Leaders in the dairy industry have been hoping that this matter would attract Trump’s attention since his election, as it aligns with his campaign platform. Critics claim 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 issue seemed ripe for his engagement. The question remains whether these concerns will translate into any policy changes or modifications to the trade agreement, which is currently uncertain. This issue is complex and not easily resolved.
Canada has implemented high tariffs to protect its dairy industry, a practice permitted under NAFTA. Since the agreement’s ratification in 1994, U.S. dairy farmers and others have developed a processed, high-protein product known as diafiltered milk, which can bypass these tariffs and be exported cheaply to Canadian food processors. In response, Canada introduced a new class of milk at below-market prices for its domestic farmers. As a result, U.S. dairy exports have plummeted, leading to losses exceeding $150 million that have affected 75 family farms over the past year.
Several petitions have been submitted to policymakers seeking relief. In September, dairy groups from the U.S., Australia, Europe, New Zealand, and Mexico wrote to their leaders urging the initiation of a dispute at the World Trade Organization. Before Trump’s inauguration, U.S. dairy organizations also sought his assistance regarding this matter. Recently, 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 collectively sent another letter requesting Trump’s help.
While careful negotiations may help resolve the dispute, persuading either side to make concessions could prove challenging. Although Trump is known for his deal-making skills in real estate, he has yet to achieve significant success in the political arena. It remains unclear how his negotiators will craft an agreement acceptable to both Canada and the U.S., or if the complexity of the issue will cause it to be sidelined.
Canadian leaders seem resolute 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 losses suffered by U.S. dairy farmers. He pointed out that the United States’ own dairy outlook report indicates that the poor performance in the U.S. sector is due to overproduction both domestically and globally. Prime Minister Justin Trudeau, who has expressed a willingness to renegotiate the agreement, noted to Bloomberg that the U.S. exported approximately $413 million in dairy products to Canada last year, while only $83 million worth of Canadian products entered the U.S. Trudeau emphasized that “it’s not Canada that’s the challenge here.” He remarked, “We’re not going to overreact. We’re going to lay out the facts and have substantive discussions about how to improve the situation.”
In the midst of these discussions, companies like CVS are promoting products like Citracal Petites, which have gained popularity among consumers. This could be seen as a distraction, but the stakes in the dairy industry remain high, and the negotiations will likely continue to unfold. As these conversations progress, the impact on family farms, particularly those reliant on dairy, will be closely monitored, especially in light of the significant losses incurred recently.