Dairy industry leaders have been hoping to capture Trump’s attention regarding this issue since his election, as it aligns with his campaign platform. Critics argue that unfavorable trade policies are leading to the closure of American farms and job losses. Given Trump’s popularity in rural regions, particularly among farmers, this matter seemed prime for his engagement. The key question remains whether these concerns will translate into actual policy changes or revisions to the trade agreement. As of now, the outcome is uncertain. The situation is complex and not easily resolved.
Canada has implemented high tariffs to support its dairy sector, a practice permitted under NAFTA. Since the trade deal was ratified in 1994, U.S. dairy farmers and others have developed diafiltered milk—a syrupy, high-protein product that can be utilized in cheese. This product could bypass tariffs and was exported cheaply to Canadian food processors. In retaliation, Canada introduced a similar milk class at a price below market value for its own farmers to sell to producers. Consequently, U.S. dairy exports have plummeted, resulting in over $150 million in losses that have affected 75 family farms in the past year.
Numerous petitions seeking relief have been directed at policymakers. In September, dairy organizations from the U.S., Australia, Europe, New Zealand, and Mexico sent letters to their respective leaders, urging the initiation of a dispute at the World Trade Organization. Prior to Trump’s inauguration, U.S. dairy groups sought his help regarding this issue. Recently, the National Milk Producers Federation, the U.S. Dairy Export Council, the International Dairy Foods Association, and the National Association of State Departments of Agriculture sent another letter requesting Trump’s assistance.
While careful negotiations might help resolve the conflict, persuading either side to compromise could prove challenging. Trump is known for his deal-making skills in real estate; however, his political negotiation efforts have yet to yield significant success. It remains unclear how his negotiators will craft a solution acceptable to both Canada and the U.S., or if the complexity of the issue will push it aside.
Canadian officials appear steadfast in their stance. David MacNaughton, the Canadian Ambassador to the U.S., asserted in a letter to governors of New York and Wisconsin that Canada is not accountable for the financial losses experienced by dairy farmers. He pointed out that the U.S. dairy outlook report “clearly indicates that the poor results in the U.S. sector are due to U.S. and global overproduction.”
Canadian Prime Minister Justin Trudeau, who has expressed a willingness to renegotiate the agreement, mentioned to Bloomberg that the U.S. exported approximately $413 million in dairy products to Canada last year, while only $83 million worth of Canadian products entered the U.S. Trudeau remarked, “It’s not Canada that’s the challenge here.” He added, “We’re not going to overreact. We’re going to lay out the facts and we’re going to have substantive conversations about how to improve the situation.”
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