Trump correct about our tariffs
WASHINGTON — U.S. President Donald Trump has a point when he lambastes Canada for protecting its dairy farmers with hefty tariffs.
But the United States is hardly innocent when it comes to farm protectionism. And the very real difficulties that U.S. dairy farmers face can’t all be blamed on America’s neighbour to the north. And in fact, despite Canada’s tariff, the U.S. runs a surplus in dairy trade with Canada.
A look at Trump’s complaints and the complicated reality behind them:
TRUMP: “Canada charges the U.S. a 270% tariff on Dairy Products! They didn’t tell you that, did they? Not fair to our farmers!” — Trump tweeted on June 8.
THE FACTS: The president is basically right about the tariffs. And the United States has some legitimate gripes about Canadian farm policy. But the whole situation is far more complicated.
Canada has long run an elaborate “supply management” program that effectively shields its farmers from competition. Canada allows a small amount of dairy and poultry imports into the country duty-free or at very low tariffs. Anything above the cutoff is hammered: Consider 245 per cent tariffs on cheese. And 298 per cent on butter.
The World Trade Organization says Canadian dairy tariffs average nearly 249 per cent, compared with the United States’ 17 per cent.
Dairy is a highly sensitive political issue in Canada. Frenchspeaking Quebec is dairy country. Shielding farmers from competition is one way to placate the province’s separatist movement. Canada has also angered American farmers by flooding export markets with cheap skim-milk powder.
Still, Canadian trade policies have had only a “tiny impact” on America’s struggling dairy farmers, says Daniel Sumner, an agricultural economist at the University of California, Davis.
Despite Canadian barriers, in fact, the United States last year ran a $474 million trade surplus in dairy with Canada: It exported $636 million in dairy products to Canada and imported $162 million, according to the U.S. Department of Agriculture.
And dairy is barely a blip — 0.1 per cent — in U.S.-Canada trade, which amounted to $680 billion last year. As a result of the North American Free Trade Agreement, “99 per cent of the trade between Canada and the U.S. is tariff-free,” said Bruce Heyman, former U.S. ambassador to Canada. Overall, the U.S. ran a nearly $3 billion surplus in goods and services trade with Canada last year.
U.S. dairy farmers are ailing nonetheless. The price of milk is down nearly 10 per cent from a year ago and 38 per cent from four years ago. But the main cause of the depressed prices is more elementary than Canada’s labyrinth tariff schedule: Too much milk.
“We’re just too damn good at what we do,” said Gordon Speirs, who runs a 2,100-cow dairy farm in Brillion, Wisc. . Improved genetics and farm management techniques mean that cows produce far more milk than they used to.