Send this page to someone via email President Donald Trump arrived in Quebec for the G7 Summit on Friday morning, and before departing from Washington, D.C., took the time to fire fresh volleys at the Canadian system of supply management. The system manages the supply of dairy, egg and poultry products by imposing steep tariffs on imports of those goods in order to prop up domestic industries that could face foreign competition if the protections on them were to be dropped. READ MORE: U.S. asks Canada to end dairy, poultry trade barriers, even as it puts up its own It is not the first time Trump has attacked the system, which has been criticized even by some in Canada as protectionist and a source of high prices for consumers on things like dairy, relative to what consumers in other countries pay for their domestic dairy products. Story continues below advertisement But his tweets on Thursday and Friday included a threat of further tariffs that could be imposed on Canadian goods imported by the United States. Why isn’t the European Union and Canada informing the public that for years they have used massive Trade Tariffs and non-monetary Trade Barriers against the U.S. Totally unfair to our farmers, workers & companies. Take down your tariffs & barriers or we will more than match you! — Donald J. Trump (@realDonaldTrump) June 8, 2018 Canada charges the U.S. a 270% tariff on Dairy Products! They didn’t tell you that, did they? Not fair to our farmers! — Donald J. Trump (@realDonaldTrump) June 8, 2018 Supply management has been a target on Trump’s official radar since early 2017, when he railed against the “unfair” system and its impact on Wisconsin dairy farmers who cannot export their products to the Canadian market without facing steep tariffs of up to 300 per cent. READ MORE: Trudeau, Macron to push Donald Trump on tariffs at G7 summit Those translate into a higher cost for consumers to buy those products in the Canadian market, and also limit how much can actually be brought into the country within a particular time frame. The challenges essentially mean that there are more costs and barriers than benefits for non-Canadian producers. WATCH BELOW: Canada is ‘not a good neighbour’ when it comes to lumber, dairy; Trump administration 1:07 Canada is ‘not a good neighbour’ when it comes to lumber, dairy; Trump administration Canada is ‘not a good neighbour’ when it comes to lumber, dairy; Trump administration – Apr 25, 2017 In October 2017, Trump demanded during NAFTA talks that supply management on dairy, eggs and poultry be ended within the next 10 years. Story continues below advertisement Trudeau refused, and has continued to do so. READ MORE: Dairy 101: The Canada-U.S. milk spat explained That, he is now arguing, is why Trump is attacking the practice publicly ahead of a major international summit. “There’s a reason why Donald Trump continues to write tweets on dairy products and Canada — it’s because I’ve told him many times: ‘No, he won’t touch, we won’t touch our supply management system,'” Trudeau said during a press conference on Thursday. Months of negotiations on NAFTA appear to have stalled in recent weeks. WATCH BELOW: Trudeau and tariffs: What will he say to President Trump? 5:54 Trudeau and tariffs: What will he say to President Trump? Trudeau and tariffs: What will he say to President Trump? – Jun 7, 2018 Earlier this year, Mexico and the United States were both facing timeline pressures to get a deal done and handed off to their respective legislatures ahead of the Mexican general election on July 1 and the American mid-term elections this fall. Story continues below advertisement However, Mexico’s leading presidential candidate said at the end of April that he would respect any agreements reached on the deal if elected. The threat that a new government might reopen chapters of the deal, which had already been agreed upon, was one of the pressures adding to the race to get a deal done quickly. READ MORE: Leading Mexican Presidential Candidate Would Respect Nafta Deal But in May, Mexico’s economic minister said there was only a 40 per cent chance of reaching a deal before July 1. That means the majority of the timeline pressure is now on the Americans, and it may explain at least part of the reason for Trump’s recently erratic behaviour on the file. READ MORE: Canada set to resist U.S. dairy pricing proposal in NAFTA: reports On May 31, he imposed harsh new tariffs of 25 per cent and 10 per cent on Canadian steel and aluminum, respectively, as well as imports from Mexico and the European Union. That came after he had twice extended temporary exemptions from the tariffs to the countries. WATCH BELOW: Quebec City prepares for G7 protests as Trudeau readies for trade tariff clash with Trump 1:15 Quebec City prepares for G7 protests