on imported steel and other countries respond with tariffs on US goods. The EU has proposed tariffs on a range of products from orange juice to motorbikes. Currently, dairy isn’t included, but potential tit-for-tat retaliation between nations could put it at risk in the future.

So how might this affect the UK? Value-wise, the USA has accounted for 15% of UK dairy exports over the last 3 years. There are exports from every category, but powders account for the bulk of trade.  These exports have generally been growing, with overall trade up 57% from 2015 to 2017. However total UK dairy exports have grown 42% in the same time, so the share of trade going to the US has only grown 1%. Still, raised tariffs would make it more difficult to export to this important destination country.

UK exp US

Going the other way, the UK imports much less dairy from the US. In 2015 and 2016 we imported only £18m-£19m worth of dairy from the US per year, and in 2017 this dropped to under £4m. These imports are split between cheese, butter and cultured milk products. If the EU raised import tariffs on dairy products from the US then the overall impact on the UK dairy industry would likely be minimal.