Trump tariffs hit Canada’s dairy farmers as US sales stall | Trade War

Abbotsford, British Columbia – Each second day, 28,000 litres of uncooked milk depart Casey Pruim’s farm in Abbotsford in western Canada, coming into a distribution system constructed on the belief that the milk and the merchandise constituted of it is going to have someplace to go.

Whereas most is consumed in Canada, some had been offered throughout the border to america.

These gross sales have largely come to a standstill since US President Donald Trump’s 50 percent tariff on $20bn in Canadian items, together with dairy merchandise, got here into impact on August 22.

Pruim, who can be chair of the British Columbia Dairy Affiliation representing about 400 dairy farmers throughout the province, advised Al Jazeera that Canadian farmers don’t individually determine which merchandise are exported.

As an alternative, producers similar to Pruim –  whose farm has 330 cows milked 3 times a day  –  promote into the provincial milk-marketing system, which distributes milk to processors in line with demand, together with for merchandise exported to the US.

If a processor loses US demand, it might require much less milk, with the influence then unfold throughout the provincial pool.

Dylan Kruger, director of public affairs at BC Dairy, advised Al Jazeera “there may be nonetheless appreciable uncertainty across the influence of the US tariffs”.

He stated it was too early to know the way the trade can be impacted or whether or not milk not offered to the US could possibly be offered elsewhere, mitigating monetary losses.

However the tariffs and wider commerce tensions have already launched uncertainty and instability for companies.

“If the processor who’s exporting a few of his product to america can not promote into that market as a result of he’s now priced out of the market with a 50 % tariff, that’s how it might influence the dairy farm,” Pruim stated.

Pruim stated if processor demand is squeezed, farmers can be compelled to dump the milk. Within the worst-case situation, the herd needs to be reduce.

“Cows aren’t like a faucet; you possibly can’t simply flip them on or off,” he stated.

His warning captures dairy’s explicit vulnerability in a tariff warfare: Milk is very perishable, collected on a decent schedule and depending on processors whose demand can change a lot sooner than farmers can modify manufacturing.

“These tariffs are utterly unwarranted,” David Wiens, president of the Dairy Farmers of Canada, advised Canada’s CBC Information, including that they’d have an effect on “the provision chain, not solely in Canada however within the US as nicely”.

Provide-management system

Dairy commerce between Canada and the US has largely operated underneath a free commerce settlement between the US, Mexico and Canada, often known as CUSMA in Canada.

Canada manages the provision of dairy, poultry and eggs by means of a nationwide agricultural coverage often known as provide administration. The system makes use of manufacturing quotas and import controls, together with tariffs, to supply farmers with extra secure and predictable costs whereas sustaining home provide.

Critics describe the system as protectionist and as a government-backed cartel.

Washington argues that Canada’s supply-management system restricts US dairy exports. Trump posted on Reality Social that “Canada had been ripping off america of America for years” and accused it of imposing “ridiculously excessive tariffs” that made life inconceivable for US farmers.

Canadian producers reject that argument, saying the present commerce settlement already offers US imports substantial tariff-free entry that’s not totally utilised.

Canada’s dairy commerce deficit with the US has grown considerably since CUSMA got here into pressure on July 1, 2020, in line with the Dairy Processors Affiliation of Canada.

In 2020, Canada exported 241.3 million Canadian {dollars} ($173m) in dairy merchandise to the US and imported 647.4 million Canadian {dollars} ($462.7m) price of dairy and dairy merchandise. In 2025, Canadian dairy exports had risen to 308.7 million Canadian {dollars} ($220.7m) whereas dairy imports from the US had greater than doubled to 1.355 billion Canadian {dollars} ($968.5m), accounting for 13.8 % of whole worth of US dairy exports, in line with the affiliation.

Bryan Yu, chief economist at Central 1 credit score union, stated the speedy shock of shedding a significant market could possibly be tough for Canadian producers to soak up as a result of substitute consumers can’t be discovered shortly.

“There may be going to be ache within the close to time period for lots of our producers,” Yu advised Al Jazeera.

“You actually can’t shortly modify to a 50 % tariff, as a result of it’s uncharted waters for lots of industries … and finally it shuts [Canadian producers] out, as a result of plenty of them don’t have the margins that they’ll play with,” he stated.

Yu stated Canadian shoppers may take up among the extra provide whereas exporters seek for new markets and higher-value merchandise, however neither adjustment is instantaneous.

“There are international markets as nicely, particularly if you speak about chilled, chilled beef, chilled merchandise and actually it’s a query of whether or not … different varieties of markets that could possibly be accessible.”

Canada has additionally imposed retaliatory tariffs, which got here into impact on September 8 and canopy $20bn price of US merchandise.

Dairy merchandise are among the many focused items. The checklist features a 50 % tariff on milk, cream and whey merchandise and a 25 % tariff on many cheeses imported from the US.

Canadian Prime Minister Mark Carney has framed Ottawa’s response as each retaliation and an try and construct higher financial resilience.

Saying the collapse of the most recent negotiations, he stated Canada would match Washington’s new tariffs “greenback for greenback” to guard employees, farmers, households and companies.

However retaliatory measures carry dangers of their very own.

“Canada’s new retaliatory tariffs will assist some industries however damage most and weaken financial development throughout the nation by elevating prices for producers and shoppers,” Oxford Economics stated in a report.

For now, geography stays necessary for perishable items like dairy merchandise that after moved shortly throughout the US border and can’t be redirected in a single day to a distant market with out new consumers, logistics and regulatory approvals.

Ottawa’s Commerce Commissioner Service is advising affected firms to verify their CUSMA compliance, discover accessible aid and phone commerce commissioners about potential new markets.

Yu predicted that the US and Canada may attain a tariff deal within the following months however stated the interim interval may convey “larger costs, weaker financial exercise and deeper distrust”.

For Pruim, the uncertainty is as destabilising because the tariff risk itself.

“I feel, like [for] any Canadian, it’s disappointing to have these commerce talks collapse once more and simply the uncertainty round it.”