Trade War or Opportunity? Trump’s Dairy Tariff Threat Impacts Farmers on Both Sides of the Border

Trump’s tariff tantrum exposes the dairy dilemma: Can two nations with completely different systems avoid a trade war that hurts farmers on both sides?

The fat lady is warming up to sing for the North American dairy trade relationship, and her name is Donald Trump. On March 7, 2025, the U.S. President threatened to impose identical reciprocal duties on Canadian dairy products, declaring, “Canada has been taking advantage of us for years with their tariffs on lumber and dairy.” This isn’t just another Trump temper tantrum – it represents a critical moment for dairy farmers on both sides of the 49th parallel who face very different but equally challenging realities.

Canada’s supply management system has provided stability for its dairy farmers for decades, while America’s market-driven approach has created a landscape of brutal competition, consolidation, and overproduction. As international pressure mounts and CUSMA negotiations loom, both nations’ dairy sectors face a stark choice: evolve together or continue a damaging cycle of retaliation.

TARIFF THEATRICS: WHAT’S REALLY AT STAKE

“Canada must immediately drop their Anti-American Farmer Tariff of 250 percent to 390 percent on various U.S. dairy products, which has long been considered outrageous,” Trump wrote on Truth Social this March. In the Oval Office, he doubled down, claiming these tariffs “go up to 400 percent — you never hear of that.”

What Trump doesn’t mention – and most Americans don’t realize – is that these prohibitive Canadian tariffs only kick in after the U.S. has hit its negotiated tariff-free quota amounts under CUSMA. The most striking fact? According to Philippe Charlebois, spokesperson for the Canadian Dairy Commission: “To date, 100 percent of U.S. dairy imports to Canada were made free of tariff.”

“To date, 100 percent of U.S. dairy imports to Canada were made free of tariff.” — Philippe Charlebois, Canadian Dairy Commission

THE TARIFF TRUTH: BY THE NUMBERS

Sources: Global Affairs Canada Tariff Schedule, Global News reporting

THE 2026 CHESS MATCH: WHO BENEFITS?

The April 2 tariff deadline isn’t about immediate retaliation—it’s about positioning for the CUSMA review coming in 2026. For Canadian farmers, the stakes are existential—preserving a system that has maintained rural communities and stable prices. For American producers, it’s about gaining greater access to a profitable market at a time when they face massive challenges at home.

A February 2025 Texas Tech University study found that U.S. dairy exports to Canada increased by 34% ($519 million) since CUSMA implementation—significant growth but below the 43% increase initially forecast by the U.S. International Trade Commission. The difference? “Canada kept its commitment partially, not fully,” according to researchers, with quota allocations “mostly favoring its processors over U.S. exporters targeting the retail market.”

US DAIRY’S REAL CRISIS: NOT JUST ABOUT CANADA

Because of Trump’s focus on Canadian tariffs, America’s dairy farmers face much more significant problems at home. The National Farmers Union’s President, Rob Larew, recently stated: “Policymakers are focused on U.S. trade policy without solving the underlying problems in the dairy industry—corporate consolidation and continued overproduction.”

Larew points to a sobering statistic: “The number of U.S. dairy farms has plummeted by 84% since 1992, and tariffs only add to the uncertainty, making it even harder for family farmers to stay in business.”

“Policymakers are focused on U.S. trade policy without solving the underlying problems in the dairy industry—corporate consolidation and continued overproduction.” —National Farmers Union President Rob Larew.

Even Washington State dairy farmers, who would theoretically benefit from increased Canadian market access, are skeptical about the impact of Trump’s tariff threats. “I think it’s a matter of access to their market more than being concerned about how they compete in our own,” explains Dan Wood, Washington State Dairy Federation Executive Director.

SIZE MATTERS: THE SCALE DISPARITY

Sources: Canadian Dairy Commission, USDA, Dairy Farmers of Canada, Statistics Canada
*Note: US prices converted to CAD and liters for comparison purposes

This table reveals the fundamental challenge: The state of Wisconsin alone produces more milk than all of Canada. As Pascal Thériault of McGill University points out, “Thinking you will open the Canadian market to U.S. milk and it will solve the U.S. farmers’ problem in dairy doesn’t stand.”

RURAL REALITIES: DIFFERENT SYSTEMS, SHARED CONCERNS

On both sides of the border, dairy farmers worry about the future of rural communities.

For Canadian farmers like Quebec’s Markus Schnegg, nearly all domestic dairy production is consumed within Canada, meaning Trump’s tariffs would affect only a tiny fraction of the market. Their genuine concern is the potential dismantling of supply management – the system that has preserved small and medium-sized dairy operations across rural Canada.

