Canada’s dairy farmers are committed to providing the highest possible quality milk for Canadians. When purchasing Canadian dairy products, consumers can rest assured that the milk in the product is free of antibiotic residue, free of artificial growth hormones, and that the farmers are committed to healthy, comfortable cows.
Canadians know their dairy products are of the highest quality. That is why 75% of Canadians believe that the government should defend the Canadian dairy industry in the context of NAFTA renegotiations.
Here are some important facts to consider in light of recent discussions on the Canada-US dairy market trade.
1. Canada Imports a Huge Amount of US Dairy
Canada’s dairy trade deficit with the US has fluctuated from year to year, grown steadily in the last ten years, reaching a ratio of 5:1 in 2016, and in 2017, it came back to the trade balance levels seen in 2014. In 2017, Canada imported a massive $470.6 million in US dairy products. In the same year, the US only imported $149.5 million worth Canadian products. This type of trade deficit would usually be characterized as ‘no small feat’ in context of the disproportionate market size of the United States compared to Canada.
2. Trump is Wrong About Tariffs on Dairy
President Trump claims that all US dairy products face a 270% tariff when entering Canada; let’s call that “Fake News”.
Imported dairy imports, including those coming from the United-States, do not pay the tariff when arrive on the Canadian market. Tariffs are only imposed after a certain level of imports has been reached. This measure, called tariff-rate quota, grants our farmers the ability to better plan their production and means Canadians waste less product.
Additional factoid: DYK not all dairy products are subject to a TRQ?
Let’s not kid ourselves: the United States uses tariff-rate quotas to limit dairy products they import too – and some of their tariffs are higher than Canada’s.
3. Canada imports More Dairy than the US
On a per-capita basis. Although Canadian dairy farmers would be more than happy to meet all of the Canadian demand for dairy, Canada imports about 10% of its market tariff free. tariff-free. This is important to note considering that the United-States imports only 3% of their market – because they impose their own heavy roadblocks on exporters. As the Agri-Food Economic Systems policy notestates: “In comparison with its market size, the US allows for much less cheese market access within its tariff rate quota. Canada allows in about double what the US does, on a relative production share basis.”
To put this into perspective, each Canadian has much greater access to imported dairy products than an American does. This is an inconvenient truth for the American Administration.
4. Canada’s Dairy Industry Supports Canadians
Perhaps the most important element to consider in the trade debate is the important economic engine that is the Canadian dairy industry. Canada’s dairy industry proudly contributes about $20 billion to the national GDP. On top of this important economic contribution, the Canadian dairy sector supports 221,000 jobs at home. These are taxpayers, consumers and, families, which rely on dairy for their livelihood and, in turn, support their communities.