US Trade Policy on Dairy Is Simple: We Basically Allow No Imports at All

Here’s a fascinating chart on an obscure subject. I can’t imagine what prompted me to look this up, but here you go:

The barely-visible red bits represent US quotas on dairy imports, part of the wildly complicated array of policies that govern the dairy industry in the United States. The International Trade Commission described it in 2001, and nothing much has changed since then:

The U.S. dairy sector is also characterized by heavy government intervention. U.S. dairy policies center on four major areas: federal marketing orders, federal price supports, dairy compacts, and international trade policy….U.S. trade measures restrict imports mainly through the imposition of TRQs….TRQs apply to fluid milk as well as processed and high value-added products. High over-quota tariff rates restrict imports within quota levels, except under exceptional market conditions.

TRQs are Tariff-Rate Quotas. We set very tiny quotas for the amount of dairy product that can be imported at low or zero tariffs, and above that the rate is so prohibitive that imports cease entirely. For example, the price of dry skim milk currently runs around 80 cents per pound, while the over-quota tariff is about 50 cents. The price of butter is $2.30 per pound, while the over-quota tariff rate is about 80 cents. No one can sell dairy into the already glutted US market with tariffs like this, so the TRQs essentially act as hard quotas on dairy imports.

In total, US import quotas amount to about 2 percent of total dairy production, and it’s only that high because of cheese. For other products, the quotas amount to well under one percent of production. For all practical purposes, then, this is US dairy trade policy:

  • We allow a little bit of foreign cheese to be imported.
  • Everything else is subject to tariffs so high that we allow no imports at all.

Just thought you’d all like to know this. Roughly speaking, this is the way every country works. Everybody protects their dairy industry, though the details vary considerably in how they do it. We’re no different.

BY THE WAY: I don’t doubt that Donald Trump’s outrage over Canadian milk tariffs is real. I’m sure he hasn’t the slightest clue that the US restricts dairy imports far more than Canada does.

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