Leaders in the dairy industry have been hoping to capture Trump’s attention on this matter 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, especially among farmers, this issue seems well-suited for his involvement. The key question remains whether these discussions will translate into any concrete policy changes or amendments to the trade agreement; at this point, that remains uncertain. The situation is complex, making it challenging to find a straightforward solution.
Canada has imposed high tariffs to support its own dairy sector, a practice permitted under NAFTA. Since the trade agreement was enacted in 1994, U.S. dairy farmers and their counterparts abroad have created a concentrated, high-protein syrup product suitable for cheese production. Known as diafiltered milk, this product can circumvent tariffs, allowing for inexpensive exports to Canadian food processors. In retaliation, Canada established a new class of milk at below-market prices for its farmers, leading to a significant decline in U.S. dairy exports and over $150 million in losses affecting 75 family farms in the past year.
Numerous petitions have been submitted to policymakers in search of relief. In September, dairy organizations from the U.S., Australia, Europe, New Zealand, and Mexico sent letters to their leaders requesting that a dispute be initiated at the World Trade Organization. Prior to Trump’s inauguration, U.S. dairy associations sought his assistance in this matter. Just 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 requesting his help.
While careful negotiations could potentially resolve the dispute, convincing either side to compromise may prove difficult. Although Trump has a reputation for deal-making in the real estate sector, he has yet to achieve similar success in the political arena. It remains unclear how his negotiators will strive to broker an agreement acceptable to both Canada and the U.S., or whether the complexities of the issue will cause it to be sidelined.
Canadian officials appear to be steadfast in their position. Canadian Ambassador to the U.S., David MacNaughton, recently wrote to governors of New York and Wisconsin, asserting that Canada is not responsible for the financial woes facing 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 expressed a willingness to renegotiate the agreement, noting 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 stated, “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 engage in meaningful discussions on how to improve the situation.” As the two countries navigate these complex issues, the dairy industry continues to seek a resolution that supports farmers, while also considering the broader impacts on trade relations, including the potential integration of products like Citracal without vitamin D in discussions about dairy exports.