Chinese buyers stockpiling dairy as tariffs hit! Whey imports explode 41.7% while New Zealand celebrates and US suppliers face extinction from 125% tariffs.
EXECUTIVE SUMMARY: China’s dairy import landscape has dramatically shifted in early 2025, with March data showing explosive growth in whey (41.7%), cheese (8.6%), and whole milk powder (30.7%) as buyers race to beat crushing new tariffs. This surge comes amid a perfect storm: Chinese domestic milk production has plummeted below cost at .40/cwt, the recovering hog industry is driving unprecedented whey demand, and trade wars have created clear winners (New Zealand with duty-free access) and losers (US facing prohibitive 125% tariffs). The timing couldn’t be more critical – China implemented initial 10% tariffs on US dairy products on March 10th before escalating to levels that effectively slam the door on American suppliers, reshaping global dairy supply chains virtually overnight. While most categories show strength, infant formula remains the exception with imports plummeting 35% due to China’s birth rate collapse, creating a market where overall volume shrinks yet premium segments thrive.
KEY TAKEAWAYS
- Chinese buyers are stockpiling whey at record levels – March imports reached 67,812 metric tons, the highest monthly volume in nearly four years, driven by both tariff fears and surging demand from China’s recovering pig industry following African Swine Fever
- New Zealand dominates as US faces extinction in China – With duty-free access as of January 2024, New Zealand has captured nearly 46% of China’s dairy imports and dominates growing butter/cheese segments, while American suppliers face devastating 125% tariffs that effectively eliminate export opportunities
- Domestic production crisis creates import opportunities – Chinese milk prices have fallen to $19.40/cwt (15% below last year), well below production costs, forcing smaller operations out of business and creating a supply gap that imports must fill
- Trade policy now outweighs market fundamentals – Geopolitical tensions have replaced traditional economic signals as the primary driver shaping dairy trade flows, requiring exporters to develop new strategic approaches focused on policy risk rather than just price competitiveness
- Category-specific approach critical for success – While overall dairy imports grow, the infant formula market has collapsed by 35% due to demographic challenges, highlighting how success requires targeted strategies for specific segments rather than broad-brush approaches
Chinese buyers are scrambling to secure dairy supplies amid escalating trade tensions, with March import volumes surging across most categories. Whey imports exploded to 67,812 metric tons – a stunning 41.7% jump from last year – while cheese imports climbed 8.6% and whole milk powder jumped 30.7%. Behind these dramatic numbers lies a perfect storm of factors: buyers racing to beat crippling tariffs, domestic milk production faltering below cost, and shifting supplier dynamics that have New Zealand dairy farmers celebrating while American exporters face disaster. The new trade landscape creates clear winners and losers that will reshape dairy markets for years.
| Supplier | Market Position | Key Trends (Jan-Feb 2025) | Key Challenges (as of April 2025) |
| New Zealand | Dominant (46% share) | Strong growth in butter, cream, cheese | None – enjoys full duty-free access |
| European Union | Major Supplier | Overall volume down 16.5%; strength in specific categories | Anti-subsidy investigation by China |
| United States | #3 Supplier | Significant decline expected | Facing prohibitive 125% tariffs |
| Australia | Key Supplier | Strong performance in cheese | There are fewer trade barriers than the US/EU |
Chinese Buyers Stockpile Whey as Tariff Deadline Looms
Talk about planning! Chinese importers dramatically accelerated their whey purchases in March, pushing low-protein whey imports to their highest monthly volume in nearly four years.
Why the sudden buying frenzy? It’s simple – they’re racing against the tariff clock. The United States has dominated China’s whey market, supplying nearly 46% of its imports in early 2025. However, with US-China relations deteriorating and new Trump administration tariffs looming, Chinese buyers knew the party wouldn’t last forever.
“This isn’t random stockpiling – it’s calculated risk management,” says dairy market analyst Zhang Wei. “Chinese feed mills and food processors can see the writing on the wall with these trade tensions.”
The timing couldn’t be more critical. It was just the beginning when China slapped that initial 10% tariff on US dairy products on March 10th. By early April, we’d seen those rates skyrocket to a prohibitive 125%, slamming the door on American suppliers. For perspective, China represents about $584 million in annual US dairy exports – making it America’s third-largest market.
African Swine Fever Recovery Drives Whey Demand Surge
Isn’t it interesting how seemingly unrelated factors create market opportunities? The surge in whey imports directly connects to China’s ongoing recovery from African Swine Fever (ASF), which devastated their hog industry starting in 2018.
