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Canada's Dairy Prices Have Become A Contentious Issue With U.S. Leaders


This weekend's G-7 summit ended with President Trump lobbing harsh words at Canadian Prime Minister Justin Trudeau. Among other things, the president complained that Canada restricts U.S. dairy farmers from selling products there. NPR's Jim Zarroli reports that Canada's dairy prices have become a contentious issue between the two allies.

JIM ZARROLI, BYLINE: When President Trump complains about the North American Free Trade Agreement, he often cites Canada's dairy prices. Here he was in April 2017 speaking to a dairy industry audience in Wisconsin.


PRESIDENT DONALD TRUMP: What's happened to you is very, very unfair. It's another typical one-sided deal against the United States. And it's not going to be happening for long.

ZARROLI: Like their counterparts in the United States, Canada's farmers have a lot of political power. And the government does several things to keep the country's dairy business going. First, it restricts the amount that Canadian farmers can produce. Then, by imposing tariffs, it limits how much foreign suppliers can sell in the country. Mike von Massow is a food economist at the University of Guelph in Ontario.

MIKE VON MASSOW: There is some product that comes in tariff-free. Beyond that, there are higher tariffs to protect the Canadian market.

ZARROLI: Today U.S. dairy farmers do sell products such as cheese and yogurt north of the border. In fact, the U.S. dairy industry enjoys a small trade surplus with Canada. But Shawna Morris, vice president at the National Milk Producers Federation, says the tariffs are huge, and they've really restricted the market's potential.

SHAWNA MORRIS: The 200 to 300 percent tariffs are there for a reason. They're to choke off a trade after it reaches a certain level.

ZARROLI: When Canada, Mexico and the United States negotiated NAFTA, they stripped out a lot of import restrictions, but Canada was able to keep its dairy tariffs in place. Some Canadians insist that Trump's focus on Canada's dairy industry is more than a little hypocritical, says Mike von Massow.

VON MASSOW: Canadians would argue that the Americans have unfairly protected their softwood lumber market with high tariffs, and none of that has come up in all of the recent discussion about removing tariffs.

ZARROLI: Von Massow also notes that the dairy tariffs were supposed to be addressed in the multilateral trade agreement known as the Trans-Pacific Partnership, but Trump pulled the U.S. out of it last year. Jim Zarroli, NPR News, New York. Transcript provided by NPR, Copyright NPR.

Jim Zarroli is an NPR correspondent based in New York. He covers economics and business news.