Synopsis, By initiating a tariff war, the US has caused disruptions resulting in India gaining a significant portion of its dairy export market. Numerous countries in India’s vicinity are likely to raise import duties on US products in retaliation, positioning India to capitalize on the opportunity to access newer export markets.
By kicking off the tariff war, the US has inadvertently ceded half of its dairy export market to India, according to Jayen Mehta, managing director of Gujarat Co-operative Milk Marketing Federation (GCMMF), owner of leading dairy brand Amul.
Nearly 50% of the US dairy exports are to places in India’s vicinity, including West Asia, North Africa, China, Southeast Asia, Sub Saharan Africa, Japan, and South Korea, he said.
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Some of these countries are expected to hike import duties on US products in response to President Donald Trump’s high tariffs on most countries. “We believe that many of these nations would turn to an alternative dairy product supplier,” Mehta said. “As the world’s largest milk producer, India is well positioned to capitalise on this situation.”
The tariff war and emerging trade dynamics may allow India to access newer markets, diversifying its export markets.
“The US dairy products will become expensive for the countries that start retaliating by increasing import duty in their respective countries,” the head of India’s largest milk marketing cooperative said. As of now, China has announced a retaliatory tariff of 34% on US imports, while a few countries have said they are unhappy with the US tariffs.
Even if not many countries go for retaliatory tariffs, the supply chain disruptions and other factors could be helpful for India’s dairy exports, industry insiders said.
“India was already on the path to become dairy of the world. The tariff war will only accelerate the process,” Mehta said.
However, India may not be able to compete for about 50% of US dairy exports that go to South America and Europe “due to longer distances,” he said.
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