While the overall agricultural sector in the United States has recently faced a trade deficit, the dairy industry presents a notable exception, consistently achieving a positive trade balance. This resilience is fueled by strong international demand for various dairy products, setting a promising precedent for future market performance. This success in dairy exports stands out against a backdrop where, since 2019, the nation's agricultural imports have increasingly surpassed its exports, leading to a significant trade imbalance.
Historically, American agriculture has been a cornerstone of the national economy, consistently generating trade surpluses since the 1960s. However, this long-standing trend began to shift, with the sector experiencing a trade deficit in 2019 and 2020. This imbalance became particularly pronounced in 2023, reaching a substantial $17.2 billion deficit, according to reports from the USDA’s Economic Research Service and Foreign Agricultural Service. By 2024, this shortfall further expanded to $31.8 billion, largely due to increased imports of fresh produce and coffee.
Looking ahead to 2025, USDA projections anticipate that U.S. agricultural exports will total $170.5 billion, while imports are expected to climb to $220 billion. Should these forecasts materialize, the agricultural trade deficit would reach an unprecedented $49.5 billion. Amidst these challenging currents, the dairy industry has proven to be a robust outlier. In 2024, U.S. dairy processors exported products and ingredients valued at $8.2 billion, while imports stood at $5.4 billion, resulting in a healthy $2.8 billion trade surplus for the dairy category.
The dairy sector's export growth has been consistently strong, with 2024 marking the second-highest export volume on record, trailing only the peak of $9.65 billion achieved in 2022. That record year saw high milk prices, which significantly boosted product values both domestically and internationally. For 2025, economists at the USDA project a further increase in dairy product and ingredient exports, estimating them to reach $8.6 billion. While imports are expected to rise to $5.6 billion, with European cheese accounting for a significant portion, the net trade surplus for dairy is predicted to improve by $200 million, reaching $3 billion.
Key drivers behind the dairy market's strength include robust demand for cheese, butterfat, and high-protein whey. In May, cheese exports hit a new high of 114 million pounds, with notable increases in sales to Japan, South Korea, Central America, and South America, despite a slight dip in exports to Mexico, the primary customer. The competitiveness of U.S. cheese prices compared to those from the European Union and New Zealand, the world's largest dairy exporters, has further bolstered this trend. Similarly, American butterfat exports have soared due to competitive pricing, with the first five months of the year already achieving 87% of last year's total butter and anhydrous milk fat sales.
The consistent growth of high-protein whey exports underscores protein's status as a premium ingredient, solidifying dairy's position as a leader in this category. However, challenges persist, particularly with low-protein whey exports, which have been adversely affected by tariff issues. China, a major importer of U.S. dry whey, drastically reduced its imports of this product by 70% in May, leading to a 5.5% overall decline in low-protein whey exports from January to May compared to the previous year. Furthermore, shipments of high-end whey protein, nonfat dry milk, lactose, and cheese to China also saw significant drops. Given China's dominant role as a global dairy product importer, U.S. exporters face the imperative of diversifying their markets to sustain international dairy sales growth.