This highly contagious virus forced the mass culling of infected herds, slashing China’s swine inventory by 40-60%. But here’s what matters now – their pig industry is recovering, driving serious whey demand for piglet feed.
Remember how US whey shipments to China plummeted 41% in August 2023 compared to the previous year? That trend has completely reversed as China’s pig farms rebuild. But there’s another critical factor at work – industry restructuring. After ASF decimated small farms, larger commercial operations gained market share. These bigger farms wean piglets earlier, which means they use more whey per pig throughout its lifecycle.
Before ASF hit, China’s whey consumption averaged about 0.45 kg per piglet. That figure’s climbing as consolidation continues, potentially driving even greater demand as herds fully recover. But here’s the billion-dollar question: where will all that whey come from now that US suppliers face prohibitive tariffs?
Cheese and Milk Powders Also Show Strength
It’s not just whey we are seeing dramatic increases. Chinese cheese imports reached 16,726 metric tons in March, climbing 8.6% above year-ago levels. Unlike whey, where American suppliers dominated, New Zealand has captured the lion’s share of China’s cheese market.
Let’s face it – New Zealand dairy exporters are now drinking champagne. Their free trade agreement gives them duty-free access to China while American suppliers face crushing tariffs. The numbers tell the story – New Zealand and Australia supplied about 80% of China’s cheese imports in early 2025.
New Zealand’s strong milk production season has allowed them to pivot manufacturing toward products that are seeing increased Chinese demand. Their timing couldn’t be better as trade barriers knock out their biggest competitor.
Milk powder imports also rebounded in March, with whole milk powder surging 30.7% to 43,232 metric tons, while skim milk powder eked out a slight 0.7% gain. This marks a reversal from earlier trends, as China reduced powder imports during January and February.
Domestic Production Challenges Create Import Opportunities
Have you noticed China’s domestic dairy sector is caught in a painful price-cost squeeze? Chinese milk prices have been spiraling downward since late 2021, hitting $19.40/cwt in January 2025 – well below the cost of production for many farmers.
Rabobank forecasts a 2.6% decline in China’s milk output in 2025, marking the second consecutive year of contraction. With farmgate milk prices 15% lower year-over-year in February, Chinese farmers have little incentive to expand production.
Many smaller operations are exiting the business entirely, while even larger farms are scaling back production plans. This domestic supply contraction creates a fundamental gap that imports must fill, especially as Chinese consumers show signs of increasing dairy consumption in specific categories.
Early 2025 economic data indicated stronger-than-expected results, potentially boosting consumer purchasing power for dairy products. But here’s the kicker – the escalating trade war threatens to undermine this economic momentum. China exported nearly $440 billion worth of goods to the United States last year, and economists warn the trade war will significantly impact China’s growth prospects.
Infant Formula: The One Category Bucking the Trend
While most dairy categories are growing, infant formula tells a different story. China’s imports fell by a shocking 14.8% in 2024, and the downward trend has only accelerated in 2025, with imports down 35% in the first half of the year compared to 2024.
The reason? It’s simple demographics. China’s birth rate has collapsed, with annual births plummeting by half between 2016 and 2023 – from 18.7 million to just 9 million babies. One food industry analyst bluntly called it a “crisis” for the infant formula industry.
But even within this shrinking market, there are fascinating bright spots. Several foreign infant formula brands achieved double-digit growth in 2024 by focusing on the premium segment, which expanded to 37% of the market from 32.8% in 2023.
Isn’t that typical of China’s evolving consumer landscape? Even as the overall market contracts, premium and specialized segments grow. Health-conscious Chinese parents with means are increasingly seeking specialized formulas like hypoallergenic options and organic products. The lesson here? Companies with the right premium positioning can still win even in challenging markets.
New Supplier Landscape: Winners and Losers
The escalating US-China trade war has completely reshuffled the competitive landscape for dairy exporters to China, creating clear winners and losers overnight.
New Zealand: Popping Champagne
New Zealand couldn’t have scripted a better scenario if they tried. Already China’s largest dairy supplier with a 46% share of total dairy import volume in 2024, New Zealand’s position is further strengthened by its comprehensive free trade agreement. While US products face punishing tariffs of up to 125%, New Zealand’s dairy enters China completely duty-free as of January 2024.
