For context, the US (starting April 10) has temporarily suspended the additional 26% tariffs on Indian goods for a period of 90 days. This decision follows the imposition of universal tariffs by US President Donald Trump on around 60 countries, including India, on April 2, with the goal of reducing the trade deficit and boosting domestic manufacturing. Notably, China is excluded from this suspension and will continue to face a significant tariff hike, bringing its total effective tariff rate to 145% after April 9. Meanwhile, a baseline 10% tariff will still apply to Indian goods.

India accounts for 24% of global milk production, yet its share in global dairy exports is surprisingly minimal, accounting for only 0.25% of the world’s dairy trade. The major dairy export products consist of butter, butter oil, buttermilk, milk, and ghee. In 2022-23, India exported 67,572.99 tonnes of dairy products, valued at $284.65 million. In 2023-24, exports declined to 63,738.47 tonnes, valued at $272.64 million, as per data from the Indian Dairy Association (IDA).

Trump tariffs may further impact dairy exports, potentially increasing costs of ghee, butter, and milk powder and reducing their US market share, says Devendra Shah, Chairman, Parag Milk Foods. According to him, the move also hindered the possibility of collaboration between Indian and American dairy sectors regarding technology exchange and investment. “Moreover, tariffs signalled a protectionist approach that created an uncertain global trade environment. However, with countries traditionally reliant on the US now looking elsewhere, we have the option of having Indian dairy products in other countries that were previously dominated by US exports,” adds Shah.