Tag Archives: Trump

OMAHA (DTN) — President Donald Trump’s tirade on Twitter over the weekend aimed at Canadian Prime Minister Justin Trudeau has elevated dairy trade between the two countries to the top political issue in Canada.

Dairy was once considered a lower-rung issue in the North American Free Trade Agreement talks, but President Trump tied high Canadian dairy tariffs to his own push for steel and aluminum tariffs.

On Saturday, the president tweeted: “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!”

The president followed up with another tweet on Sunday: “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!”

Trump and leaders of the other G-7 nations, including Trudeau, have been embroiled in arguments over the White House move at the beginning of June to implement 25% tariffs on steel and 10% tariffs on aluminum. Trudeau has called the steel and aluminum tariffs “insulting.” But Trump went further, roaring on Twitter about fair trade and dairy tariffs.

The U.S. held a dairy trade surplus with Canada in 2017 that ran anywhere from $113 million to $521 million, depending on the math of different agencies and trade associations.

Canada and the U.S. both use tariff-rate quotas to allow trading partners to export a certain volume of cheese, butter fat, butter milk, dry milk, cream, yogurt, whey products and ice cream at lower tariffs. Then the tariff volumes spike once the quota limit is reached. In Canada, once those quotas are reached, tariffs can reach as high as 294% for some products. The 270% number President Trump uses comes from blended dairy powder over the tariff-rate quota, which is 3% for the U.S., according to Canada’s customs tariffs schedule. https://goo.gl/…

Following the trade rhetoric over the weekend, the leaders of the National Farmers Union and Canadian Federation of Agriculture issued a joint statement noting the two countries have more than $40 billion in annual agricultural trade between them, a dollar figure that continues to climb. And farmers in both countries need the certainty that comes from that trade, the groups stated.

“No heated rhetoric nor inflammatory remark could possibly represent the positive sentiment that American and Canadian farmers share for each other’s nation. We urge our respective officials to engage in positive discourse that protects the strong trade ties that benefit American and Canadian farmers alike.”

The National Milk Producers Federation responded to DTN regarding comments from the president and his advisers.

“We appreciate President Donald Trump’s acknowledgement that Canada has not treated our farmers fairly,” NMPF stated. “However, we do not believe that some of the language used by some White House officials was appropriate to describe this strong disagreement with Canada on trade policy. We agree that we need to express to Canada that trade needs to be a two-way street, and we are prepared to do it respectfully, but forcefully and with determination.”

Canadian dairy producers dug in. Pierre Lampron, president of Dairy Farmers of Canada, said his group and all Canadians reject the White House’s personal attacks on Trudeau. Lampron maintains the U.S. has a 5-to-1 dairy trade surplus with the U.S., and based on market studies, 10% of the Canadian dairy market is open tariff-free while only 3% of the U.S. market is open, Lampron said.

Canadian dairy farmers, who are politically influential in the country, “are concerned by the sustained attacks by President Trump with an aim to wiping out dairy farmers here at home,” Lampron said.

“The root of the U.S.’ problem is that they are producing too much milk in an oversaturated world market,” he said. “Canada already produces enough milk to fill Canadian demand. As Canada has less population than the state of California, and that Wisconsin alone produces more milk than all Canadian farms combined, clearly, the Canadian market is too small to make a dent in U.S. overproduction.”

It’s hard to get a handle on actual dairy trade between the two countries. A Bloomberg article Monday cites that the U.S. exported $227 million in dairy products to Canada last year while Canadian dairy producers exported $114 million to the U.S., according to Statistics Canada. https://goo.gl/…

The U.S. Dairy Export Council cites that Canada was the third-largest market for U.S. dairy products in 2017, buying $636 million in products, up 1% from 2017.

But the U.S. Dairy Export Council also says people cannot just rely on the numbers posted on its website. That’s because the Canadians demand most of the dairy products exported to Canada from the U.S. are required to be processed and re-exported, rather than used on the domestic market. So the real “export” volume to Canada is not actually known. https://goo.gl/…

After pointing out that the USDA export charts on the USDEC website don’t tell the whole story, Jaime Castaneda, senior vice president of trade policy for USDEC, said, “We want to have the same fair trade that 99% of agriculture has with Canada.”

Trump’s continued focus on Canadian dairy tariffs comes as overall U.S. dairy exports are surging as well. March and April were record months for U.S. dairy exports, according to the U.S. Dairy Export Council. Much of the export growth is driven by higher product exports to China, Mexico, Southeast Asia and South Korea. https://goo.gl/…

Canada’s Dairy Information Centre states Canada exported 137.1 million pounds of dairy products to the U.S. in 2017, a 32% increase from 2016, driven mainly by a spike in yogurt and whey products. Those sales were valued at $115 million in U.S. dollars, up from $86.7 million in 2016.

Comparatively, dairy trade ranging somewhere from $341 million to $751 million between the two countries still comes down to one-tenth of 1% of trade volume between the U.S. and Canada last year. U.S. exports to Canada were $341.2 billion in 2017 while Canadian exports to the U.S. were $332.8 billion.

Canada’s dairy production with 941,800 milking cows would make it the third-largest dairy state in the U.S., behind California with 1.8 million head and Wisconsin with 1.28 million milking cows. Nationally, the U.S. has about 9 million milking cows. To keep Canada’s dairy producers operating and largely profitable, Canada has a supply management system that it is increasingly determined to defend in the NAFTA talks.

