Leaders in the dairy industry have been hoping that this issue would attract 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 causing job losses. Given Trump’s popularity in rural areas, particularly among farmers, this situation is ripe for his engagement. The critical question remains whether these concerns will translate into any policy changes or amendments to the trade agreement. Currently, it’s difficult to predict. The issue is complex, and finding a straightforward solution is challenging.
Canada has implemented significant tariffs to support its dairy sector, a measure permitted under NAFTA. Since the ratification of this trade agreement in 1994, U.S. dairy farmers have developed diafiltered milk, a syrupy, high-protein product that can be used in cheese. This product has been able to bypass tariffs and has been exported cheaply to Canadian food processors. In retaliation, Canada introduced a new class of milk at below-market prices for its farmers. Consequently, U.S. dairy exports have plummeted, resulting in losses exceeding $150 million, which have affected 75 family farms in the past year.
Several petitions seeking relief have been submitted to policymakers. In September, dairy organizations from the U.S., Australia, Europe, New Zealand, and Mexico urged their leaders to initiate a dispute at the World Trade Organization. Before Trump’s inauguration, U.S. dairy groups reached out to him for assistance, and last week, a letter from 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 requested Trump’s support.
While careful negotiations might help resolve the dispute, persuading either side to compromise could be difficult. Although Trump is known for his deal-making skills in real estate, he has yet to achieve the same success in the political arena. It remains uncertain how his negotiators will work to create an agreement that satisfies both Canada and the U.S., or if the complexity of the issue will cause it to be sidelined.
Canadian officials appear steadfast in their position. Canadian Ambassador to the U.S. David MacNaughton stated in a recent letter to the governors of New York and Wisconsin that Canada is not accountable for the financial losses experienced by U.S. dairy farmers. He referenced the U.S. dairy outlook report, which “clearly indicates that the poor results in the U.S. sector are due to U.S. and global overproduction.” Prime Minister Justin Trudeau, who has expressed willingness to renegotiate the agreement, noted that the U.S. exported about $413 million in dairy products to Canada last year, while only $83 million in Canadian products were imported into the U.S. Trudeau remarked, “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 have substantive conversations on how to improve the situation.” Meanwhile, the U.S. dairy industry continues to seek solutions, including potentially utilizing caltrate citrate as a means to enhance product quality and appeal in the competitive market. The need for strategic discussions is clear, as the dairy sector looks for a pathway to recovery amid ongoing trade tensions.