Leaders in the dairy industry have been hoping to attract Trump’s attention to a pressing issue since his election, as it aligns with his campaign platform. Critics contend that uncooperative trade policies are leading to the closure of American farms and resulting in job losses. Given Trump’s popularity among rural voters, particularly farmers, the situation seemed ideal for his intervention. However, the question remains whether these discussions will translate into actual policy changes or modifications in trade agreements. Currently, it is difficult to predict, as the matter is complex and lacks a straightforward solution.
Canada has imposed high tariffs to protect its own dairy sector, a move permitted under NAFTA. Since the ratification of this trade agreement in 1994, U.S. dairy farmers have developed a processed, high-protein product known as diafiltered milk, which can bypass these tariffs and is cheaply exported to Canadian food processors. In response, Canada introduced a new category of milk sold at below-market prices to support its farmers. Consequently, U.S. dairy exports have plummeted, leading to losses exceeding $150 million, which have affected 75 family farms in the past year.
Several petitions have been directed to policymakers seeking relief from these challenges. In September, dairy groups 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 organizations reached out to him for help in resolving this issue. Last week, another letter requesting Trump’s assistance was sent by 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.
While careful negotiations could potentially ease the dispute, persuading either side to compromise may prove challenging. Although Trump is known for his deal-making skills in real estate, he has yet to achieve similar success in the political sphere. It remains uncertain how his negotiators will craft an agreement satisfactory to both Canada and the U.S., or if the intricacies of the issue will lead to it being sidelined.
Canadian officials appear steadfast in their position. Canadian Ambassador to the U.S., David MacNaughton, stated in a letter to the governors of New York and Wisconsin that Canada is not accountable for the financial setbacks faced by U.S. dairy farmers. He noted that the United States’ own 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, informed Bloomberg that the U.S. exported approximately $413 million in dairy products to Canada last year, whereas only $83 million in Canadian products were imported into the U.S. Trudeau asserted, “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.” Amid these discussions, there is potential for including elements like citrate and vitamin D fortification in dairy products, which could enhance nutritional value and appeal to health-conscious consumers. If the negotiations progress, incorporating such enhancements could be a strategic move to strengthen the industry’s position on both sides of the border.