as Trudeau readies for trade tariff clash with Trump Quebec City prepares for G7 protests as Trudeau readies for trade tariff clash with Trump – Jun 7, 2018 The tariffs had originally been announced in March and Trump quickly moved to link them with NAFTA talks, suggesting Canada and Mexico could secure permanent exemptions by capitulating to his demands. Story continues below advertisement Negotiations, however, have remained prickly with outstanding disagreements on a number of key files, including agricultural barriers, auto imports and the issue of whether to include a five-year sunset clause in the deal. There were reports that Trump had nixed a deal reached by his team earlier in the month and abruptly shifted his priorities on what to secure from the deal. WATCH BELOW: Trudeau calls Trump tariffs ‘insulting and unacceptable’ 1:07 Trudeau calls Trump tariffs ‘insulting and unacceptable’ Trudeau calls Trump tariffs ‘insulting and unacceptable’ – Jun 3, 2018 On May 31, he announced the threatened steel tariffs would go into effect and mused about whether to impose tariffs on auto imports as well. Trudeau, who has been both praised and criticized for his lack of criticism of Trump since the latter took office, blasted the measures as “absurd” and “unacceptable,” casting them as a blow to Canada-U.S. relations. Story continues below advertisement READ MORE: Here are 4 potential areas for conflict (other than steel tariffs) at the G7 Summit The Canadian government announced it will impose retaliatory tariffs worth $16.6 billion on roughly 134 American products, designed to hurt manufacturers in areas where Trump received strong support in the last election. Trudeau also told reporters he had offered to personally go down to Washington in May to hammer out the final details of a NAFTA deal virtually completed. READ MORE: Tariffs on steel and aluminum might cost the U.S. 400,000 jobs — and Canada could get hit too Trump, he said, handed him off to U.S. vice-president Mike Pence, who said any meeting would include a precondition: a sunset clause. That is one of the major no-go issues for Canada in NAFTA talks, and Trudeau refused. Trump is expected to face a barrage of criticism at the G7 on his recent decision to launch a trade war and impose tariffs on both Canada and the European Union, both historical allies with the U.S. It is not clear how the notoriously criticism-averse president will respond. But if the disagreements over tariffs and supply management so far are any indication, there could be more Twitter attacks yet to come. Advertisement<doc-sep>In the midst of what appears to be a full-blown trade war between Canada and the US over steel and aluminum, and with Donald Trump taking his first steps on Canadian soil for the G7 summit, a familiar bugbear reappeared to haunt the negotiations. Canada charges the U.S. a 270% tariff on Dairy Products! They didn’t tell you that, did they? Not fair to our farmers! — Donald J. Trump (@realDonaldTrump) June 8, 2018 Whatever understanding Canada and the US may (or may not) have come to on their high-value trade in lumber or auto parts, they remain implacably opposed on the comparatively minor matter of milk. 01:12 Justin Trudeau's G7 comments that angered Donald Trump – video Trump has attacked Canada’s protected dairy industry before, calling it a “disgrace” and blaming it for widespread hardship among US farmers. Although the entire trade in dairy products between the two countries is worth less than US$600m, ideological division has sharpened the ongoing dispute. His negotiators have demanded the dismantlement of Canada’s openly dirigiste system of supply management in agriculture – a complicated nexus of production quotas and import tariffs designed to ensure Canadian dairy, egg and poultry farmers receive fair prices for their products. In what free-trading Americans like to call Soviet Canuckistan, the dairy industry is thriving like never before But the Canadians are no less determined to retain one of the last vestiges of their otherwise-abandoned collectivist traditions. Canadian cows are sacred, and the farmers who care for them enjoy outsized influence in national politics. Expert observers have said that Justin Trudeau’s government would abandon the treaty altogether before sacrificing supply management. “It’s just too sensitive for the Canadians,” Kevin Carmichael, a senior fellow at the Centre for International Governance Innovation in Waterloo, recently told CNBC news. Even so, the Trudeau government recently alarmed Canadian farmers by signalling a willingness to give on the issue in the face of insistent US demands. The dispute has acquired new urgency as the US dairy industry continues to suffer from a deep crisis of persistent overproduction, with farmers sinking into insolvency