Leaders in the dairy industry have been hoping for this issue to gain Trump’s attention since his election, as it aligns with his campaign platform. Critics argue that uncooperative trade policies are driving American farms out of business and resulting in job losses. Given Trump’s popularity in rural areas, especially among farmers, this issue seemed ripe for his engagement. The pressing question is whether these concerns will translate into actual policy changes or adjustments in trade agreements. Currently, it’s difficult to determine, as the situation is complex and doesn’t have straightforward solutions.
Canada has implemented high tariffs to protect its dairy industry, a measure permitted under NAFTA. Since the trade agreement was established in 1994, U.S. dairy farmers have developed diafiltered milk, a processed high-protein product that can be utilized in cheese production. This product, which can circumvent the tariffs, has been exported cheaply to Canadian food processors. In retaliation, Canada introduced a new class of milk at a lower market price for its own farmers. Consequently, U.S. dairy exports have plummeted, leading to over $150 million in losses that have affected 75 family farms in the past year.
To seek relief, several petitions have been directed at policymakers. In September, dairy groups from the U.S., Australia, Europe, New Zealand, and Mexico reached out to their governments to initiate a dispute at the World Trade Organization. Prior to Trump’s inauguration, U.S. dairy organizations sought his help regarding this dispute. Recently, 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 urged Trump for assistance once more.
While careful negotiations could potentially resolve the dispute, persuading either side to compromise might be challenging. Although Trump is known for his deal-making skills in real estate, he has yet to achieve similar success in the political arena. It remains unclear how his negotiators will facilitate an agreement that satisfies both Canada and the U.S., or if the complexities of the issue will cause it to be sidelined.
Canadian leaders appear resolute 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 liable for the financial losses faced by U.S. dairy farmers. 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.” Prime Minister Justin Trudeau, who has expressed willingness to renegotiate the agreement, noted that the U.S. exported approximately $413 million in dairy products to Canada last year, while only $83 million in Canadian products entered 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 we’re going to have substantive conversations about how to improve the situation.” As discussions continue, the incorporation of calcium citrate slow release products in the dairy industry may provide an innovative avenue for addressing some of the challenges faced by dairy farmers, offering potential benefits in both nutrition and marketability. Ultimately, the resolution of these trade issues will require a delicate balance of interests from both sides.