StoneX’s Dairy Expert Discusses Tariff Impact on Dairy Market

Key takeaways

• Tariffs adding uncertainty to already volatile dairy market
• Canada, Mexico and China could face recessions from tariffs
• Trump administration could enact programs to support farmers

StoneX Director of Dairy Market Insight Nate Donnay was a featured guest on the Agriculture of America podcast from the StoneX Ag & Dairy Outlook in Nashville and was asked to give his impression of the dairy market’s volatility over the last few months as well as what tariffs could do to the market in the near future.

"It's tough to summarize given the uncertainty around government policies," Donnay said. "The first slide in my presentation is on the tariffs, and I've practiced it five times … and every time I practice it, it comes out different."

While generally supportive of the dairy market outlook in comparison to other analysts, Donnay noted that with the uncertainties around the implementation of US import tariffs and the potential impact on global economic growth, "the outlook is looking more bearish." The market has seen increased downward pressure on feed prices, with milk also lower in recent months and butter at its lowest since 2023. "Production is running strong … so the supply side looks pretty decent to me," Donnay added.

Donnay said tariffs on Canadian dairy imports have the potential to affect individual market segments as well as the market as a whole. Since Canada is located "right next door" and has strict price controls in place, Donnay believes Canada still presents a lucrative opportunity for the US. In the near term, Canada and China have already announced retaliatory tariffs on US dairy products but have limited the scope of products affected. Canada is targeting only 10% of the products coming into the country. "It's a relatively small amount," said Donnay. "They are only hitting us with 10%, and China is very similar."

China recently announced tariffs on 6% of the products the US ships into the country. "So the direct impact on the balance tables looks pretty small." In his far-term perspective, however, Donnay was more bearish. "We're taking about 40 million people out of a global population of 8 billion people. If we really want to drive sales for the future … we need to look further afield than Canada," Donnay commented.

Of far greater concern to Donnay is the impact tariffs will have on the economies of Canada, Mexico, and China. Analysis by leading economists shows the tariffs run the risk of pushing the economies of the three countries into recession. Should that happen, Donnay warns that dairy consumption and demand for dairy overall in those countries will likely decline. "So where we stand right now, I don't think the tariffs impact the trade flows all that much; I'm more concerned about what happens to economic growth in those countries."

Donnay was asked for insights on the effect of Highly Pathogenic Avian Influenza (HPAI) recently found in two new states. "I go back and forth on my level of concern around HPAI in the dairy herd." When it showed up in Texas, Idaho, and Colorado;, milk production per cow fell between 1% and 3% for three months, and then production recovered. Then the virus showed up in California, and production per cow dropped 8% for two months.

"We still don't know exactly why it impacted California so much worse than other places." Another cause for concern for Donnay is the two new spillover events in 2025, in Nevada and Arizona. "I am a little bit concerned the virus is jumping more easily from the birds to the cows and may spread more widely as the birds migrate north again this spring."

With his closing comments, Donnay remained positive. With the drop in commodity prices and the Trump administration's strong support for farmers, Donnay said we might see new government programs, commodity purchases, or direct payments to farmers, all of which could turn out to be more bullish for the markets than anticipated.

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Listen to the full interview here.

Written by Dan Morales 
Expert: Nate Donnay, Head of Dairy Market Insights for StoneX

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