Beef & ethanol win big in U.S.-U.K. trade deal – dairy gets snubbed. Why our industry keeps getting left behind.
EXECUTIVE SUMMARY: The new U.S.-U.K. trade deal creates a $5B agricultural export opportunity but sidelines dairy despite 125% British tariffs. Beef secured a 13,000-ton tariff-free quota, ethanol gained $700M+ in tariff relief, while dairy received only vague promises. Political sensitivities and complex standards stalled dairy concessions, exposing systemic weaknesses in trade advocacy. The deal signals a shift toward managed bilateral agreements, urging dairy to adopt aggressive niche strategies and coalition-building to avoid perpetual “second-phase” status.
KEY TAKEAWAYS:
- Beef (+13K tons) and ethanol ($700M+) won concrete gains; dairy excluded despite $19.5M existing exports
- U.K. protects dairy via politics & standards; U.S. negotiators prioritized easier wins
- Dairy must pivot to premium niches (A2 milk, organic cheese) and preemptively align with global standards
- Industry-wide coalition-building essential to counter fragmented trade strategies
- 10% baseline U.S. tariffs remain, signaling era of transactional “managed trade” over broad liberalization
In a trade agreement that promises $5 billion in new agricultural opportunities, dairy’s conspicuous absence from specific commitments exposes a troubling pattern in international negotiations. While beef producers celebrate access to 13,000 metric tons and ethanol makers secure $700 million in new exports, the dairy industry is left parsing vague promises and wondering why our products consistently face the same old barriers. If this is truly “America First” trade policy, why does dairy keep finding itself last in line?
The U.S.-U.K. trade agreement announced on May 8 represents the first significant trade negotiation victory since President Trump’s “Liberation Day” tariffs shocked global markets in April. Agriculture Secretary Brooke Rollins hailed the deal as “exponentially” increasing opportunities for American farmers-yet a closer examination reveals a concerning stratification: while beef and ethanol secured concrete market access provisions worth nearly a billion dollars, dairy walked away without specific commitments despite facing British tariffs exceeding 125% on high-value dairy components and finished products.
This stark disparity demands urgent industry attention. Are we witnessing an emerging pattern where dairy becomes the sacrificial heifer in trade negotiations? Or does this framework agreement signal an opportunity for dairy to secure premium classification in subsequent implementation talks? Either way, the implications for your operation’s future export potential and competitive position deserve serious consideration as you plan everything from your component optimization strategy to your long-term capital investments.
The Deal’s Architecture: Building Access for Some, Blueprints for Others
The agreement’s structure tellingly reveals which agricultural sectors had stronger negotiating leverage. Just as milk is classified and priced differently based on end use, this deal creates immediate winners with specific market access guarantees while leaving others with ambiguous future promises:
Beef: The Definitive Winner American beef producers secured a 13,000-metric-ton tariff-free quota, a dramatic improvement from virtually non-existent current U.K. market access. While British food safety standards will continue prohibiting hormone-treated beef, this carved-out quota offers unprecedented access for hormone-free U.S. beef products to the U.K.’s premium market.
“This is going to increase our beef exports exponentially,” Agriculture Secretary Rollins stated emphatically, highlighting the tangible nature of this concession. The National Cattlemen’s Beef Association termed it a “tremendous win” for American producers.
Ethanol: Fuel for Rural America’s Bottom Line Perhaps the most significant single-commodity win came for corn growers and ethanol producers, with the U.K. eliminating tariffs on U.S. ethanol up to 1.4 billion liters annually. This provision alone is expected to generate over $700 million in new export opportunities, benefiting corn producers supplying America’s ethanol industry.
This concession was substantial enough to trigger explicit concerns from the U.K.’s National Farmers’ Union, which noted that the potential market disruption for British arable farmers clearly indicated the provision’s meaningful market impact.
Dairy: Conspicuously Vague Promises Despite facing some of the U.K.’s highest agricultural tariffs, exceeding 125% on products from whey protein concentrates to high-fat cheeses, the agreement includes no explicit new market access commitments for U.S. dairy products. This absence is particularly notable given the robust advocacy from the International Dairy Foods Association (IDFA) and the sector’s longstanding trade barriers.
