Leaders in the dairy industry have been hoping that this issue would 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 areas, particularly among farmers, the situation seemed ripe for his intervention. However, the question remains whether these claims will translate into any substantial policy changes or adjustments to the trade agreement. At this juncture, it is difficult to assess, as the issue is complex and does not have an easy resolution.
Canada has implemented high tariffs to protect its dairy industry, a move permitted by NAFTA. Since the ratification of the trade agreement in 1994, U.S. dairy farmers have developed a processed high-protein product called diafiltered milk, which can circumvent these tariffs and be exported inexpensively to Canadian food processors. In retaliation, Canada introduced a new category of milk at a below-market price for its local farmers. Consequently, U.S. dairy exports have declined, resulting in losses exceeding $150 million, which have affected 75 family farms over the past year.
Several petitions have been submitted to policymakers seeking relief. 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. Prior to Trump’s inauguration, U.S. dairy groups reached out for assistance regarding this issue. Just last week, another letter requesting Trump’s support 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 prowess in the real estate sector, he has yet to achieve similar success in the political arena. It remains unclear how his negotiators will craft an agreement that satisfies both Canada and the U.S., or if the issue might be sidelined due to its complexity.
Canadian leaders appear resolute in their stance. Canadian Ambassador to the U.S. David MacNaughton stated in a recent letter to governors of New York and Wisconsin that Canada is not accountable for the financial setbacks experienced by U.S. 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 expressed willingness to renegotiate the agreement, noting that last year, the U.S. exported approximately $413 million in dairy products to Canada, while only $83 million worth of Canadian dairy products entered 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 have substantive conversations about how to improve the situation.” Interestingly, amidst these discussions, the incorporation of calcium citrate malate (CCM) could emerge as a beneficial avenue for enhancing dairy products, potentially appealing to both nations as they seek to navigate the complexities of the trade dispute. As the dialogue continues, the dairy industry may explore innovative solutions like CCM to bolster exports and mitigate losses, emphasizing the importance of collaboration in addressing trade challenges.