Labor analyst Thomas Fellows paints a concerning picture for U.S. farmers: “One thing that could happen is that with fewer export opportunities, U.S. dairy farmers may face an oversupply, which could push down milk prices domestically, hurting smaller farms in particular. In the long run, however, if low prices persist, small and medium-sized dairy farms may shut down due to financial losses.”

A FOUR-POINT PLAN FOR NORTH AMERICAN DAIRY COOPERATION

Rather than a destructive tariff war, both American and Canadian farmers could benefit from a cooperative approach:

1. Gradual Market Evolution: A long-term transition (15-20 years) that gives farmers on both sides time to adapt without sudden shocks.
2. Addressing Overproduction: Collaborative policies to tackle the real crisis in U.S. dairy – chronic overproduction that devastates farm prices.
3. Value-added Focus: Joint initiatives to develop specialty products where North American dairy can compete globally against European and Oceanian producers.
4. Rural Transition Support: Programs that help dairy-dependent communities on both sides of the border build resilience through diversification.

“A prolonged tariff war with our top trading partners will continue to create uncertainty and additional costs for American dairy farmers, processors, and rural communities. We urge Canada and the United States to negotiate a resolution to these issues.” — International Dairy Foods Association.

THE BOTTOM LINE: FARMERS OVER POLITICS

The dairy industries in both countries stand at a crossroads. Trump’s April 2 tariff deadline is just the beginning of what could be years of destructive trade tension.

The hard truth is that neither blunt force tariffs nor rigid protection of the status quo will serve farmers well. As the International Dairy Foods Association stated, “A prolonged tariff war with our top trading partners will continue to create uncertainty and additional costs for American dairy farmers, processors, and our rural communities.”

The absolute priority shouldn’t be scoring political points but creating dairy systems on both sides of the border that ensure family farmers can thrive in rural communities while adapting to 21st-century market realities. The question isn’t whether Canada’s system or America’s approach is superior – it’s how we can learn from each other to create something better for farmers in both nations.

KEY TAKEAWAYS

• Scale disparity is fundamental: Wisconsin alone produces more milk than all of Canada combined, meaning Canadian market access can’t solve America’s overproduction crisis
• Both systems have failed farmers differently: Canadian supply management creates millionaire farmers but locks out new entrants, while America’s free market approach has eliminated 84% of dairy farms since 1992
• Political rhetoric masks economic reality: Trump’s tariff threats focus on high over-quota tariffs that have never actually been paid, as U.S. exports haven’t exceeded duty-free quotas
• Rural communities are the real stakeholders: Dairy farmers in both countries share concerns about preserving rural economies despite different regulatory approaches
• The path forward requires cooperation: A gradual 15-20 year transition with policies addressing overproduction, value-added product development, and rural support would benefit farmers on both sides more than tariff wars.

EXECUTIVE SUMMARY: As Trump threatens 250% retaliatory tariffs on Canadian dairy imports, farmers on both sides of the border face a pivotal moment in North American dairy trade relations. While Canada’s supply management system has created stability at the cost of innovation, America’s market-driven approach has produced scale but devastating overproduction that crushes prices. The article reveals that despite Trump’s claims, 100% of U.S. dairy imports to Canada currently enter tariff-free under negotiated quotas, with exports to Canada increasing 34% since CUSMA implementation. Neither system is working perfectly for farmers, and the upcoming 2026 CUSMA review presents an opportunity to develop collaborative solutions that preserve rural communities while addressing chronic market failures rather than engaging in destructive tariff wars.

Learn more:

• TRUMP’S 250% DAIRY TARIFF THREAT: What’s Really at Stake for Your Farm – With President Trump threatening 250% retaliatory tariffs starting April 2, producers on both sides face significant market disruptions that could permanently alter North American dairy trade patterns.
• DAIRY TARIFF TSUNAMI: Kerrygold Stockpiles as Trump’s Trade War Threatens Your Milk Check – Kerrygold’s emergency stockpiling reveals what Trump’s tariffs mean for your milk check as dairy’s perfect storm is brewing. Find out if your operation is prepared for the coming market volatility.
• Waste Not, Want Not: The Untold Story of Canada’s Dairy Surplus – Why do Canada’s dairy farms waste 7% of their milk? Is it time to revamp supply management? Dive into the impact and explore solutions for Canada’s controversial dairy system.

Join the Revolution!

Join over 30,000 successful dairy professionals who rely on Bullvine Daily for their competitive edge. Delivered directly to your inbox each week, our exclusive industry insights help you make smarter decisions while saving precious hours every week. Never miss critical updates on milk production trends, breakthrough technologies, and profit-boosting strategies that top producers are already implementing. Subscribe now to transform your dairy operation’s efficiency and profitability—your future success is just one click away.