In a recent Senate confirmation hearing, Howard Lutnick, US President Donald Trump’s nominee for Commerce Secretary, sharply criticized Canada’s treatment of American dairy farmers.
“Canada… treats our dairy farmers horribly. That’s got to end,” Lutnick declared, amidst the growing tensions between the US and Canada regarding tariffs and trade relations.
Lutnick’s assertion that Canada treats American dairy farmers “horribly” reflects longstanding dissatisfaction with Canadian dairy policies. Canada’s supply management system for dairy products controls production levels and imposes tariffs on imports exceeding specific quotas to stabilize prices and support Canadian dairy farmers.
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Under USMCA, the US gained tariff-free access to 3.6% of Canada’s dairy market, up from 3.25% under the Trans-Pacific Partnership. Additionally, Canada agreed to eliminate Class 7 pricing provisions, which had been a contentious issue.
Despite this and the increased market access, US officials contend that Canada’s remaining trade barriers continue to disadvantage American dairy producers.
“If Canada is going to rely on America for its economic growth, how about you treat our farmers, our ranchers, and our fishermen with respect?” pointed Lutnick.
In 2022, US dairy exports reached a record $9.5 billion, marking a 25% increase from the previous year and an 85% surge over the past decade. Key export destinations include Mexico, Southeast Asia, and Canada.
However, in 2023, dairy exports declined by 7% in milk solids equivalent terms, attributed to subdued global demand and heightened competition from the European Union and New Zealand.
When asked if he can “commit to the American people that prices will not go up”, Lutnick instead said that he can “commit that the economy of the United States of America will be much, much better.”
“A particular product’s price may go up, but all of them, this is not inflationary,” he explained. “The two top countries with tariffs, India and China, do have the most tariffs and no inflation. It is just a nonsense that tariffs cause inflation.”
During the hearing, Lutnick also said that if Mexico and Canada want to avoid the incoming tariffs, they should shut their respective borders to “show respect” to the US.
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