as farm-gate milk prices stick stubbornly below the cost of production. Last year, US farmers dumped almost 100m gallons of surplus milk. Recently, a surge in dairy-farmer suicides has caused national alarm, drawing attention to what the New York Times called “the widespread hopelessness afflicting the industry”. Representing a state suffering especially hard from farm failures and suicides, the US Senate minority leader, Chuck Schumer, recently echoed his Republican president in blaming Canada for the debacle. “Canada, when it comes to dairy, acts like China when it comes to trade,” Schumer told hard-pressed farmers in upstate New York. “They’re unfair. They put up barriers. They treat us bad.” Meanwhile, just across the St Lawrence river in what free-trading Americans like to call Soviet Canuckistan, the dairy industry is thriving like never before – and like none other in the developed world. Family farms milking an average of 80 cows each have prospered under a heavily regulated system that supports prices at sustainable levels by restricting domestic overproduction and keeping imports at bay. In 2016, Canadian farmers received an average price of C$0.79 a litre for milk, compared with C$0.49 on average for US farmers. The result is that dairying remains a key economic support of traditional rural life throughout central Canada. As critics of the system like to point out, hoping to inspire resentment among consumers annoyed by the price of milk, Canadian dairy farmers enjoy incomes 60% above average in the country. But to supporters, the uniquely prosperous, protected Canadian dairy industry stands as a model alternative to the increasingly disruptive and unpopular dynamic of unrestricted free trade in all things. Supply management enjoys strong government support in no small part because the policy obviates the need to subsidize farmers directly in the manner of the US and the EU – the two greatest culprits behind the current world dairy glut. “The system works so incredibly well,” said Bruce Muirhead, associate vice-president and professor of history at the University of Waterloo. “And the big thing about supply management is that it doesn’t cost the government a cent. Consumers pay the full cost of production.” Domestic critics have called supply management a grotesque distortion of free-market principles, complaining that the comparatively high price of Canadian milk sacrifices the interests of consumers in favour of producers and victimizes the poor. But no consumer or social policy group has taken up the cause, and all six parties currently represented in the House of Commons unanimously support supply management. As do Canadian consumers: an Ipsos poll this year by the Dairy Farmers of Canada reported that 75% of Canadians support even greater government efforts to defend the industry in the face of current US demands. As the trade minister, Chrystia Freeland, has pointed out, trade data flatly contradicts the claim that Canadian supply management is ravaging US dairyland – either because it unfairly restricts imports or because it dumps a subsidized surplus in US markets. In 2016, Canada imported dairy products from the US worth five times more than the small amount it exported there. “I would call that a pretty good deal,” she told the House of Commons. Canadian farmers point out that despite the tariffs that protect them, imports make up 10% of the country’s dairy consumption. By contrast, the US restricts dairy imports to 3% of domestic consumption. “That just screams hypocrisy to me,” Muirhead said. “I don’t understand how they can get away with these positions.” As a recent visitor to Wisconsin, “America’s Dairyland”, where low prices are forcing the closure of hundreds of dairy farms a year, Muirhead said he encountered no resentment against Canada among local farmers. “The president of the Wisconsin Farmers Union told me that what they really wanted was a supply-managed system like ours,” he said. Dairy deregulation has spread hardship wherever it has been implemented, Muirhead added. “Every single objective indicator says that in the case of dairy you cannot have a system that operates without production controls,” he said. “If you try, you’re basically consigning your farmers to a life of penury – or worse.” Canada successfully defended the system in its first free trade agreement with the US, and several subsequent ones. But with the full wrath of Trump now focused squarely on the country’s protected farmers, this stubborn remnant of Canadian exceptionalism has never been more fragile.