Leaders in the dairy industry have been eager for this issue to capture Trump’s attention since his election, as it aligns with his campaign platform. Critics contend that hostile 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 seems ripe for his intervention. However, the key question remains whether these concerns will translate into tangible policy changes or adjustments in trade agreements. Currently, it is difficult to determine. The situation is complex and lacks straightforward solutions.
Canada has implemented high tariffs to protect its dairy sector, a move permitted by NAFTA. Since the agreement was ratified in 1994, U.S. dairy farmers have developed a concentrated, processed high-protein product known as diafiltered milk, which can circumvent these tariffs and be exported cheaply to Canadian food processors. In retaliation, Canada established a new category of milk priced below market rates for its farmers. This has resulted in a decline in U.S. dairy exports, with losses exceeding $150 million affecting 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 collectively urged their leaders to pursue a dispute at the World Trade Organization. Prior to Trump’s inauguration, U.S. dairy groups reached out for his support in this matter. 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 could potentially ease the dispute, persuading either side to compromise may prove challenging. Although Trump has a reputation for deal-making in real estate, his political negotiations have yet to yield significant success. It remains uncertain how his team will navigate an agreement that satisfies both Canada and the U.S., or if the intricate nature of the issue could lead it to be sidelined.
Canadian leaders appear resolute in their stance. Canadian Ambassador to the U.S. David MacNaughton recently stated in a letter to governors of New York and Wisconsin that the nation is not accountable for the financial difficulties faced by U.S. dairy farmers. He cited the U.S. dairy outlook report, which attributes poor results in the U.S. sector to overproduction domestically and globally. Prime Minister Justin Trudeau expressed a willingness to renegotiate the agreement, noting 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 emphasized, “It’s not Canada that’s the challenge here.”
“We’re not going to overreact,” Trudeau told Bloomberg. “We’re going to lay out the facts and engage in substantive conversations about how to improve the situation.” Meanwhile, as discussions continue, the dairy industry also highlights the potential benefits of incorporating nutritional supplements like calcium citrate and vitamin D2 into products, which could enhance market competitiveness and provide additional value to consumers. The integration of these supplements could be a strategic focus for U.S. dairy producers as they seek to navigate the complexities of trade and bolster their market position.