As soon as once more, U.S. President Donald Trump lambasted Canada on Wednesday — this time, for allegedly imposing exorbitant tariffs on dairy merchandise.
These claims, made throughout a White Home go to from the Irish prime minister, come lower than every week after he mischaracterized the Canada-U.S.-Mexico Settlement (CUSMA) — a deal he negotiated — making an essential omission whereas stating that Canada is charging greater than 200 per cent tariffs on dairy merchandise.
This is an summary of Canada-U.S. dairy commerce, addressing factors the president has just lately known as into query.
Why is dairy commerce contentious?
In the course of the North American Free Commerce Settlement (NAFTA) renegotiations in 2018, the Trump administration sought to have Canada eliminate its decades-old supply management system.
It’s a nationwide coverage framework meant to make sure predictable and steady costs by guaranteeing supply-managed farmers a minimal worth for his or her merchandise.
American dairy farmers argued that the best way the Canadian authorities allocates its tariff-free dairy import permits denies them full entry to the 3.5 per cent share of Canada’s market they thought they’d gained in CUSMA, the revised NAFTA.
Canada’s provide administration system depends on the control of imports and allows the dairy, poultry and egg sectors to restrict the availability of their merchandise to what Canadians are anticipated to eat.
Beneath each CUSMA and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) with Pacific Rim dairy exporters like New Zealand, Canadian dairy processors successfully management what enters their market.
Each the U.S. and New Zealand have taken aim at the supply management system via the dispute settlement processes of their respective commerce agreements.
U.S. farmers have entry to varied federal subsidy programs, such because the Dairy Margin Protection and Dairy Income Safety packages, which assist them stand up to risky markets.
When CUSMA got here into pressure on July 1, 2020, it included a brand new requirement for a overview in six years. CUSMA has a sunset clause that may finish the commerce deal after 16 years except every occasion commits to renewing it for one more time period.
How a lot dairy does Canada import from the U.S.?
Regardless of Trump downplaying how a lot of an export market Canada is for the U.S., the nation has been persistently one of many high importers of U.S. agricultural merchandise, based on the U.S. Division of Agriculture.
Final 12 months, Canada was the second-highest importer of U.S. dairy products, shopping for about $1.14 billion US, and it was the US’ high export marketplace for eggs and related products.
The federal authorities introduced a plan on Wednesday to slap tariffs on $29.8 billion price of American items to hit again in opposition to U.S. President Donald Trump after he imposed punishing tariffs on Canadian metal and aluminum early Wednesday morning.
The division stated on its web site in June 2024 that Canada represents “considered one of our most important and dependable buying and selling companions.”
The full agricultural and associated product exports to Canada from the US amounted to about $28.2 billion US in 2023.
Has Canada hiked its dairy tariffs?
Excessive Canadian tariffs solely apply if the agreed tariff-rate quotas on U.S. dairy imports beneath CUSMA are reached or exceeded.
Nonetheless, the U.S. Division of Agriculture stated in February that “almost all agricultural merchandise traded between the US and Canada” are freed from tariffs or quotas.
Not like what Trump is claiming, Canadian tariffs did not bounce throughout the Biden administration, because the U.S. is way from reaching the zero-tariff restrict for dairy merchandise.
As an example, in 2025, Canada would apply a 298.5 per cent levy on above-maximum butter and 245.5 per cent for above-maximum cheddar cheese. These have been the identical charges utilized in 2017 and 2020.
Even the Worldwide Dairy Meals Affiliation (IDFA) printed a statement on March 7, which says the U.S. “has by no means gotten near exceeding” the quotas. It additionally expressed considerations about rising prices as a result of ongoing commerce conflict with the U.S.’s “high buying and selling companions.”
What did the U.S. acquire from Canada in dairy commerce?
Beneath CUSMA, Canada gives new tariff price quotas exclusive to the US.
The U.S. gained extra market entry in Canada for its merchandise, with Canada agreeing to not apply tariffs on sure quantities of U.S. dairy product imports per 12 months comparable to:
- Fluid milk.
- Cheese.
- Cream.
- Skim milk powder.
- Butter and cream powder.
- Concentrated and condensed milk.
- Yogurt and buttermilk.
- Powdered buttermilk.
- Merchandise of pure milk constituents.
- Ice cream and ice cream mixes.
- Different dairy.
- Whey.
Canada additionally eliminated two milk worth courses and ensures that the worth of skim milk solids used to supply non-fat dry milk, milk protein concentrates and toddler components might be set no decrease than a stage primarily based on the US worth for non-fat dry milk.
Canada additionally dedicated to undertake measures designed to restrict the affect of any surplus skim milk manufacturing on exterior markets.
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