U.S. agriculture has been an economic beacon providing trade surpluses to the national economy since the 1960s.
That began to change more recently as agriculture began to experience a trade deficit, meaning the U.S. imported more agricultural products than it exported to other countries around the world, says Corey Geiger, lead dairy economist for CoBank.
Trade imbalance
“While the agricultural trade balance turned slightly negative in 2019 and 2020, a noticeable imbalance appeared in 2023, with a $17.2 billion deficit, reported USDA’s Economic Research Service and Foreign Agricultural Service,” Geiger says. By 2024, the spread expanded to a $31.8 billion shortfall, as the U.S. began importing more fresh produce and coffee.
This year, USDA agencies forecast the U.S. will export $170.5 billion and import $220 billion worth of ag product. If this comes to fruition, it would create a historic $49.5 billion shortfall, based on the latest Outlook for U.S. Agricultural Trade.
“While those are the headwinds facing U.S. agriculture, dairy is bucking those forces,” Geiger explains. “In 2024, U.S. dairy processors exported $8.2 billion in dairy products and ingredients while we imported $5.4 billion in dairy products. That created a positive $2.8 billion trade surplus in the dairy category.”
For the most part, U.S. dairy continues to grow its export base. To that end, 2024 dairy exports stand in second place to the all-time record of $9.65 billion posted in 2022.
“Those record exports were driven by record milk prices that netted a $25.93 mailbox milk price that year and caused higher product prices in the U.S. and also globally,” Geiger says.
As for 2025? USDA economists are forecasting $8.6 billion in dairy product and ingredient exports.
“On the flip side, imports could total $5.6 billion. Incidentally, cheese, primarily from Europe, could be $2 billion of the $5.6 billion import total,” Geiger notes. “If USDA’s latest forecast unfolds this year, dairy would have a net trade surplus of $3 billion, which would be a $200 million improvement over last year.”
Dairy market bright spots
Cheese, butterfat, and high-protein whey pace growth in dairy product and ingredient exports. In May, cheese posted a record 114 million pounds in exports. While exports to No. 1 customer Mexico fell, sales to just about every other major customer rose in May, including Japan, up 24%; South Korea, up 20%; Central America, up 23%; and South America; up 47%.
Globally, cheese demand remains strong. Plus, cheese exports have been buoyed by lower U.S. prices when compared to the largest two dairy exporters: the European Union and New Zealand.
“From a price standpoint, U.S. butterfat, just like cheese, is selling at a discount when compared to the world’s two largest dairy exporters,” Geiger says. “That has significantly buoyed exports. Through May 2025, the U.S. has already exported 88 million pounds of butter and anhydrous milk fat.”
By comparison, the U.S. exported 101 million pounds of those two products total last year. This means that U.S. butter makers have sold 87% of last year’s sales volume in the first five months of the year.
Protein continues to be regarded as a hero ingredient, and according to Geiger, dairy is a proven winner in this category. To that end, high-end whey exports continue to grow both in volume and value. This category includes whey protein concentrates and whey protein isolates over 80% protein.
“On the other end of the spectrum, low-protein-level whey exports have been battered by tariff-related issues,” Geiger explains. “In 2024, China purchased nearly 40% of all dry whey exports sent from U.S. suppliers. When comparing January to May 2024 to the same time this year, whey exports in product category 4.404.10 were off 5.5%. However, the larger concern popped up in May as China imports were down a whopping 70%.” Specific exports for the month were 20,696 metric tons of low-protein whey in May 2024 and just 6,265 metric tons in May 2025.
That isn’t the only category of concern when it comes to China, as shipments of high-end whey protein, nonfat dry milk, lactose and cheese dropped between 59% to 83% during May, Geiger says. “With China being the world’s largest dairy product importer, U.S. exporters must find new homes for products and ingredients to keep growing international dairy sales,” he says.