Deregulation: Understanding the Trump G7 Canadian Dairy Remarks

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Canadian, June 10, 2018:  As Sputnik reported earlier, US President Donald Trump suggested the creation of a tariff-free trade zone between G7 member nations.

“No tariffs, no barriers — that’s the way it should be. And no subsidies. […] That would be the ultimate thing, whether or not it works, but I did suggest it,” Trump said in a news conference in Quebec on Saturday prior to his departure for Singapore.

According to the CBC, Canada does impose a 270 percent tariff on milk, a 245 percent tariff on cheese and a 298 percent tariff on butter, as a means of keeping imported products out of the dairy-rich country according to reports published in sputniknews.com

Canada, like almost every other nation, tightly controls homegrown products — in this case dairy products — to assure that its farmers are paid fairly. The so-called protectionism has earned Ottawa the nickname of “Soviet Canuckistan,” courtesy of the US arch-conservative pundit and Republican presidential adviser, Pat Buchanan

As The Guardian puts it, “Canadian cows are sacred,” and some opine that Canadian farmers influence Canadian politics so deeply that Prime Minister Trudeau would likely drop any trading agreement that endangers the popular and profitable Canada dairy indu

The US, being export-oriented, has found itself in a bind, as competitive exports have become the only way for American factory dairy facilities to be profitable. The price for milk and dairy products is kept artificially below cost through Washington subsidies and so US farmers massively over-produce.

Without a corresponding demand, the unregulated and subsidized US factory-farm corporations will not be profitable, and will face reorganization at the hands of shareholders and the courts.

Last year, US farmers shockingly destroyed almost 100 million gallons of unsold milk, The Guardian reported. If that’s not bad enough, there has been a wave of farmer suicides recently that has rung a national alarm, referred to by the New York Times as “the widespread hopelessness afflicting the industry.”

Breaking the Canadian tariff wall and flooding its northern neighbor with cheap factory-produced US milk is seen to be desirable to investors holding large stakes in US-based agricultural corporations. US Senate minority leader, Chuck Schumer (D-NY), quickly echoed Trump’s “unfair” dairy tariff narrative.

​When it comes to numbers and money, The Guardian reports that the entire issue is worth some $600 million, a tiny figure when measured against a 2017 US trade deficit of $566 billion according to sputniknews.com

Why does Trump consider it worth discussing? Is there a Trump property or golf course that stands to benefit from destroying Canada’s protectionist dairy policies?

One possible answer is that on Thursday, two days before the beginning of the G7 summit, Canadian Prime Minister Justin Trudeau criticized Trump’s notorious new tariffs on steel and aluminum.

The consistent profitability of the $660 million US dairy industry represents a fraction of the almost $13 billion retaliatory response posed by Trudeau, but how the game will be played out over the following months is anyone’s guess.

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