WESTERN PRODUCER — Trade data shows that the United States is selling more dairy products to Canada.
In the last few years, American exports of cheese, butter, whey and other dairy products to Canada have climbed by 67 percent — going from C$525 million in 2021 to $877 million in 2024, using data from Agriculture Canada.
It’s a big win for U.S. dairy farmers, but that’s not the story being told by president Donald Trump.
“Canada must immediately drop their Anti-American Farmer Tariff of 250 per cent to 390 per cent on various U.S. dairy products, which has long been considered outrageous,” he said on Truth Social in early March.
Trump is exploiting only part of the story on dairy trade between the U.S. and Canada because he’s ignoring the export data.
Unfortunately, the tariffs are very large and are something that is easily distorted, says an agricultural economist from Cornell University.
“The thing about the (Canadian) dairy tariffs, once you get (above) the TRQs (import quotas), is they’re really big numbers,” said Chris Wolf from his office in Ithaca, N.Y.
“I would guess that’s why this administration has latched on to those (tariffs), because they seem outrageous and most people (ordinary Americans) don’t know what’s going on.”
Trump’s numbers aren’t exactly right, but they’re in the ballpark.
In February, Wolf and Aleks Schaefer, an economist from Oklahoma State University, published a paper in Food Policy about the dairy trade between the U.S. and Canada.
They determined that the Canada-U.S.-Mexico Agreement is working for American dairy farmers. It provides Americans access, under a tariff rate quota, to 3.6 per cent of Canada’s dairy market.
The quota is functioning as intended, which is why the U.S. is now selling 60 percent more butter, cheese and other products into Canada.
However, there are massive duties on American dairy if volumes exceed the quota.
However, the tariffs are hypothetical because U.S. export volumes to Canada are below the TRQ.
“In practice, these tariffs are not actually paid by anyone,” Al Mussell, an agricultural economist from Ontario, told CNN recently.
But while the optics of a 298 per cent tariff can be easily exploited by Trump and others, including U.S. dairy exporters, Wolf said they’re also necessary for Canada’s dairy industry.
America’s dairy farms are larger and more efficient, so the cost of producing milk is lower, said Wolf, who grew up on a farm in Wisconsin.
“You (Canada) have to have the trade protections.… You can’t maintain an internal price that’s 1.5 to two times (higher )… what the U.S. farm milk price is, without preventing trade,” he said, adding that American dairy farms have huge herds compared to Canada.
“In the United States today … 70 per cent of the milk production comes from herds that have a 1,000 or more cows.”
Meanwhile, dairy farms with less than 100 cows are still commonplace in Canada.
“For Canadian dairy farms, the average is 96 milking cows,” says the Dairy Farmers of Canada website.
“Eastern Canada tends to have an average number that is lower (average of 75 to 95 cows per farm in Quebec and Ontario).”
Wolf isn’t pro or con supply management. From his vantage point in New York, Canadians should decide if they want supply management or not.
However, when he looks at dairy production as an economist, it’s obvious that an 80 cow dairy farm in Ontario is less efficient than a 2,000 cow farm in Minnesota.
When Wolf talks to U.S. farmers about Canadian dairy, he warns them about the downside of completely open trade with Canada.
If supply management went away, Canada could become a major player in the dairy trade.
“If you were to liberalize the Canadian dairy industry … that stretch of Ontario that goes from Michigan to New York is some of the best land anywhere for milking cows,” he said.
“Canada could produce a lot more milk, and Canada could be a competitor (to the U.S.)”
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