Understanding Canadian Tariffs on U.S. Dairy Products- Impacts and Implications

What are the Canadian tariffs on US dairy products?

The relationship between the United States and Canada has been a complex one, especially when it comes to trade. One of the most contentious issues in this relationship has been the Canadian tariffs on US dairy products. These tariffs have been a source of frustration for American dairy farmers, who argue that they are unfair and detrimental to their businesses. In this article, we will explore the Canadian tariffs on US dairy products, their impact, and the ongoing negotiations to resolve this trade dispute.

The Canadian tariffs on US dairy products are part of a broader system known as supply management. Supply management is a system that regulates the supply of dairy products in Canada to ensure stable prices and quality for consumers. Under this system, the government sets production quotas and import tariffs to control the market. The tariffs on US dairy products are designed to protect Canadian dairy farmers from foreign competition and to maintain the stability of the domestic market.

The tariffs on US dairy products have been a point of contention for many years. In 2018, the US and Canada reached a new trade agreement, the United States-Mexico-Canada Agreement (USMCA), which aimed to resolve some of the trade disputes between the two countries. However, the issue of Canadian dairy tariffs remained unresolved, leading to significant tensions between the two nations.

The Canadian tariffs on US dairy products are quite high. For example, the tariff on cheddar cheese is 26.5%, and the tariff on skim milk powder is 29.9%. These tariffs make it difficult for American dairy farmers to compete with their Canadian counterparts in the Canadian market. As a result, American dairy farmers have been hit hard by the tariffs, with many businesses forced to shut down or reduce their operations.

The impact of the Canadian tariffs on US dairy products has been significant. In 2018, the tariffs cost American dairy farmers an estimated $460 million. This has led to job losses in the dairy industry and has had a negative impact on the rural economies in the United States.

Efforts to resolve the Canadian tariffs on US dairy products have been ongoing. The US has been pushing for changes to the supply management system, arguing that it is unfair and discriminatory. However, Canada has been resistant to making significant changes to the system, as it is a cornerstone of the country’s dairy industry.

In recent years, there have been some positive developments. In 2020, the US and Canada reached a bilateral agreement that provided American dairy farmers with increased access to the Canadian market. Under this agreement, American dairy farmers were able to export more dairy products to Canada, which helped to mitigate some of the negative impacts of the tariffs.

Despite these efforts, the issue of Canadian tariffs on US dairy products remains unresolved. The US continues to push for significant changes to the supply management system, while Canada remains steadfast in its defense of the system. The future of the US-Canada dairy trade relationship remains uncertain, and the resolution of this issue is likely to have a significant impact on both countries’ dairy industries.