Trading across the pond

Posted 8 October, 2025

A Gorgonzola warehouse. Credit: Scailyna/INS

The July 27 tariffs and trade framework agreement (1) reached between the European Union (EU) and United States, setting a single 15% US tariff ceiling on most EU goods imported to America from 1 August 2025, is certainly not perfect, but the European dairy industry will not contest it further.

“The EU-US agreement is inherently flawed as it is far from comprehensive and does not result in trade liberalisation,” Jukka Likitalo, secretary general of European dairy trade association Eucolait, told Dairy Industries International (DII).

“It does however have the merit of allowing trade between the EU and US to continue. We are reasonably happy with the deal and will not seek further concessions or safeguards,” he said.

Since this deal reached between European Commission president Ursula von der Leyen and US President Trump, the EU and US issued a Joint Statement on 21 August (2), setting out action to be taken by both sides as part of this agreement “on reciprocal, fair and balanced trade.”

One week later, on 28 August, the Commission released two proposals to implement the EU-US deal (3). One of them eliminated tariffs on US goods exports to the EU, including dairy lines and plastics, glass and aluminium, which could be used in packaging. The Commission said it would “continue to engage with the US to lower tariffs.”

Paragraph two of the 21 August joint statement said in effect the US would pay just lip service to its World Trade Organisation (WTO) commitments to impose “Most Favoured Nation” (MFN) tariff rates regarding its trade with the EU in levying 15% charges. MFN agreements mean the lowest duties imposed on any WTO member are applied to all.

MFN rates would apply, unless they are below 15%, in which case rates will be levelled up to this rate applying so-called “reciprocal” tariffs, an arbitrary measure based on supposed trade deficits and other protection in trading partners, which, in effect, allow the Trump administration to impose tariffs at any rate it likes.

Commenting on the agreement, Likitalo said, “US tariffs on EU dairy products are mostly above 15% and will therefore not increase.”

That said, “The [US] tariffs on some dairy ingredients, such as casein, are very low or even zero,” Likitalo warned. Casein has been exported duty free in the past (4).

“The impact of the additional tariff will be highest on these ingredients.” Laurens van Delft, director, trade and economics at the European Dairy Association (EDA), noted most fresh, grated, and processed Gouda/Edam lines within quota attracted 10% tariffs before (now 15%) (5). Also, Roquefort exports have attracted just 2.7% duties, now rising to 15% (6).

Likitalo added that the US also operates many tariff rate quotas (TRQs) for dairy products, primarily cheeses, with in-quota duties sometimes lower than 15% – for instance, 10%. Here the duty will increase to 15%, but Likitalo said, “The impact would likely be limited due to the small difference.”

Commenting on the “EU concessions,” for example, tariff reductions, the Commission released on 28 August (5), the Eucolait chief said these included two zero duty quotas of 10,000 tonnes for US dairy products, one for various cheese types (but not all cheese) and one for “various dairy products” (7) (in Annex III of proposal 1) including milk and cream with fat content by weight less than 1% and unripened or uncured cheese, including whey and curd.

Van Delft also welcomed the deal’s “predictability versus the threat of much higher duties.”

But he warned that some EU dairy lines previously entering at lower rates will see costs rise, “so careful implementation matters.” He added that with the EU’s zero duty cheese quotas for American exports, sales exceeding these volumes would still attract EU MFN dairy tariffs.

He agreed the deal brought stability, but noted it would add costs for some exports, “that will likely lift US consumer prices.” And he warned, “Strategically, the sector will need to, where necessary, diversify towards alternative growth markets beyond the US.”

In general, van Delft, also deputy secretary general at the European Whey Processors Association (EWPA), said the risk of immediate escalation of the tariff war has been reduced. He stressed that “under World Trade Organisation non-discrimination rules, other partners may now request the same treatment.” That said, other dairy experts stressed that whether the Trump administration pays any attention to these WTO rules remains to be seen.

“The EU and member states must assess the long-term impact carefully. Otherwise, we risk new trade and political tensions. Going forward, a trade policy must be smart, not punitive. Dairy is not the problem here and using it as a pawn only creates new problems on both sides of the Atlantic,” said the EDA executive.

For Copa-Cogeca however, the Brussels-based organisation representing farmers and agri-cooperatives, including dairy, the agreement is nothing if not punitive. “It delivers nothing for the EU agriculture sector… granting improved market access for US agri-food products, while EU producers are left facing higher tariffs on key export products,” said Copa-Cogeca (8).

It urged the Commission to continue negotiating with the US to lower tariffs on key agricultural exports and to publish an impact assessment of the agreement on the EU agricultural sector, highlighting that Australia and Argentina will continue to benefit from lower 10% tariffs.

Ima, executive vice president for policy development and strategy at the US Dairy Export Council (USDEC), took a different view.

“We don’t expect to see a significant impact of the 15% tariff floor, but anything that opens the EU market for US dairy products will help to bridge the huge trade deficit, which currently runs in the EU’s favour,” Casteneda, also executive vice president at the National Milk Producers Federation (NMPF), told DII.

Casteneda said, “Our primary focus has not been on blocking the EU from this market, it has been on delivering comparable opportunities for US exporters into the EU, but the EU has kept refusing to allow for that level playing field, which is growing the appetite in our industry to chip away at EU exports here. Further escalation with the EU is needed to fix the dairy trade deficit,” Castaneda continued, adding, “We’d love to be happily surprised though and see the EU take these framework commitments seriously to deliver.”

USDEC president and CEO Krysta Harden added in a statement, “For too long, the EU has wielded tariffs and red tape and misused geographical indications as weapons to shut US products out, while European exporters enjoyed extensive access to our shelves.” (9)

As it stands, “current dairy trade between the EU and US is quite one-directional,” Likitalo said, with “the US being one of the top export markets for the EU.”

He cited figures showing in 2024, the EU exported some 140,000 tonnes of cheese to the US and 60,000 tonnes of butter, the bloc’s main dairy exports, up from around 125,000 and 45,000 tonnes respectively in 2023 (10).

Indeed, Casteneda confirmed the US exported very little dairy to the EU, “Last year (2024), the EU exported over US$3 billion [€2.57 billion]’s worth of dairy products to the US, and the US exported US$167 million [€143 million] in dairy products to the EU.”

Notwithstanding, a Danone Global spokesperson implied to DII the deal would not have a pronounced effect for this major as, “Ninety per cent of our activity in North America involves dairy and plant-based products (EDP), which are sourced and produced locally.”

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