Michael Dykes, IDFA’s president and CEO, offered a measured response that balanced optimism with clear disappointment: “For too long, the U.K. has limited America’s food and agricultural exports to the world’s sixth largest economy and now President Trump’s deal promises to level the playing field. IDFA looks forward to studying the details of this agreement as they emerge, especially specifics on relief and new market access opportunities for U.S. dairy products.”
The careful diplomatic language can’t hide the evident truth: dairy didn’t get specific commitments when other sectors did. U.S. dairy exports to the U.K. totaled just $19.5 million in 2024, a fraction of what they could be without Britain’s prohibitive tariffs. That’s like running a state-of-the-art rotary parlor at 10% capacity because someone arbitrarily limited your milk truck access.
Why Was Dairy Left Behind? The Political Calculus
The absence of specific dairy provisions reflects complex trade politics rather than economic potential. Several factors likely contributed to dairy’s secondary treatment:
1. U.K. Domestic Sensitivities British dairy farming represents a politically sensitive sector, especially in regions like Scotland, Wales, and Northern Ireland, where dairy farming maintains significant cultural importance. The U.K.’s National Farmers’ Union specifically raised concerns about agriculture shouldering an imbalanced burden of concessions to secure benefits for the British automotive and steel industries.
This political resistance likely led U.K. negotiators to protect dairy while offering concessions in beef (with strict standard compliance requirements) and ethanol (where British production capacity is more limited).
2. U.S. Negotiating Priorities the U.S. trade strategy appears to have prioritized securing wins for beef sector with robust political representation, ethanol, which represents a significant opportunity for American corn growers. Despite being a major agricultural sector, dairy may have been positioned as a “second phase” priority, with negotiators accepting vague commitments to address non-tariff barriers rather than specific market access guarantees.
But here’s the uncomfortable question: Why does dairy consistently find itself in the “next phase” category in trade negotiations? Is it because our industry lacks the political clout of beef and corn interests? Or have we failed to make a compelling enough case that dairy deserves priority consideration? Either way, the pattern is troubling and demands industry-wide reflection on our trade advocacy approach.
The Agriculture and Horticulture Development Board (AHDB) analysis indicates that even with Trump’s 10% baseline tariff, British dairy products would remain relatively affordable to affluent U.S. consumers, given that price fluctuations within this range are common in commodity markets. This suggests a missed opportunity for reciprocal market access that could have benefited both countries’ dairy sectors.
3. Standards Complications The agreement explicitly maintains the U.K.’s food safety and animal welfare standards, with U.K. officials, including Prime Minister Starmer and Defra Secretary Steve Reed, affirming that regulatory sovereignty will be preserved. This means U.S. dairy exporters must navigate Britain’s complex food safety, labeling, and production standards-specifications covering everything from somatic cell count thresholds to antibiotic residue testing protocols and bacteria count limits that differ from U.S. requirements.
The Global Context: Dairy Trade Momentum vs. Political Headwinds
The trade agreement emerges against a backdrop of improving conditions in global dairy markets, making the lack of specific dairy provisions even more frustrating. The Global Dairy Trade price index rose 4.6% in the May 6 auction, the third consecutive increase, with particularly strong performance for lactose (+16.8%) and cheddar cheese (+12%).
This positive market momentum creates favorable fundamentals for export expansion if trade barriers only fall. The contrast between rising global dairy demand and persistent political resistance to trade liberalization creates a challenging strategic environment for U.S. dairy exporters, like having high-producing Holsteins but limited access to premium milk markets.
Three Perspectives on Dairy’s Trade Position
While I firmly believe dairy got shortchanged in this deal, it’s worth examining alternative viewpoints to understand the full picture:
1. The “Complex Product” Perspective Some trade analysts argue that dairy’s complexity, with its diverse product categories from fluid milk to whey protein isolates, makes it inherently more challenging to negotiate quickly than single commodities like beef or ethanol. According to this view, dairy’s many tariff lines, varying shelf-life requirements, and complex regulatory standards require more detailed negotiations than were possible in this initial framework.
