Canadian dairy farmers are facing significant operational challenges following the implementation of a 50 percent tariff on Canadian goods exported to the United States. The tariffs, which took effect on August 22, apply to approximately 20 billion dollars in Canadian products, including dairy.
Casey Pruim, a dairy farmer in Abbotsford, British Columbia, and chair of the British Columbia Dairy Association, stated that the tariffs have disrupted the distribution system. Because milk is a highly perishable commodity that requires consistent processing, farmers cannot easily adjust production levels or redirect supply when export demand from the United States stalls. Pruim noted that if processors lose access to the US market due to the tariff, the resulting decrease in demand could force farmers to dump milk or reduce herd sizes.
Dylan Kruger, director of public affairs at BC Dairy, indicated that there is considerable uncertainty regarding the long-term impact of these measures. While some industry representatives are exploring alternative markets, experts suggest that finding new buyers for perishable dairy products is not an immediate process.
The trade dispute stems from long-standing tensions regarding Canada’s supply-management system, which utilizes production quotas and import controls. US officials have criticized the system as protectionist, while Canadian producers argue that the existing Canada-United States-Mexico Agreement (CUSMA) already provides US exporters with significant tariff-free access. Data from the Dairy Processors Association of Canada shows that Canada’s dairy trade deficit with the US has increased since 2020.
In response to the US tariffs, the Canadian government implemented retaliatory tariffs on 20 billion dollars worth of US goods, effective September 8. These measures include a 50 percent tariff on US milk, cream, and whey products, and a 25 percent tariff on various cheeses. Prime Minister Mark Carney stated that Canada intends to match US tariffs to protect domestic industries.
Economists have warned that the ongoing trade tensions may lead to higher prices and economic instability. Bryan Yu, chief economist at Central 1 credit union, noted that while the two nations may eventually reach a new trade agreement, the interim period presents significant risks for producers who lack the margins to absorb sudden market shifts.
Article source: www.aljazeera.com | Image credit: www.aljazeera.com