Australian Dairy Farmers chairman Allan Burgess says the reintroduction of the US Dairy Export Incentive Program (DEIP) over the weekend is a blow to the international dairy market at a time when it was starting to stabilise.

"You have to question which side of the fence the US is on," Mr Burgess said. "On one hand, in international forums like the G20, the US says it doesn't support increased protectionism.

"Then on the other hand, it reintroduces export subsidies in dairy.

"Reintroducing export subsidies will further damage the world market and Australian dairy farmer returns."

The US move is in retaliation against the European Union, which also reintroduced dairy export subsidies in January.

But Mr Burgess says the US action will have no impact on EU returns.

"At best it will have only a relatively small impact on US milk prices," he said.

"But the negative signal it sends to world markets means the potential cost impact will be greatest for unsubsidised industries like Australia."

Dairy industry leaders are discussing a response with the Federal Government.

"We are seeking a commitment from the US that they consider Australia's export markets when they roll out this DEIP program," Mr Burgess said.

National Farmers' Federation president David Crombie also slammed the US subsidies as another mis-step towards protectionism, which would "derail legitimate attempts to correct the global economic recession".

"With world economies in freefall and the international food crisis ever-present, leading the charge on trade reform to open up markets should be political leaders' focus," Mr Crombie said.

"Instead of breaking down artificial trade barriers such as tariffs, subsidies and quotas to jump-start economies the world over – including the floundering US economy – and give new impetus to global markets, the US is regressing into imaginary harbours that give it no protection at all.

"The problem with so-called protectionism is while it may shore-up domestic jobs in the short-term, it only reinforces the inherent distortions that plague international trade.

"Rather than help the US economy to rebound, it entrenches the inefficient allocation of resources that economies can ill-afford – now or for a longer-term recovery."