What Trump gets wrong about Canada-U.S. dairy trade
President Donald Trump once again criticized Canada on Wednesday for what he alleges are excessive tariffs on dairy products. This latest attack comes just days after he misrepresented the Canada-U.S.-Mexico Agreement (CUSMA), omitting key information while claiming that Canada charges over 200% tariffs on dairy products.
The issue of dairy trade has been a contentious one during the renegotiation of the North American Free Trade Agreement (NAFTA) in 2018. The Trump administration pushed for Canada to eliminate its supply management system, which guarantees stable prices for farmers by controlling imports. American dairy farmers argued that Canada’s allocation of tariff-free dairy import permits denied them full access to the Canadian market as promised in CUSMA.
Canada’s supply management system allows dairy, poultry, and egg sectors to limit their product supply to meet Canadian demand. Under CUSMA and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Canadian dairy processors have control over market access. Both the U.S. and New Zealand have challenged Canada’s supply management system through trade dispute mechanisms.
Despite Trump’s claims, Canada has consistently been one of the top importers of U.S. agricultural products. In 2023, Canada imported $28.2 billion worth of agricultural products from the U.S., making it a significant trading partner. The U.S. Department of Agriculture reported that almost all agricultural products traded between the U.S. and Canada are tariff-free.
Contrary to Trump’s assertions, Canadian dairy tariffs have not increased during the Biden administration. High Canadian tariffs only apply when agreed tariff-rate quotas are exceeded, and the U.S. has not come close to reaching these limits. The International Dairy Foods Association also noted concerns about rising costs due to the ongoing trade war with top U.S. trading partners.
Under CUSMA, the U.S. gained increased market access in Canada for dairy products, including fluid milk, cheese, butter, and cream. Canada agreed not to apply tariffs on specific amounts of U.S. dairy imports per year and eliminated two milk price classes. Additionally, Canada committed to measures to limit surplus skim milk production’s impact on external markets.
In conclusion, while President Trump continues to criticize Canada’s dairy trade practices, the reality of the situation is more nuanced. Canada’s supply management system and CUSMA agreements have specific provisions that govern dairy trade between the two countries. It is essential to understand these nuances to have a more accurate perspective on the issue.
