US Tariffs Stalls Canadian Dairy Exports and Threatens Farmers

Canadian dairy exports to the United States have come to a standstill following the implementation of a 50 percent US tariff in August. Operating out of Abbotsford, British Columbia, dairy farmer Casey Pruim oversees a system where 28,000 litres of raw milk leave his farm every second day, relying on a distribution network that once spanned the border.

The disruption began when US President Donald Trump placed a 50 percent tariff on $20bn worth of Canadian goods, directly impacting dairy products starting August 22. Pruim, who serves as chair of the British Columbia Dairy Association and represents roughly 400 dairy farmers in the province, explained that individual producers do not dictate where their exports go. Instead, they sell to the provincial milk-marketing system, which allocates milk to processors based on demand, including cross-border shipments to the US.

Dylan Kruger, director of public affairs at BC Dairy, noted that considerable uncertainty surrounds the impact of these US tariffs. It remains unclear how the industry will absorb the excess milk or whether alternative markets can mitigate the financial fallout. If processor demand drops due to being priced out of the American market, farmers like Pruim warn they may be forced to dump milk or reduce herd sizes.

David Wiens, president of the Dairy Farmers of Canada, criticized the measures as unwarranted and disruptive to supply chains in both nations. The cross-border trade has historically been governed by CUSMA, with Canada utilizing a national supply-management system featuring production quotas and import controls to stabilize prices. While Washington has argued that this system restricts US access, Canadian producers counter that US imports have grown significantly under the trade agreement.

Economist Bryan Yu of Central 1 credit union warned that producers face short-term pain because replacement buyers cannot be found instantly. In response, Ottawa introduced retaliatory tariffs covering $20bn in US goods, including a 50 percent tariff on milk, cream, and whey, and a 25 percent tariff on various cheeses. Prime Minister Mark Carney defended the response as a measure to match Washington's actions dollar for dollar, though organizations like Oxford Economics caution that these retaliatory tariffs could drive up costs and weaken economic growth.