<doc-sep>President Trump’s weekend rant against Canada’s dairy policies has deep roots in electoral politics — namely, those of Wisconsin, a state that responded to Trump’s “America First” trade rhetoric and helped him win the White House. It was there, in April 2017, at a Snap-on tools factory, that Trump chose to unveil his “Buy American, Hire American” executive order aimed at giving domestic manufacturers preference in government contracts. And that was when Trump first blasted “some very unfair things” in Canada’s dairy trade regime. Trump, who has been prone to a bit of magnification, in this case actually understated the Canadian tariff during last week’s Group of 7 summit in Quebec — it’s as high as 313.5% for butterfat, compared with the “270% on dairy” the president cited. From there, though, the situation gets a lot more complicated. Advertisement Despite any tariffs, Canada remains the second-biggest foreign market for U.S. dairy products — it bought $792 million in U.S. cheese, milk protein isolates, butter, whey and other milk derivatives last year, according to the U.S. Dairy Export Council. Canada exported much less — $149 million — to the U.S., according to the Canadian government. (There is ample dispute over how much of that southward traffic consists of dairy products made from U.S. ingredients.) For those keeping score — and that would certainly include Canadian dairy farmers — that’s roughly a 5:1 trade imbalance in favor of the U.S. The escalating statistical war may have consumers’ heads spinning fast enough to churn butter. Nearly everyone knows Canada is a partner in the North American Free Trade Agreement. So, why isn’t dairy trade “free?” It turns out some exports are freer than others. “Let’s not pretend we’re in a global free market when it comes to agriculture,” Canadian Prime Minister Justin Trudeau told Bloomberg shortly after Trump’s Wisconsin remarks. For instance, Canada has complained regularly that U.S. subsidies on corn and other crops give U.S. growers an unfair advantage. NAFTA’s “free” trade elements have rolled out slowly over decades, and the pact never fully opened Canada’s dairy market. Ottawa was allowed to keep its tight control of dairy supplies and prices, a program it calls “supply management.” Canada can dun U.S. imports severely once they exceed about 10% of the market. Advertisement U.S. farmers have gained a lot more from trade with Mexico, whose imports of U.S. dairy products skyrocketed under the agreement, to $1.3 billion. Canadian dairy farmers on Monday goaded their U.S. counterparts for producing vastly more than the market demands. That has swelled U.S. cheese and butter reserves to hundreds of millions of pounds. Wisconsin alone produces more dairy products than all of Canada, noted Pierre Lampron, president of Dairy Farmers of Canada. “Clearly, the Canadian market is too small to make a dent in U.S. overproduction,” Lampron said. California exported $1.4 billion in dairy products in 2016, about 12% of which went to Canada, according to the state Department of Food and Agriculture. Advertisement U.S. dairy exports, however, have largely plateaued at about 15% of production. The industry has launched an ambitious plan to increase exports to 20% by 2020. The effort is being pushed by the export council, headed by President Obama’s former agricultural secretary, Tom Vilsack, an Iowa native. While Vilsack glowingly referred to Mexicans as “our brethren” in dairy trade, he said the U.S.-Canadian relationship “can best be described as heavily strained,” during congressional testimony last year. Canada’s dairy lobby spends an estimated $80 million to $120 million to keep the relationship just so, making it a “political third rail,” according to the CanadaWest Foundation, a policy think tank. Last year, Canada extended its supply management rules to cover an ultra-filtered milk powder used in cheese production, limiting U.S. imports in hopes of boosting domestic production. That move lopped millions from U.S. trade, predominantly from neighboring Wisconsin and New York, and tripled Canadian exports of the milk classification, according to the National Milk Producers Federation. Advertisement That change fueled dairy support for renegotiating NAFTA, which already had been a core tenet of Trump’s trade policy. Another was abandonment of the Trans-Pacific Partnership, a 12-nation accord that would have given the U.S. an additional, albeit thin, slice of the Canadian dairy market. Both NAFTA 2.0 and a revamped TPP, without the U.S., have drawn the ire of Canada’s dairy industry, which is centered in the eastern portion of the country where its political support is highest. Asked about retaliating to U.S. tariffs on aluminum and steel, Trudeau said in a news conference at the end of the G-7 meeting that while Canadians are known to be polite, “we will not be pushed around.” Trump responded with tweets characterizing Trudeau as “dishonest and weak,” and followed later with a tweetstorm from Singapore, where he was preparing for a summit with North Korean leader Kim Jong Un. “Sorry, we cannot let our friends, or enemies, take advantage of us on Trade anymore. We must put the American worker first!” Trump wrote. “Fair Trade is now to be called Fool Trade if it is not Reciprocal.” Advertisement geoffrey.mohan@latimes.com Follow me: @LATgeoffmohan<doc-sep>
