The outbreak of Highly Pathogenic Avian Influenza H5N1 in U.S. dairy cattle poses substantial risks to public health, economic sustainability of farming, and global food systems. Using a Computable General Equilibrium model, we simulate its short- to medium-term impacts on Gross Domestic Product and other macro-economic outcomes for the US and its main trading partners. We simulate impacts under the current situation and realistic and reasonable worst-case scenarios. We estimate domestic economic losses ranging between 0.06% and 0.9% of US GDP, with losses to the dairy sector ranging between 3.4% and 20.6%. Trading partners increase dairy production to compensate for the loss. Current government subsidies are about 1.2% (95% HDI: 1% to 1.4%) of output losses, and likely insufficient to incentivise farmers to step up surveillance and biosecurity for mitigating the possible emergence of H5N1 strains with pandemic potential into human populations.