However, this argument conveniently overlooks the decades that dairy has already spent navigating these complexities, and it fails to explain why similar complexities in other sectors (e.g., specific automotive components) do receive tailored solutions in trade agreements.
2. The “Strategic Patience” Argument IDFA and some industry insiders suggest that the broad commitment to addressing “non-science-based standards” could benefit dairy exports more than specific tariff reductions. They argue that regulatory barriers often pose greater obstacles than tariffs, and a comprehensive approach to non-tariff barriers might deliver better long-term results than limited quota increases.
While there’s merit in addressing regulatory barriers, history shows that these promises rarely translate into meaningful market access improvements without specific, quantifiable commitments. As the Journal of Dairy Science has documented, vague commitments on regulatory cooperation rarely led to measurable export increases without specific tariff reductions or quota expansions.
3. The “Market Reality” View A third perspective, supported by AHDB analysis, suggests that the U.K., with its 111.9% self-sufficiency in milk, simply doesn’t need substantial dairy imports. According to this view, negotiators focused on sectors where genuine market complementarity exists, such as ethanol (where the U.K. has limited production) and beef (where regulatory differences rather than market saturation have limited trade).
This view, however, ignores consumer demand for product diversity and specialty items. As U.K. consumers enjoy distinctive U.S. cheeses that are not produced domestically, American consumers seek authentic British dairy products. The $19.5 million in dairy trade demonstrates that demand exists despite current barriers.
What This Means for Your Dairy Operation
How should forward-thinking dairy farmers interpret this development? Consider these strategic implications:
1. Prepare for a New Trade Era The agreement’s structure, maintaining a 10% baseline U.S. tariff with selective sector carve-outs, signals a fundamental shift in trade policy. Rather than comprehensive liberalization, we’re entering an era of managed, transactional trade relationships where specific sectors secure advantages while others face barriers.
Dairy operations should prepare for this more fragmented trade landscape by:
- Diversifying export markets rather than over-relying on any single destination
- Developing products that meet the highest global standards to facilitate market access when opportunities emerge
- Building flexibility into business models to adapt to rapidly changing trade conditions
This approach isn’t unlike strategic breeding decisions: rather than betting everything on one genetic line, smart breeders maintain diversity in their genetic selections to adapt to changing market demands for components, feed efficiency, or health traits.
2. Focus on Sustainability as Competitive Advantage. With the U.K. explicitly maintaining its standards on imports, sustainability and animal welfare credentials will increasingly determine which dairy operations can capitalize on trade opportunities. The Dairy Health, Efficiency & Resource Dynamics (Dairy HERD) Initiative, a $1.3 million research collaboration between FFAR, DMI, and Zoetis, strategically positions U.S. dairy to demonstrate health, economic, and environmental benefits.
Progressive operations should:
- Document sustainability metrics that satisfy stringent international standards
- Invest in technologies that simultaneously improve sustainability and profitability
- Stay informed about evolving global standards that could become market access barriers
Consider this similar to proactive mastitis prevention programs: investing upfront in proper milking protocols and facility design saves exponentially more than treating clinical cases after they develop. Similarly, investing in sustainability documentation now prevents market access problems later.
3. Advocate Strategically for Phase Two. While dairy didn’t secure explicit wins in this framework, implementation negotiations present another opportunity. Dairy producers should advocate collectively through organizations like the IDFA, focusing on:
- Securing specific tariff reductions for dairy products in implementation talks
- Addressing non-tariff barriers that disproportionately affect dairy
- Highlighting how improved dairy access would benefit U.K. consumers without threatening British producers
Actionable Strategies for Dairy Businesses: Beyond Frustration to Opportunity
Instead of simply lamenting dairy’s exclusion from specific market access gains, forward-thinking operations should implement these concrete strategies:
Strategy 1: Niche Market Dominance Focus U.S. dairy export efforts on high-value, differentiated products where U.K. domestic production is limited. For targeted nutrition markets, examples include specialty products like A2 beta-casein dairy powders, grass-fed organic cheeses, and specialty whey protein isolates.