The U.S. operates with programs such as the Margin Protection Program, which was revamped this spring because farmers and lawmakers determined the safety net wasn’t strong enough. Based on the latest enrollment figures, USDA expected to issue roughly $90 million in checks this week to more than 20,000 dairy farmers because of MPP prices for the months of February, March and April.

The debate over Canadian dairy and its supply management system comes as Wisconsin Gov. Scott Walker announced last week that his state is creating a new dairy task force to make recommendation that would help the viability and profitability of dairy in his state. Walker modeled the proposal after a similar task force created in Wisconsin in 1985.

“Dairy farmers are facing challenges due to an extended period of low milk prices and market uncertainty,” Walker said. “By creating this task force, industry experts can work together to create real solutions that can help our farmers, processors, and allied organizations, and to ensure that our dairy industry is not only our past, but our future.”

Meanwhile, dairy farmers in states such as Wisconsin and Michigan are actually learning more about how the Canadian supply management works and asking why the U.S. can’t look at a comparable model. Michigan Farmers Union will host meetings later this week in Michigan with Canadian dairy farmers.

Regardless whether you’re a Republican, Democrat, Libertarian or a card-carrying Mugwump, I think we can all agree that President Donald Trump is a man not afraid to change his mind. Of course, that’s not to say that everyone would characterize this unique flexibility in the same way.

What strikes some as being open-minded, hits others as being empty-headed. What speaks to some as strategic deal making, warns others of random cluelessness. What some admire as bold examples of leadership, others fear as reckless and counterproductive displays of power.

Furthermore, many members of the citizen jury flip their verdicts from morning tweet to morning tweet. Our wonderful country can often be a tough bar to manage with the head bouncer facing intractable problems on a daily basis. Reassessments can be good or bad, absolutely necessary or dangerous second-guessing.

No less a thinker than Ralph Waldo Emerson once said: “A foolish consistency is the hobgoblin of little minds.” Whatever else fans and critics might think of the commander-in-chief’s gray matter, it is clearly not haunted by ghosts of uniformity and steadfastness.

But while I’m glad President Trump is not demonically possessed by an irrational need to strictly “stay the course” for its own sake, I am increasingly troubled by the reckless way he likes to shoot from the hip in matters of global trade.

The seeds of mistrust now being sown among many of our major trading partners makes me wonder if the White House truly understands the evolutionary nature of the international marketplace, a networking process that slowly improves over time as “non-zero” relationships (i.e., net import and export sums that benefit both sides of a trade) proliferate and compound.

But if this criticism is too harsh on the Trump administration, I feel more confident in saying that the president and his entire motley crew (given the extremely short truce in the trade war with China declared just last week, it seems clear that not every team member is rowing in the same direction) could benefit from a season or two of demanding fieldwork and farm management.

As far as I’m concerned, the great and abiding ethos of agricultural marketing has always been summarized by the pledge “my word is my bond.” Many may think this sounds quaint and unrealistic. But I still think it’s the fundamental nail that guarantees 95% or more of the country’s farm business.

That’s not to say that no one in the farming and ranching community ever bothers with lawyers and contracts. Of course, successful producers follow prudent business practices. And that’s not to say that all those who work the soil or sort cattle automatically turn into unimpeachable Eagle Scouts. Bad apples fall from rural and urban orchards alike.

Nevertheless, I would have no qualms testifying before Congress (or perhaps more to the point, chatting over drinks at Mar-a-Lago) about agriculture’s extraordinarily high commitment to honor and trust in matters of commerce. Maybe I’m hopelessly naive. But I’ve seen too many unhedged farmers dutifully deliver contracted corn dollars under the spot market and too many unhedged feedlot managers accept delivery on fall calves tens of dollars above the spot market to think otherwise.

Although waves of consolidation and concentration have certainly changed some of the dynamics of agricultural business over the decades, an amazing network of trust and cooperation still exists in the country. This network’s taproot is comprised of realities such as isolation, low population, piecemeal infrastructure, and scattered markets.

The magic of this necessary trust at first fostered the rising levels of trade required to feed and energize the continental United States. This same quality of trust was then increasingly married to hundreds of other trusting business partners all around the world to create global trade worth trillions and trillions of dollars.

Unfortunately, this long-tested alchemy of trust and trade, a proven elixir responsible for the creation of untold wealth through U.S. agriculture, as well as the nation as a whole, is being threatened by a president who believes that trade wars are good and easily won.

Can’t you just hear our trading partners say something like “Anyone so casually bellicose is not to be trusted.” And that’s exactly the point. Trust and trade go together like love and marriage. Once you become less than trustworthy, your sex appeal as a trading partner quickly goes south.

During less than 18 months in office, President Trump has reneged (or threatened to renege) on U.S. international pledges too numerous to count. Some of these decisions may have been well-reasoned. But the way the president and his team blow hot and cold (sometimes on the same day), is it any wonder that U.S. creditability seems to be approaching an all-time low.

Maybe if Trump had been raised in the wilds of western Nebraska or Kansas instead of cushy New York, he would have learned one of the woodshed’s most valuable lessons: “Say what you mean, and mean what you say.”