Leaders in the dairy industry have been hoping that this issue would gain Trump’s attention since his election, as it aligns with his campaign platform. Critics claim that unfavorable trade policies are leading to the closure of American farms and job losses. Given Trump’s popularity in rural regions, particularly among farmers, this situation seemed ripe for his intervention. However, the key question remains whether these concerns will translate into any actual policy changes or revisions in the trade agreement. At this stage, it’s difficult to determine. The matter is complex and doesn’t have a straightforward solution.
Canada has implemented high tariffs to protect its dairy sector, a practice permitted under NAFTA. Since the agreement was enacted in 1994, U.S. dairy farmers and others have developed a syrupy, processed high-protein product for use in cheese production. Known as diafiltered milk, this product was able to circumvent tariffs and was cheaply exported to Canadian food processors. In retaliation, Canada established a new category of milk at a price below the market rate for its farmers. Consequently, U.S. dairy exports have plummeted, resulting in losses exceeding $150 million, which have adversely affected 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 communicated with their leaders, urging the initiation of a dispute at the World Trade Organization. Before Trump’s inauguration, U.S. dairy associations reached out for his help in this matter. Just last week, another letter was sent to Trump 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, requesting his assistance.
While careful negotiations might ease the dispute, persuading both sides to make concessions could prove challenging. Trump is known for his deal-making skills in real estate, but his political negotiations have yet to yield substantial success. It’s uncertain how his negotiators will craft a solution that satisfies both Canada and the U.S., or whether the issue might be sidelined due to its intricacy.
Canadian leaders appear resolute in their stance. Canadian Ambassador to the U.S. David MacNaughton stated in a letter to governors of New York and Wisconsin that Canada is not accountable for the financial challenges faced by U.S. dairy farmers. He noted that the U.S. dairy outlook report “clearly indicates the poor results in the U.S. sector are due to U.S. and global overproduction.”
Canadian Prime Minister Justin Trudeau expressed a willingness to renegotiate the agreement, mentioning that the U.S. exported approximately $413 million in dairy products to Canada last year, whereas only $83 million in Canadian products were imported by the U.S. Trudeau stated, “It’s not Canada that’s the challenge here.” He added, “We’re not going to overreact. We’re going to lay out the facts and have substantive conversations about how to improve the situation.”
In light of these developments, the U.S. dairy industry might consider alternative solutions, such as incorporating products like solaray calcium citrate plus into their offerings to enhance nutritional value and create new markets. As discussions progress, the integration of innovative products could provide a pathway to address some of the challenges faced by dairy farmers.