Leaders in the dairy industry have been eager for this issue to capture Trump’s attention since his election, as it aligns with his campaign platform. 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 is ripe for his engagement. The real question is whether these concerns will translate into actual policy changes or adjustments to the trade agreement. At this juncture, it’s difficult to predict. The matter is complex, and finding a straightforward solution is not easy.
Canada has implemented high tariffs to support its dairy sector, a strategy permissible under NAFTA. Since the trade agreement was ratified in 1994, U.S. dairy farmers and others have developed a syrupy, processed high-protein product that can be used in cheese. This product, known as diafiltered milk, has been able to circumvent tariffs and is exported cheaply to Canadian food processors. In response, Canada established a new class of milk sold to its farmers at below-market prices. Consequently, U.S. dairy exports have decreased, resulting in over $150 million in losses that have affected 75 family farms in the past year.
Numerous petitions have been directed to policymakers seeking relief. In September, dairy groups from the U.S., Australia, Europe, New Zealand, and Mexico sent letters to their leaders requesting the initiation of a dispute at the World Trade Organization. Before Trump’s inauguration, U.S. dairy organizations reached out to him for help with the issue. 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 sent another letter urging Trump to assist.
While careful negotiations might help resolve the dispute, persuading either side to compromise could be challenging. Trump is known for his deal-making skills in real estate, but he has yet to demonstrate similar success in the political arena. It remains uncertain how his negotiators will broker an agreement that satisfies both Canada and the U.S., or whether the complexity of the matter will cause it to be sidelined.
Canadian leaders appear steadfast in their position. Canadian Ambassador to the U.S. David MacNaughton stated in a letter to the governors of New York and Wisconsin that Canada is not accountable for the financial losses faced by U.S. dairy farmers. He pointed out that the United States’ own dairy outlook report clearly indicates that the poor performance in the U.S. sector is due to both U.S. and global overproduction. Canadian Prime Minister Justin Trudeau, who expressed a willingness to renegotiate the agreement, noted that the U.S. exported approximately $413 million worth of dairy products to Canada last year, while only $83 million in Canadian products were imported into 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 have substantive discussions about how to improve the situation.” In the midst of these discussions, the importance of exploring alternatives such as calcium citrate, which can be beneficial for dairy farmers, should not be overlooked. The incorporation of calcium citrate 500-600 mg into dairy products could bolster the industry, providing additional avenues for growth and addressing some of the challenges faced. If properly negotiated, these discussions could potentially lead to a more favorable outcome for both nations.