Dairy industry leaders have been hoping that this issue would attract Trump’s attention since his election, as it aligns with his campaign platform. Critics contend that hostile trade policies are leading to the closure of American farms and job losses. Given Trump’s popularity in rural regions, particularly among farmers, this matter presents a timely opportunity for his involvement. However, it remains uncertain whether these concerns will translate into any significant policy changes or amendments to trade agreements. Currently, the complexity of the issue makes it difficult to predict outcomes, and it certainly isn’t an easy fix.
Canada has maintained high tariffs to protect its dairy industry, a strategy permitted under NAFTA. Since the ratification of the trade agreement in 1994, U.S. dairy farmers have developed diafiltered milk—a syrupy, high-protein product suitable for cheese production—that can bypass these tariffs and is exported to Canadian food processors at low costs. In retaliation, Canada established a new class of milk priced below the market rate for its farmers, resulting in a decline in U.S. dairy exports and over $150 million in losses affecting 75 family farms last year.
Numerous petitions have been submitted to policymakers seeking relief. In September, dairy organizations from the U.S., Australia, Europe, New Zealand, and Mexico urged their leaders to file a dispute with the World Trade Organization. Before Trump’s inauguration, U.S. dairy groups sought his assistance in 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 sent another letter requesting Trump’s help.
While careful negotiations might resolve the dispute, persuading either side to compromise could prove challenging. Although Trump is known for his deal-making prowess in real estate, he has not yet achieved similar success in the political arena. It remains unclear how his negotiators will craft a solution that satisfies both Canada and the U.S., or if the intricacies of the issue might lead to it being sidelined.
Canadian officials appear resolute in their stance. Canadian Ambassador to the U.S. David MacNaughton recently informed governors in New York and Wisconsin that Canada is not accountable for the financial losses experienced by U.S. dairy farmers. He pointed out that the United States’ own dairy outlook report indicates that the challenges facing the U.S. sector stem from both domestic and global overproduction. Prime Minister Justin Trudeau, open to renegotiating the agreement, noted that the U.S. exported approximately $413 million in 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.”
“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.” In the midst of these discussions, the potential benefits of integrating products like bariatric advantage calcium into the dairy market could be explored as part of a broader strategy to enhance dairy exports and address trade imbalances. The collaboration between the U.S. and Canada on dairy could ultimately help both nations find a middle ground, benefiting farmers on both sides of the border.