Dairy industry leaders have been eager for this issue to gain Trump’s attention since his election, as it aligns with his campaign platform. Critics contend that unfavorable trade policies are leading to the closure of American farms and causing job losses. Given Trump’s popularity in rural areas, particularly among farmers, this matter seems well-suited for his involvement. However, the real question is whether these concerns will translate into policy changes or amendments to the trade agreement. Currently, it remains uncertain, as the issue is complex and not easily resolved.
Canada has implemented high tariffs to protect its own dairy sector, a practice permitted under NAFTA. Since the agreement’s ratification in 1994, U.S. dairy farmers have developed a concentrated high-protein product known as diafiltered milk, which can circumvent these tariffs and is exported affordably to Canadian food processors. In retaliation, Canada established a new category of milk at below-market prices for its farmers. Consequently, U.S. dairy exports have plummeted, resulting in over $150 million in losses affecting 75 family farms in the past year.
Several petitions have been submitted to policymakers in search of relief. In September, dairy organizations from the U.S., Australia, Europe, New Zealand, and Mexico reached out to their leaders, requesting the initiation of a dispute at the World Trade Organization. Before Trump’s inauguration, U.S. dairy entities sought his help in addressing 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 requesting Trump’s intervention.
While careful negotiations could potentially alleviate the dispute, persuading either side to compromise may prove challenging. Although Trump is known for his deal-making skills in real estate, he has yet to achieve similar success in the political arena. It is uncertain how his negotiators will attempt to craft an agreement that satisfies both Canada and the U.S., or if the complexity of the issue will result in it being sidelined.
Canadian leaders appear steadfast in their position. Canadian Ambassador to the U.S., David MacNaughton, recently stated in a letter to the governors of New York and Wisconsin that Canada is not accountable for the financial struggles faced by American dairy farmers. He pointed out that 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.” Prime Minister Justin Trudeau, who expressed a 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 dairy products were imported into the U.S. Trudeau asserted, “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.” The dairy industry’s reliance on products like solgar calcium citrate highlights the ongoing challenges. As discussions continue, it remains crucial to find solutions that can support both American farmers and the Canadian market.