Implementation steps:
- Identify products currently exempt from the highest U.K. tariff categories
- Invest in third-party certifications relevant to U.K. consumers (organic, animal welfare, sustainability)
- Partner with distributors specifically experienced in navigating U.K. regulatory requirements
- Target premium consumer segments willing to pay prices that can absorb remaining tariffs
Strategy 2: Pre-emptive Standards Alignment Proactively identify and adopt key U.K./EU production and sustainability standards before they become mandatory import requirements. This positions your products for immediate advantage when partial market opening occurs.
Implementation steps:
- Conduct a standards gap analysis comparing your current practices to U.K. requirements
- Implement documentation systems for traceability that satisfy U.K. import regulations
- Adopt sustainability metrics aligned with the U.K.’s Agriculture Act requirements
- Develop product formulations that meet U.K. labeling and ingredient standards
Strategy 3: Coalition Building Beyond Dairy. Explore alliances with other U.S. agricultural sectors that are also facing similar “second-tier” treatment in trade deals to create a broader, more powerful lobbying bloc focused on comprehensive agricultural export parity.
Implementation steps:
- Identify other agricultural sectors with similar U.K. market access challenges
- Develop joint position papers quantifying the combined economic impact
- Coordinate advocacy efforts targeting the mid-June implementation negotiations
- Present unified economic impact data to trade negotiators, showing the combined potential
The Hard Truth: Dairy Needs a More Aggressive Trade Strategy
Let’s be brutally honest: if dairy continues with its current approach to trade advocacy, we’ll keep getting the same disappointing results. The industry’s polite, diplomatic responses to being sidelined won’t drive change. What would happen if dairy producers and processors adopted the more assertive, unified approach we see from beef and corn interests?
Consider this sobering reality: U.K. tariffs exceeding 125% on dairy products essentially say, “we don’t want your products.” At the same time, the U.S. negotiators’ willingness to accept vague promises rather than concrete access provisions suggests dairy isn’t a top priority. This status quo is unacceptable for an industry that produces some of the world’s highest-quality, most efficiently produced dairy products.
According to AHDB analysis, even with current trade barriers, reduced competition from U.S. dairy doesn’t benefit British producers as much as they might hope; instead, it primarily benefits processors and retailers while depressing farmgate prices through limited export opportunities. This suggests a mutually beneficial opportunity exists for a more balanced dairy trade relationship that negotiators failed to capture.
When will dairy stop accepting scraps from the trade negotiation table and demand its rightful place? If we represent a powerful economic force in American agriculture, why aren’t we securing the same concrete wins as other agricultural sectors?
The Bottom Line: Strategic Positioning for the Future
The U.S.-U.K. trade agreement represents both an opportunity and a wake-up call for the dairy industry. While beef and ethanol secured specific market access improvements, dairy’s absence from explicit commitments signals a need for more effective industry positioning in trade negotiations.
Forward-thinking dairy operations should prepare for a more managed, sector-specific trade environment rather than broad liberalization. This means:
- Invest in meeting the highest international standards to position products for market access when opportunities emerge, just as progressive dairies invest in quality premiums through meticulous milking protocols and cow comfort
- Develop export strategies focused on specialized, high-value products that can overcome tariff barriers through premium positioning, similar to how genetic selection for components can maximize revenue in component-based pricing systems
- Engage collectively through industry organizations to secure specific dairy provisions in implementation talks
- Leverage research on the connections between dairy cow health, economics, and sustainability to develop compelling market access arguments
- Diversify export markets rather than focusing exclusively on the U.K. or EU destinations, just as prudent producers maintain multiple milk buyer relationships rather than depending entirely on a single processor
It’s time for dairy to stop playing defense and start playing offense in trade negotiations. The industry’s future in international markets depends not on accepting the status quo position in trade agreements, but on challenging it through strategic, informed advocacy that presents dairy not as just another agricultural commodity, but as an essential nutritional and economic powerhouse deserving priority consideration in future trade negotiations.
What will you do to ensure dairy isn’t left behind in the next round of trade talks? The answer to that question will determine whether your operation captures or misses the global market opportunities emerging in this new era of managed trade relationships.
Learn more:
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