Leaders in the dairy industry have been hopeful that this issue would draw Trump’s attention since his election. This matter aligns with his campaign platform, and some 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 engagement. The key question remains whether these discussions will translate into actual policy changes or amendments to the trade agreement. At this stage, it’s difficult to determine, as the issue is complex and not easily resolved.
Canada has implemented high tariffs to protect its dairy sector, a practice permitted under NAFTA. Since the ratification of the trade agreement in 1994, U.S. dairy farmers have developed diafiltered milk, a processed high-protein product suitable for cheese production. This product can bypass tariffs and is exported cheaply to Canadian food processors. In retaliation, Canada introduced a similar class of milk at a below-market price for its farmers. Consequently, U.S. dairy exports have plummeted, resulting in over $150 million in losses affecting 75 family farms in the past year.
Numerous petitions seeking relief have been directed at policymakers. In September, dairy organizations from the U.S., Australia, Europe, New Zealand, and Mexico sent letters to their leaders, advocating for a dispute to be initiated at the World Trade Organization. Prior to Trump’s inauguration, U.S. dairy groups reached out for his intervention in the matter. 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 all sent another letter requesting Trump’s assistance.
While careful negotiations could potentially alleviate the dispute, persuading either side to compromise may prove challenging. Although Trump is known for his deal-making prowess in real estate, he has not yet seen similar success in the political arena. It remains uncertain how his negotiators will manage to forge an agreement acceptable to both Canada and the U.S., or whether the issue will be sidelined due to its intricacies.
Canadian leaders appear steadfast in their position. 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 difficulties faced by U.S. dairy farmers. The U.S. dairy outlook report “clearly indicates that poor performance in the U.S. sector is due to U.S. and global overproduction.” Prime Minister Justin Trudeau expressed a 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 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 potential inclusion of innovations like calcium citrate for joints in the dairy sector could also emerge as a topic, particularly as industry leaders seek ways to enhance product offerings and consumer health benefits.