Brief

Will Trump milk the opportunity to battle Canada on dairy trade issues?

Dive Brief:

  • A number of U.S. dairy organizations have written President-elect Donald Trump asking him to step in regarding Canada’s existing and soon-to-be-expanded protectionist policies designed to block imports from the U.S., according to Food Safety News.
  • Among the groups reaching out to Trump are The International Dairy Foods Association (IDFA), the U.S. Dairy Export Council (USDEC), the National Milk Producers Federation, and The National Association of State Departments of Agriculture (NASDA). These organizations say Canada’s policies are a violation of both the North American Free Trade Act agreement and the World Trade Organization.
  • The groups believe the U.S. dairy industry has already been hampered by Canada’s exorbitant tariffs, and  that the country is breaking its trade obligations by implementing and enforcing these policies.

Dive Insight:

President-elect Donald Trump has spouted plans to get tough on Mexico and China starting on Day 1 of his administration. Numerous reports have stated that the top of his wish list is to renegotiate or outright terminate the NAFTA, which has been in place between the United States and its neighbors to the north and south since 1994.

Trump wasn’t shy about expressing his feelings about NAFTA during the campaign, blaming the agreement for causing the loss of U.S. jobs due to companies leaving for Mexico.

However, the U.S. and Canada are among each other's largest trading partners. According to the Office of the U.S. Trade Representative, Canada was the largest goods export market for the United States in 2015. It was also the second-largest supplier of goods imported into the nation in 2015.

The dairy issue between the U.S. and Canada is both multifaceted and contentious. Canada has steep tariffs for most dairy products to grow its own dairy industry. Instead, the United States and other countries had been exporting a syrupy, processed high-protein product, called diafiltered milk, that was able to get past the tariffs. Canadian food processors were showing preference for the inexpensive import. In response, Canada created a new similar class of milk with a below-market-price that its own farmers could sell to producers.

In September, U.S. dairy groups and their counterparts in Australia, Europe, New Zealand and Mexico sent a letter to their leaders asking them to initiate a dispute at the World Trade Organization.

With only a week away until he takes office, Trump has yet to name someone to head the U.S. Department of Agriculture. Food concerns don’t appear to be his main order of business. It wouldn’t be much of a surprise if he simply didn’t respond in any meaningful way to the dairy groups’ request.

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Filed Under: Manufacturing Policy