Strong Start, Fragile Future: U.S. Dairy’s Trade Balancing Act

By Daniel Munch

Between January and April of this year, the United States imported $78.2 billion worth of agricultural products — the highest value on record. Over the same period, U.S. agricultural exports totaled just $58.5 billion, resulting in a record-setting agricultural trade deficit of nearly $20 billion in the first four months alone. Despite this dim outlook, one bright spot stands out: dairy. U.S. dairy exports exceeded $3 billion through April, marking a new record and outpacing dairy imports by more than $1 billion ($3 billion vs. $1.9 billion). Today’s Market Intel underscores both the importance of foreign market access to dairy farm profitability, the potential for market expansion from the current trade negotiating dynamics, and the continued vulnerability of the sector to volatile and unresolved trade disputes and barriers, despite a strong start to the year.

Where we Export Dairy

In 2024 the U.S. exported $8.2 billion in dairy products to 114 countries and the European Union, representing close to 5% of total ag exports by value. Despite this broad reach, just 10 markets accounted for 74% of total export value, and over half (51%) of all U.S. agricultural exports were concentrated in only three countries: Mexico, Canada and China — all currently at the center of ongoing trade tensions. Mexico has been the top destination for U.S. dairy products since surpassing Canada in 2003, purchasing nearly one-third of all U.S. dairy exports in 2024. China, a stable third-place market since 2009, briefly overtook Canada in both 2013 and 2014.

What Dairy We Export

Fluid milk and cream products are challenging to trade internationally due to their high perishability and water content, which make transportation costly relative to its market value. As a result, the bulk of U.S. dairy exports are in manufactured products with longer shelf lives and greater shipping efficiency.

In 2024, cheese led the way, with the U.S. exporting over $2.4 billion worth (508,791 metric tons), accounting for nearly 30% of total dairy export value. Nonfat dry milk — produced by removing most of the fat and water from fluid milk — ranked second, totaling over $2 billion in export value (25%) and topping the volume list at 741,791 metric tons. This versatile product is used in reconstituted milk, infant formula, dairy, bakery and confectionery items, and occasionally as animal feed or calf milk replacer.

Rounding out the top three was the “other dairy products” category, which includes powdered ingredients like lactose and milk protein concentrates. This category contributed $1.9 billion in export value across 660,535 metric tons. The U.S. also exported smaller but still significant volumes of whey, butter, ice cream and yoghurt.