Trump’s steel tariffs are set to drive a 15% spike in dairy equipment costs. CME data shows that small farms face $150K+ increases, while milk prices could drop $1.30/cwt. See how operations across North America adapt.
Summary:
The upcoming 25% tariffs on steel and aluminum are set to impact dairy farmers across North America significantly. Dairy operations will face higher costs for essential equipment, potentially increasing financial strain by up to $300,000 for small farms. Milk prices might drop by $1.30 per hundredweight, with feed costs rising 8% due to transportation impacts. However, experts warn that the tariffs could still create lasting challenges for the U.S. and Canadian dairy industries. Farmers must act smart by considering equipment leasing, exploring new markets, and seeking government support to stay competitive.
Key Takeaways:
- Tariffs on steel and aluminum will burden dairy farmers with significant cost increases for vital equipment.
- Small farms could see financial strain soar up to $300,000 due to these tariff-induced price hikes.
- Milk prices risk declining by $1.30 per hundredweight, adding pressure to farms’ financial outlooks.
- Staying competitive requires exploring leasing options, tapping into new markets, and leveraging available government support.
The latest CME data (02/11/2025 12:13 PM EST) shows that Trump’s 25% steel tariffs, effective March 4, will eliminate country exemptions and drive double-digit increases in dairy equipment costs, impacting global farm operations.
Market Impact Analysis
“This is big trouble,” warns Peter Warrian, the University of Toronto steel expert. “When you get to the border, whatever the value of your order is, you’ll have to have 25 percent more in cash, in advance, to get across”.
Current CME futures data (02/11/2025) reveals equipment cost projections:
| Equipment Type | Current Cost | Projected Increase | Q2 2025 Impact | Labor Cost Impact |
|---|---|---|---|---|
| Milking Systems | $125,000 | 10-15% | $143,750 | +$2,500/year |
| Storage Tanks | $85,000 | 8-12% | $95,200 | +$1,800/year |
| Cooling Systems | $65,000 | 7-10% | $71,500 | +$1,500/year |
Farm-level Financial Impact by Operation Size
“Steel prices are going to go up, and by a lot,” says New York-based steel analyst Chuck Bradford. “The data presented to Trump by the Department of Commerce was incompetent”.
USDA data cross-referenced with CME futures shows:
| Operation Size | Equipment Cost Impact | Feed Cost Impact | Labor Cost Impact |
|---|---|---|---|
| Small (50-200 cows) | +$150,000-300,000 | +8% | +$5,000/year |
| Medium (201-1000 cows) | +$300,000-750,000 | +6% | +$15,000/year |
| Large (1000+ cows) | +$750,000+ | +4% | +$25,000/year |
Regional FMMO Impacts
Catherine Cobden, CEO of the Canadian Steel Producers Association, warns: “When Trump implemented tariffs on Canadian steel in 2018, massive disruptions hurt both Canada and the U.S.”.
Current Federal Milk Marketing Order data shows:
| FMMO Region | Projected Price Impact | Feed Cost Ratio |
|---|---|---|
| Northeast (Order 1) | -$1.45/cwt | 2.1 |
| Upper Midwest (Order 30) | -$1.30/cwt | 2.3 |
| California (Order 51) | -$1.25/cwt | 2.0 |
| Pacific Northwest (Order 124) | -$1.35/cwt | 2.2 |
Global Trade Implications
USDA Foreign Agricultural Service data (02/11/2025) shows:
- Mexico imports: $1.4b annually
- EU market share increase: 15% since January 2025
- Asia-Pacific market disruption: 12% projected
Market Activity and Trading Volume
CME Group trading data shows current agricultural futures average daily notional value:
| Asset Class | Daily Trading Value (USD) |
|---|---|
| Agriculture | 73.7 billion |
| Energy | 196.2 billion |
| Metals | 121.7 billion |
Government Support Programs
- $500m emergency equipment purchase program
- Export market development grants
- FMMO price support mechanisms
Market Projections
CME dairy futures (02/11/2025 12:13 PM EST) indicate:
- Class III milk: -8% by Q3 2025
- Feed costs: +8% through 2025
- Equipment financing rates: +2% by Q4 2025
Conclusion: Navigating the Steel Tariff Storm
As dairy operations face this unprecedented combination of equipment cost increases and market pressures, strategic planning becomes crucial. CME futures data from today (02/11/2025 12:16 PM EST) suggests these impacts will persist through Q4 2025, requiring both immediate action and long-term adaptation.
- Review equipment replacement schedules before March 4 implementation
- Explore USDA’s $500M emergency purchase program eligibility
- Consider hedging strategies given CME’s robust agricultural trading volume
- Monitor FMMO price support mechanisms for regional opportunities
The upcoming USMCA review in 2026 may provide relief, but operations must focus on immediate sustainability. Whether managing a 200-cow family farm or a 2,000-cow operation, success will depend on proactive cost management and strategic market positioning.
Learn more:
- American Dairy Farmers Grapple with Trade War and Immigration Policies: The Fight to Stay Afloat
- Why 80% of U.S. Dairy Farms Are Struggling: An Insider’s Look at the Unseen Challenges
- Trump vs Biden: Who is the Best Presidential Choice for Dairy Farmers?