Share this Story: 'Very twisted': Alberta dairy industry finds itself in the crosshairs of Trump's trade blast 'Very twisted': Alberta dairy industry finds itself in the crosshairs of Trump's trade blast Photo by Brennan Linsley / AP Article content Alberta dairy farmers at the centre of a developing trade war between Canada and the U.S. are calling President Donald Trump’s targeting of the Canadian industry unfair. Following a tense G7 meeting, Trump called Prime Minister Justin Trudeau “dishonest and weak” on Twitter, in reference to statements Trudeau made in a press conference regarding retaliatory tariffs on American steel and aluminum products. We apologize, but this video has failed to load. tap here to see other videos from our team. Try refreshing your browser, or 'Very twisted': Alberta dairy industry finds itself in the crosshairs of Trump's trade blast Back to video Trump stated that the initial American tariffs on Canada were in response to the U.S. paying prices 270 per cent higher on dairy than they should be because of unfair Canadian trade practices. PM Justin Trudeau of Canada acted so meek and mild during our @G7 meetings only to give a news conference after I left saying that, “US Tariffs were kind of insulting” and he “will not be pushed around.” Very dishonest & weak. Our Tariffs are in response to his of 270% on dairy! — Donald J. Trump (@realDonaldTrump) June 9, 2018 Article content “I think we need to see some truth come out of the U.S., but that doesn’t seem to hinder the president,” said Albert Kamps, a dairy farmer just outside of Lacombe. “There’s about 500 very worried dairy farmers in Alberta.” Kamps, vice-chairman of Alberta Milk, the organization representing the province’s dairy farmers, called Trump’s rhetoric “very twisted.” “We allow the first 10 per cent in with no tariffs. That changes the whole story,” said Kamps. “The U.S. only allows three per cent of their imports to come in without tariffs. We’re the big importers, a five-to-one trade imbalance with the U.S. on dairy alone.” On Sunday morning, Trump trade adviser Peter Navarro escalated tensions with Canada, saying on Fox News “there’s a special place in hell for any foreign leader that engages in bad faith diplomacy” with the president and “then tries to stab him in the back on the way out the door.” Economic advisor Larry Kudlow echoed those comments, likening Trudeau’s statements at the G7 to “a betrayal” during an interview on CNN. Canada charges the U.S. a 270% tariff on Dairy Products! They didn’t tell you that, did they? Not fair to our farmers! — Donald J. Trump (@realDonaldTrump) June 8, 2018 Article content Fair Trade is now to be called Fool Trade if it is not Reciprocal. According to a Canada release, they make almost 100 Billion Dollars in Trade with U.S. (guess they were bragging and got caught!). Minimum is 17B. Tax Dairy from us at 270%. Then Justin acts hurt when called out! — Donald J. Trump (@realDonaldTrump) June 11, 2018 Article content “This right now is probably the worse phase of Canada-U.S. relations since probably the early 1960s,” said Mount Royal University political scientist Duane Bratt. “I mean, Trump is right about the problems with supply management, but if it wasn’t supply management it’d be some other issue. Trump just likes a fight.” He said it’s disingenuous of Trump to now claim U.S. tariffs on aluminum and steel are in response to Canadian tariffs on dairy products. “He said it was for national security reasons and around NAFTA. NAFTA’s an opportunity to discuss these issues, but that’s not what he’s doing here,” said Bratt. “I don’t know how you negotiate with someone like Donald Trump.” Bratt said he believed Canadians would rally around Trudeau, something already seen in statements of support from conservatives like former Prime Minister Stephen Harper and Alberta UCP leader Jason Kenney. I’m in complete agreement with the Prime Minister’s statement. A reasonable, balanced and firm assertion that Canada will not be bullied, and that we will retaliate if the US Administration does not end its attack on our steel exports. https://t.co/4wZ9Vf3pAR — Jason Kenney (@jkenney) June 10, 2018 Article content “This isn’t policy, it’s personal,” Bratt said. “Do I think we should have supply management? Absolutely not, it’s economically distorting, it increases the price of milk and dairy products. I think Canada would be willing, listening to some of the comments of Trudeau, to discuss that.