China’s withdrawal from the U.S. soybean marketplace for much of this year has been a painful reminder of the risk of heavy dependence on a single market. Our advice to U.S. dairy exporters, given our expanding dairy processing capacity, is to seize upon new market opportunities to diversify.
China has consistently been the third largest export market for U.S. dairy after Mexico and Canada, gobbling up between 7-10% of U.S. dairy exports annually by value. Meanwhile, China’s goals of self-sufficiency and, therefore, direct competition with U.S. dairy, means slackening demand is inching closer. Changing the industry’s reliance on one top market requires developing multiple markets currently in various stages of maturity.
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But which markets offer the most promise? We offer five options in various regions that deserve more attention.
- Indonesia-Southeast Asia: Granted, our history with Indonesia has been plagued by onerous facility registration measures. But with the White House’s claim that Indonesia has agreed to eliminate non-tariff and tariff barriers for U.S. dairy exporters, it’s time to take a fresh look at this consistent top performer among Southeast Asian export markets. A young and growing population, strong consumer demand, ambitious child nutrition policies, and a domestic industry with no runway to near-term self-sufficiency means Indonesia is ripe for partnership with U.S. dairy exporters.
- United Arab Emirates-Middle East: Although UAE’s government is pushing to increase domestic production, a lack of natural resources will make that extremely challenging. The UAE is both import-dependent and continues to position itself as the Gulf Region’s primary hub for agricultural imports. Already the second highest importer of U.S. dairy in the region per capita, UAE import trends point to continued long-term growth bolstered by low tariffs, limited barriers to trade, and a modernized and science-based import regime. We see big upside for U.S. dairy exports to UAE.
- Algeria-North Africa: When we consider how to outcompete Europe in North Africa, Algeria holds the key. Both the United States and the EU have a tariff-reducing trade agreement with Morocco, but Europe’s proximity to the market is an advantage over U.S. exporters. Algeria, on the other hand, has no tariff-reducing FTA with the U.S. or EU and boasts greater import demand with less domestic production than Morocco. In other words, the U.S. has opportunity to improve competitiveness in Algeria and neutralize the nation’s domestic protectionism. Investing now could be enough to turn the tables on European dominance in North Africa over the long term.
- El Salvador-Central America: Consider El Salvador as U.S. dairy’s potential export bridge to Central America. While the nation has strong and growing demand for many foodservice and consumer-facing dairy products, increasing domestic production costs are proving to be a challenge. Under the CAFTA-DR agreement, which includes El Salvador, however, U.S. dairy products reached their final phase of duty-free implementation in 2025, allowing greater opportunities free of tariff-rate quotas. This access is only strengthened by the White House’s announcement of a new deal with El Salvador that will aid dairy access. Gradually positioning itself to become a regional hub for dairy supply chains, El Salvador is a growing dairy importer and a strong growth market for U.S. dairy exports over the past five years. These factors and more – proximity, tariff reductions, and strong demand – give U.S. exports an edge in this growing regional market hub.
- Brazil-South America: Brazil’s massive population and burgeoning dairy import needs are an opportunity for American success. The United States consistently ranks as one of Brazil’s top dairy importing partners and has tariffs that achieve parity with major competitors like the EU and New Zealand. Even with protectionist measures, Brazil is the fastest growing dairy importer in South America, with significant room for growth. U.S. bilateral negotiations with Brazil have accelerated rapidly based on the Section 301 investigation announced recently, putting the United States in prime position to capitalize on projected import growth should the agreement include new dairy access.
U.S. exporters stand ready to diversify and the time is now to reduce the U.S. dairy industry’s reliance on China. For these reasons, U.S. dairy supports the Trump administration in its efforts to negotiate and close new deals for U.S. dairy exports. With an eye toward strategic diversification and a common understanding of growing market share for value-added products, U.S. dairy will become the world’s undisputed leading supplier of high quality, nutritious dairy products.
Michael Dykes is president and CEO of the International Dairy Foods Association. Gregg Doud is president and CEO of the National Milk Producers Federation and served as the first Trump administration's chief agricultural trade negotiator.