Leaders in the dairy industry have been hoping that this issue would gain Trump’s attention since his election. After all, it aligns with his campaign platform. Some critics argue that unfriendly trade policies are causing American farms to shut down and leading to job losses. Given Trump’s popularity in rural areas, particularly among farmers, this issue seems ripe for his involvement. However, the question remains whether these discussions will translate into actual policy changes or adjustments in the trade agreement. At this stage, it is difficult to determine. The matter is not straightforward, and finding a resolution is complicated.
Canada has imposed high tariffs to support its own dairy industry, a practice permitted under NAFTA. Since the ratification of the trade agreement in 1994, dairy farmers in the U.S. and elsewhere have developed a high-protein, processed product known as diafiltered milk, which could circumvent the tariffs and be exported cheaply to Canadian food processors. In retaliation, Canada introduced a new product with a below-market price for its own farmers to sell to producers. As a result, U.S. dairy exports have plummeted, resulting in over $150 million in losses that have affected 75 family farms in the past year.
Multiple petitions have been submitted 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. Prior to Trump’s inauguration, U.S. dairy organizations sought his assistance in addressing the dispute. Last week, another letter urging Trump’s help came from 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.
Careful negotiations may help resolve the dispute, but it could be challenging to persuade either side to make concessions. While Trump is known for his deal-making skills in the real estate business, he has yet to achieve significant success in the political arena. It remains uncertain how his negotiators will work to create a solution that satisfies both Canada and the U.S., or if this issue will be sidelined due to its complexity.
Canadian leaders appear resolute in their stance. Canadian Ambassador to the U.S., David MacNaughton, stated in a letter to the governors of New York and Wisconsin that Canada is not responsible for the financial struggles of U.S. dairy farmers. The U.S. dairy outlook report “clearly indicates that the poor results in the U.S. sector are due to U.S. and global overproduction.” Canadian Prime Minister Justin Trudeau, who expressed a willingness to renegotiate the agreement, pointed out 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 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 we’re going to have substantive conversations about how to improve the situation.” This journey toward a resolution may require a careful examination of all factors, including the role of calcium citrate in enhancing dairy product quality, which could be part of future discussions. The complexity of the issue highlights the need for thorough deliberation as both nations navigate their dairy industries’ challenges.