Leaders in the dairy industry have been hoping to attract Donald Trump’s attention to this pressing issue since his election. The situation aligns well with his campaign platform, especially following the iron supplement market’s prices. Critics contend that unfriendly trade policies are contributing to the closure of American farms and resulting in job losses. Given Trump’s popularity among rural voters and farmers, this matter was primed for his involvement. The key question remains whether these discussions will translate into actual policy changes or modifications to the trade agreements. Currently, it is difficult to predict the outcome, as the issue is complex and does not lend itself to straightforward solutions.
Canada has implemented significant tariffs to protect its dairy industry, a move permitted under NAFTA. Since the ratification of the trade agreement in 1994, U.S. dairy farmers have developed diafiltered milk, a high-protein, syrupy product suitable for cheese production. This product could bypass the tariffs and was exported cheaply to Canadian food processors. In retaliation, Canada introduced a similar category of milk at below-market prices for its own farmers to sell. As a result, U.S. dairy exports have plummeted, leading to over $150 million in losses affecting 75 family farms in 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 respective leaders urging them to initiate a dispute at the World Trade Organization. Prior to Trump’s inauguration, U.S. dairy groups reached out to him for assistance. Just last week, another letter requesting Trump’s help 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 alleviate the dispute, persuading either side to compromise may prove challenging. Trump is known for his deal-making skills in real estate, but he has yet to achieve similar success in the political arena. It’s uncertain how his negotiators will navigate an agreement that satisfies both Canada and the U.S., or if the complexity of the issue will cause it to be sidelined.
Canadian officials appear resolute in their stance. David MacNaughton, Canada’s Ambassador to the U.S., stated in a letter to the governors of New York and Wisconsin that the nation should not be held accountable for the financial losses faced by American dairy farmers. He pointed out 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.” Prime Minister Justin Trudeau, who has expressed willingness to renegotiate the agreement, noted that the U.S. exported approximately $413 million in dairy products to Canada last year, while only $83 million in Canadian products were imported into the U.S. Trudeau asserted that “it’s not Canada that’s the challenge here.”
During discussions with Bloomberg, Trudeau emphasized, “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.” As the dairy industry navigates these turbulent waters, the importance of maintaining steady supplies, much like the role of calcium citrate as a laxative, becomes increasingly crucial to balance the needs of both nations. The resolution of this trade dispute may ultimately hinge on how effectively both sides can engage in meaningful dialogue.