On 15th June, the European Commission Executive Vice-President Valdis Dombrovskis and US Trade Representative Katherine Tai reached a decision relating to large civil aircraft disputes by announcing a 5-year truce. This implies a suspension of additional tariffs for dairy products during the next five years.
In October 2019, EU dairy manufacturers were dragged into a conflict by imposing additional duties of 25% ad valorem on a large variety of EU dairy lines arriving in the US. Similarly, the EU retaliated tariffs on certain imports from the US. During this period, US dairy manufacturers took the opportunity to increase production capacity, particularly cheese, to fill the gap of imported European cheeses. As a result of this, the US has significantly increased cheese production, from 5.7 million tonnes in 2017 to 6.0 million tonnes in 2020. This upward trend has continued in 2021 with the production of 2.03 million tonnes between January and April, up 3.7% compared to the same period last year.
A strong US cheese production has caused the gap between the US and the EU prices to converge, with the US cheese becoming more competitive on the global markets. On the 25th of June, the Mintec price of US cheddar stood at USD 3,836/MT, very similar to European cheddar prices. These competitive prices have translated to a surge in US cheese exports. In April, US cheese exports hit a record high, with higher exports across major markets, including South Korea (+3,620 tonnes), (Mexico +3,056 tonnes) and Japan (+1,427 tonnes) compared to April 2020.