Trade tensions between the United States and Canada are creating another potential problem for American agriculture, this time for the dairy industry.
Trade negotiations between the two countries broke down in August, followed by new U.S. tariffs on Canadian goods. Canada responded by announcing retaliatory tariffs that take effect September 8 and specifically target several sectors of the U.S. economy, including dairy.
For dairy producers, the concern is what happens when an important neighboring market becomes caught in a larger political and economic dispute.
Wisconsin Farmers Union President Darrin Von Ruden says his state provides an example of why export markets are important to the dairy industry. Wisconsin produces considerably more milk and dairy products than its population consumes, making markets outside the state and outside the country important outlets for products including cheese and butter.
While Von Ruden is speaking from the perspective of Wisconsin, the potential consequences extend beyond one state. Canada’s new counter tariffs include numerous U.S. dairy products, with some milk, cream, whey and other dairy products facing tariffs of 50 percent beginning September 8.
Von Ruden says another casualty of the dispute could be relationships farmers on both sides of the border have spent years developing.
Finding a quick resolution may also be getting more difficult.
Recent polling from Abacus Data found strong Canadian support for Prime Minister Mark Carney’s decision to suspend negotiations with the United States rather than accept the terms being offered by Washington. Abacus also found the trade dispute has become one of the biggest factors affecting support for Carney’s government.
That creates an additional challenge for American agriculture. Trade pressure is intended to create leverage at the negotiating table, but if that pressure strengthens public support in Canada for resisting U.S. demands, farmers could be left dealing with the consequences while the two governments remain at odds.
Dairy has already been a longstanding source of disagreement between the United States and Canada. American producers have criticized Canada’s supply management system and restrictions on access to its dairy market. Von Ruden says the dispute also raises a larger question about what policies are needed to provide stability for dairy farmers in the United States.
Trade disputes may be negotiated by governments, but farmers can feel the consequences long before an agreement is reached. For dairy producers, disruptions to a nearby export market could add pressure to an industry already dealing with tight margins and uncertainty.
And with Washington and Ottawa still trying to determine a path back toward negotiations, dairy farmers across the United States will be watching closely. The longer the dispute continues, the greater the possibility that agriculture becomes collateral damage in a trade fight producers themselves did not start and have little power to resolve.
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