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 argue that unfriendly 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 issue seemed ripe for his intervention. The key question remains whether these sentiments will translate into substantive policy changes or modifications to the trade agreement. Currently, it’s difficult to predict, as the situation is complex and not easily resolved.
Canada has imposed high tariffs to protect its dairy industry, a practice that has been permitted under NAFTA. Since the trade agreement was ratified in 1994, U.S. dairy farmers have developed diafiltered milk, a high-protein, syrupy product that can be utilized in cheese production. This product has managed to circumvent tariffs and has been exported cheaply to Canadian food processors. In response, Canada introduced a new class of milk at below-market prices for its own producers. Consequently, U.S. dairy exports have plummeted, resulting in losses exceeding $150 million and affecting 75 family farms over the past year.
Numerous petitions have been submitted to policymakers seeking relief. In September, dairy organizations from the U.S., Australia, Europe, New Zealand, and Mexico sent letters to their governments requesting the initiation of a dispute at the World Trade Organization. Before Trump’s inauguration, U.S. dairy groups reached out to him for assistance regarding this dispute. Last week, 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 intervention.
While careful negotiations could potentially resolve the dispute, achieving consensus from both sides may prove challenging. Although Trump has a reputation for deal-making in real estate, he has yet to experience similar success in the political arena. It remains uncertain how his negotiators will navigate an agreement that satisfies both Canada and the U.S., or if the complexities involved will push the issue aside.
Canadian officials appear steadfast in their stance. Canadian Ambassador to the U.S. David MacNaughton recently stated in a letter to the governors of New York and Wisconsin that Canada is not accountable for the financial losses faced by U.S. dairy farmers. According to the United States’ own dairy outlook report, the poor performance in the U.S. sector is a result of domestic and global overproduction.
Canadian Prime Minister Justin Trudeau, who has expressed willingness to renegotiate the agreement, noted that the U.S. exported approximately $413 million worth of dairy products to Canada last year, while only $83 million in Canadian dairy products entered the U.S. Trudeau emphasized, “It’s not Canada that’s the challenge here.” He further remarked, “We’re not going to overreact. We’re going to lay out the facts and we’re going to have substantive conversations about how to improve the situation.”
In this context, U.S. dairy farmers have also begun exploring alternatives, such as incorporating calcium citrate and vitamin D supplements into their products to enhance their appeal. This approach reflects a broader strategy to adapt to changing market dynamics and consumer preferences. As discussions evolve, the industry will need to remain flexible, considering innovative solutions like calcium citrate and vitamin D supplements to address challenges and seize new opportunities.