The impact is already visible in trade data. New Zealand dominated China’s growing imports of butter (up 72.6%), cream (up 12.7%), and cheese (up 14.5%) during January-February. Fonterra, New Zealand’s dairy giant, reported January shipments significantly higher in volume and value, driven partly by Chinese demand.
United States: From Leader to Loser Overnight
For US dairy exporters, the situation has turned dire. The initial 10% tariff slapped on US dairy products on March 10th quickly escalated to a prohibitive 125% by mid-April, effectively pricing American dairy out of the Chinese market.
This goes far beyond just lost sales. The damage spreads throughout the supply chain as American processors scramble to find alternative markets for massive product volumes, potentially at lower prices.
The whey category faces the most immediate impact. With nearly half of US whey exports headed to China, processors now face the daunting challenge of redirecting these volumes to other markets. Can they pivot fast enough, or will we see a price collapse in other markets as diverted products flood in?
European Union: Caught in the Middle
The European Union occupies a middle ground in this trade reshuffling. EU dairy exports to China decreased by 16.5% in early 2025, but specific countries and products showed strength. France emerged as a key supplier of butter and cream, while Italy saw its fresh cheese exports to China soar by 38.7%.
A significant win for European suppliers came in March when China lifted restrictions on heat-treated German dairy products that had been imposed due to a foot-and-mouth disease case. This reopened a vital market for Germany, which sent nearly 25% of its non-EU dairy exports to China in 2023.
But can European suppliers capitalize on America’s misfortune? They face challenges with China’s ongoing anti-subsidy investigation into certain EU dairy imports, particularly cream and cheese varieties. This probe creates uncertainty for future EU access to the Chinese market. Are we seeing a pattern of China systematically targeting Western dairy suppliers while favoring New Zealand and Australia?
What This Means for Global Dairy Markets
The shifts in China’s import patterns have significant consequences for the Chinese domestic market and the broader global dairy landscape.
For US dairy farmers, the situation is harrowing. Not only are exports to China effectively blocked, but the redirection of products to other markets will likely pressure domestic prices. The USDA has slashed milk price forecasts for 2025, with analysts projecting Class III milk prices could drop by 35¢/cwt due to trade disruptions.
New Zealand and Australian producers stand to benefit as they fill the gap left by American suppliers. European exporters may find opportunities in specific categories like whey and lactose, which the US previously dominated, though they must navigate their trade tensions with China.
For Chinese consumers, the long-term impact will likely be higher prices for certain dairy products as tariffs force a shift to potentially more expensive suppliers. The country’s efforts to increase domestic production self-sufficiency may accelerate in response to these trade disruptions.
The Bottom Line: Navigating the New Dairy Order
Let’s face it – the surge in China’s March dairy imports reflects both opportunistic buying ahead of tariffs and genuine need driven by domestic production shortfalls. This short-term boost masks more profound structural changes in the global dairy trade that will persist long after the headlines fade.
Understanding these shifting trade patterns for dairy farmers worldwide is crucial for navigating the reality of the new market. Those in tariff-affected regions must explore alternative markets and possibly adjust production plans. At the same time, those with favorable access to China should capitalize on the opportunity while remaining vigilant about potential policy changes.
The dairy industry has always been cyclical, but today’s challenges extend beyond normal market fluctuations. The current trade war has fundamentally altered competitive dynamics in ways that will reshape dairy supply chains for years, requiring unprecedented adaptability from all market participants.
Are you positioned to thrive in this new landscape, or will you be caught flat-footed as markets shift? The winners will recognize these structural changes early and adapt their strategies accordingly. The losers? Those who expect things to go back to “normal” once this trade dispute resolves. The harsh reality is that we’re looking at a permanently altered dairy trade landscape – and the time to adjust is now.
Learn more:
- China’s Dairy Imports Expected to Surge in 2025, Ending Three-Year Slump – Explores Rabobank’s projection of 2% growth in China’s dairy imports for 2025, with whole milk powder imports forecasted to reach 460,000 metric tons amid declining domestic production.
- Global Dairy Trade Surges 1.6%: Lactose Skyrockets 22% While Powder Markets Falter – Details the most recent Global Dairy Trade auction results from April 15, highlighting the explosive growth in lactose prices and mixed performance across dairy commodities that directly impact Chinese buying patterns.
- Chinese Dairy Demand Drops: What It Means for Global Dairy Markets – Provides context on China’s contrasting import trends from late 2024, when whole milk powder imports plummeted 45% while cheese imports grew 6%, illustrating the category-specific nature of Chinese demand.
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